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Currency Wars Escalate Furtherby Peter A. Grant
May 09, AM 
Gold continues to consolidate the previous two weeks of gains, holding below last week's high at 1487.98. The battle between strong physical demand in Asia and asset reallocation in the West continues to play out.The Bank of Korea is the latest participant in the global easing party; what many more ominously categorize as a global currency war. The BoK cut its benchmark rate by 25 bp to 2.50%, ostensibly to "counter currency appreciation and support growth" according to a WSJ article. That of course is what every major central bank is attempting to do, resulting in a race to the bottom that suddenly seems to be gaining momentum. Much of that growing momentum is attributable to the Bank of Japan's massive easing efforts directed at ending decades of deflation. In tanking the yen, the BoJ has pushed up the relative price of South Korean goods and services, cutting into their exports. This prompted the BoK to respond with their own easing measures. Hey Taiwan, what are you going to do now? Perng Fai-nan, governor of Taiwan's central bank, recently expressed concern that the accommodative policies of the U.S., Europe and Japan will have enormous negative side effects, that will be born largely by Asia's emerging economies. True enough, but let's be honest here, the serial easers aren't going to be tightening any time soon, so what's a small emerging country to do? My guess is ultimately they will be forced to ease as well, or watch their economies wither. In light of what's transpired in the wake of Abenomics, the currency wars do indeed appear to be heating up. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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