What is the Future of the British Pound?

The drastic 8 percent plunge of the British pound against the U.S. dollar, and the uncertainty as to how Britain should interact with Europe, has many questioning what the role of the British pound, and Britain itself, will be in the future.

The currency’s 8% decline versus the dollar this year has the feel of something more than a cyclical move. A currency that functioned as the world’s reserve currency for a century and a half before the dollar took on that role, and which fostered financial institutions such as central banking, may be sliding into the sunset.

The triggers for the most recent bouts of sterling selling have come from a string of relentlessly weak U.K. economic numbers, which have raised fears of a “triple dip” recession — at least until this week’s surprisingly positive data from the services sector. But the bigger story is a more existential one: with the turmoil experienced since 2007 in its most powerful industry — banking — and the euro zone charting a more independent course, many are wondering what Britain’s role in the world will be.

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Gold Gains on Euro, British Pound, and Swiss Franc

Probably one of the most important metrics of gold's strength is its movement against currencies, and the last week it moved up strongly against the Euro, British Pound, and Swiss Franc.

Against euros it gained 2.0 percent; against the British pound, 1.7 percent; and against the Swiss franc, 1.3 percent. Gold did fall against the Japanese yen by 0.3 percent.

The euro fell against the U.S. dollar, dropping from $1.3169 to $1.2982, a loss of 1.1 percent.

Spot settlements for COMEX gold ended at $1,215, while averaging $1,203.

George Soros and British Pound

British Pound Plunging

The ongoing plunge in value of the British pound brings to mind the millions earned by George Soros when he bet against it in September 1992.

Concerns over the rate of the fall in value of the pound has some concerned over how that will impact the value of stocks, commodoties and trade around the world.

The pound has been in even worse shape than the euro over the last month and a half or so, and it remains to be seen how it could effect the global scene.

It makes you wonder if old George Soros is back in the picture, or at least someone like him.

British Pound Plunging

Jim Rogers Denies British Pound Statement

Jim Rogers on British Pound Collapsing

According to Jim Rogers, the comments attributed to him that he said the British pound was ready to collapse, possibly in the next several weeks, isn't true, and he knew nothing of the press release which made the assertions.

Interestingly though, Rogers did make a fortune betting against the pound in the past.

Even so, Rogers didn't exactly back down from the issue in general, as he reasserts that while he didn't make the statements attributed to him, he still considers that over the next several years the British pound has some major problems.

What is sounds like is Rogers believes in the collapse of the British pound, he's just saying it didn't say it.

Jim Rogers on British Pound Collapsing

Gold Rising 30% in 2010?

Gold Rising 30% in 2010

According to the London Market Bullion Association, gold could rise close to 30 percent in 2010, as continual concerns over central banks printing money, sovereign defaults, quantitative easing and outrageous government stimulus programs weigh on the minds of investors.

It's unknown what will happen if the British pound collapses, as a number of investment experts like Jim Rogers and Marc Faber are predicting, and that could cause gold prices to go through the roof as investors and consumers look for somewhere safe to place their money.

Now that the government stimulus programs have been proven to be mass failures, the growing realization we aren't close to being out of the recession yet is settling on people, and that will cause even more to move toward gold as a haven.

In the short term it doesn't look like any new gold mines are coming online either, making gold a possible rare commodity as funds continue to buy physical gold to back them up. That is another possible factor which could move gold prices higher in 2010 and beyond.

Gold Rising 30% in 2010

Jim Rogers: British Pound Collapsing

Jim Rogers on British Pound

According to currency and commodity expert Jim Rogers, the British pound is ready to collapse in the near future, saying it could easily be within the next several weeks.

In typical response to that reality, the Governor of the Bank of England, Mervyn King, said the central bank is ready to print as much money as needed to deal with the situation, which pushed the value of the pound down even more. Keynesian's still don't get that printing money and simulating the economy don't work, doesn't create jobs, or have a lasting impact. They're learning the hard way now that this is true.

