Gold Price Explodes In Ukrainian Currency

As we have repeated over and over again, gold should primarily act as an insurance policy which protects your purchasing power during a currency crisis. And despite the fact that most economic pundits want us to believe there is an economic recovery, the truth of the matter is that the recovery is very weak; the economy remains fragile. Apart from that, a global currency crisis is playing out and it will probably hit most of the currencies in the years ahead.

Recently, in the heat of the emerging market crisis, we wrote Gold Price Exploding In Emerging Markets. The charts in the article show the explosive price action in local currencies of the emerging markets that were hit hardest. That’s the insurance policy in action.

Today, it’s the turn of the Ukrainian currency.


From GoldCore:

The Ukrainian hryvnia has fallen by 50.14% against gold in 2014 and by 28% in the last four days alone. Ukrainians who own gold have protected their savings – again showing gold’s safe haven properties.

Yesterday, gold hit a four-month high at $1,345.35 before falling almost 1%, possibly due to profit taking and technical selling.

Gold has risen more than 10% so far this year on uncertainty over the pace of the U.S. economic recovery, worries about growth in China and continuing robust global physical demand. Geopolitical tension between Russia and the western powers over Ukraine will likely support gold.

In other markets, Asian shares struggled to find a solid footing on Thursday as escalating tensions over the Ukraine led to weakness into equity markets and the risk of a renewed bout of risk off.

Ukraine is seeing bank runs, as central bank reserves shrink and some 7% of bank deposits were withdrawn in just 3 days.  Bank run fears mean some financial institutions operating in Ukraine closed branches and imposed limits on cash withdrawals this week.

All jokes aside, if one tries to explain this to the majority of people, the result would be a conversation along these lines: “The gold price up? No, the currency down and gold is helping preserve the purchasing power which is the primary role of a currency. Oh, gold is a currency?”

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