As far as the British pound collapsing, Rogers added that this will make the great recession look like a small blip in comparison, and could come near the end of 2010.

Rogers and Marc Faber agree that a currency crash will come before the coming economic crisis.

Taking into consideration the figures from the U.S. Labor Department, Commerce Department and those on the British economy, and the idea that we're in a recovery is a joke.

Those who want to get a more in-depth explanation of what's happening will have a chance to on March 19, 2010, where Jim Rogers and Marc Faber will join British investor Vince Stanzione to talk on how to successfully invest in the coming recessionary environment.

Jim Rogers on British Pound

Commodities: US Dollar Strengthens

Dollar will collapse in spite of current strength

The U.S. dollar continues to strengthen because of the unique market circumstances, as it improved against euro, British pound, and the Australian and New zealand dollars today.

Against the Japanese yen though, it dropped to a 13-year low, as it's growing into the currency of choice for those seeking safety. At its lowest point against the yen today, the dollar fell to 90.89.

As Watching U.S. Dollar said today, "remarkable factors in the market keep the dollar high against other nations' currencies, as it was up to two-year highs against the euro, while it enjoyed a six-year high against sterling.

"Sterling fell to as low as $1.5270 against the U.S. dollar, while the euro was as low as $1.2498. The Australian and New Zealand dollars also plunged against the greenback, with the Australian dollar taking the biggest hit, falling by 7.6 percent to $0.6213, while the New Zealand dollar was right behind it, decreasing by 6.5 percent to $0.5576."

Looking ahead, the US dollar will eventually collapse as a perfect storm seems to be brewing against it in 2009.

Rupee Declines against Major Currencies except ... US Dollar

The rupee was weak over the last seven days, as it was only able to gain against the US dollar in open and inter-bank markets which ended Saturday.

The US dollar traded Monday at Rs62.86, and dropped to Rs62.65 by Saturday. The greenback gained Saturday a little, as it traded at Rs62.70; still lower than Monday's price.

In the inter-bank market, the Rupee fell the most against the pound sterling, trading Monday at Rs124.5813, and reaching Rs125.4430 by the weekend. Pound Sterling also rose on the open market, closing at Rs125.95 Saturday, after trading on Monday for Rs124.25.

With the Euro, it traded at Rs94.7125 on the inter-bank market, and ended Saturday at Rs95.6875. It came close to an all-time high of Rs96 during the week. In the open market, the Euro ended up, closing at Rs95.95, while trading on Monday at Rs95.1.

For the Japanese yen, its inter-bank trading was at Rs0.6042 on Monday, and closed at Rs0.6104. On the open market the yen rose only a fraction, closing at Rs0.605.

U.S. Dollar Continues to Plunge Against Japanese, European and Canadian Currencies

The U.S. dollar continues to fall against major currencies, as it is flirting with its all-time low against the euro. For the euro, the dollar was only able to buy $1.5208. For the British pound, it increased a little to $1.9859, up from $1.9847.

In late trading in New York, it also fell against the Canadian dollar, going to 1.0042, down from Monday's 1.0074 cents.

The Japanese yen also increased against the U.S. dollar, climbing to 103.14, up from 103.96. Japan's leadership is getting more concerned about the weakening dollar, as it has fallen by over 7 percent in 2008 already. They're concerned that their exports could suffer if it continues at this "abnormally rapid" rate.

This of course isn't bad news for all businesses in the U.S., as manufacturing will benefit from the weakened dollar, as well as tourist-related businesses that attract a lot of international visitors. The question there is if the weakening domestic tourist market will be made up for by foreign tourists. That has yet to be answered.

As far as the Canadian dollar, the Canadian bank cut borrowing rates by a half point; the first time since November 2001. They've indicated more cuts may be on the way in April.

For the Australian dollar, things are going the other way, as they continue to battle inflationary pressures, and continue to raise their interest rates, today increasing it by a quarter point, which now stands at 7.25 percent.