Look Whats Happening to Gold Priced in OTHER CurrenciesBy David Smith Around the world, the price of gold and silver is most commonly quoted in U.S. dollars. As Americans, we tend to think this is the pricing gold standard. But its easy to forget that foreign investors generally pay for a purchase in their countrys dominant currency. Yes, there are realms whose domestic monetary unit is actually the U.S. dollar. These locales have what is known as a dollarized economy. But many, if not most, transact predominantly in their own currency. In Argentina and Mexico, for example, its the peso. In Great Britain, its the Pound sterling. In most of Europe, its the euro. In Russia, the ruble. In China, the yuan. If the currency in question trades reasonably close to that of the dollar, there may not be a major difference. For example, on the day gold traded at US $1,229, a troy ounce was priced at about 1,102 euros (). Just a few years ago, our Northern friends had a much easier go of it, when their currency, known affectionately as the Loonie, held for several months in the $1.10 area. Today, the Loonie is only worth around $0.72 cents. Nowadays, the purchase of a troy ounce of gold will set Canadian investors back a cool C$1,678. Consider that if a Canadian had bought gold in 2012, when his/her currency was worth US $1.05, they would have paid about C$1,540 per ounce, when an American was paying $1,600. Not bad, being able to purchase silver and gold at a 5% discount, eh? Lets say that gold once again trades at US$1,600, and at that time, if the Canadian dollar is still stuck around $0.72, the hapless Canadian buyer will have to shell out C$2,080 for the same ounce. Before Zimbabwes epic inflationary spiral virtually destroyed its currency, the Zimbabwean dollar, it traded believe it or not at around US $1.27. In June, 2006, this worthless paper promise (a phrase which appears to have been coined some years ago by David Morgan at http://www.themorganreport.com/) was replaced by the Second Zimbabwe Dollar (ZWN) at a rate of 1,000:1. Then a third and fourth dollar were introduced. By the time it had declined to 10 x 25 ZWD (first dollars) that form of the currency was finally abandoned. The polite way of speaking about this abandonment is that it was demonetized. The reality for Zimbabweans, is that they had been financially wiped out. Interestingly, during this hyperinflationary phase one of the worst on record people panned for tiny flecks of gold in local, muddy streams in an attempt to earn enough money to buy food. Those who were old or infirm and who could not somehow pay younger people to pan for them in effect faced starvation. Imagine how different it would have been for these same people, had they held just one ounce of gold, or a tube of 20 one-ounce silver bullion rounds! As a sidebar, gold in most other currencies has been looking very bullish on their charts for much of the last two years. Could the fact that were accustomed to viewing the gold price in dollar terms (which made it look like a declining asset) account for the fact that so many people including several well-known analysts of whom this writer is aware missed the boat when the metals made what looks to be a major turn to the upside in late January? A United Kingdom or European Union citizen will pay, in addition to the spot price and a premium, a Value-Added-Tax (VAT) in the case of silver bullion bars and coins, but not gold bullion up to 20% of the purchase price. This means that, in addition to recouping the going premium and dealing with any $USD currency differentials, UK and EU customers must see silver rise a further 20% on certain silver purchases, in order to just break even. These three countries, in addition to experiencing a weakening exchange rate vis a vis the dollar, have been facing internal problems, such as high debt ratios, weakening economies, and capital flight, causing additional hammer blows to the value of the money they might have considered exchanging for gold and silver. In late 2015, Argentina, long referred to disparagingly as the place where money goes to die finally elected a President who may be able to institute a sea-change in the way his country does business if so, to the long-term benefit of just about all concerned. When this writer visited Buenos Aires in 2007, the peso was trading at 2.5:1 US dollars. In the spring of 2015, it was officially 10:1, but on the blue dollar street market, pesos could be had for 20:1. The restaurant where we ate would not accept credit cards (due to the uncertainty of what the exchange rate might be when charges were redeemed by the eatery). Not surprisingly, only cash was accepted. Of course this also encourages tax evasion, but could you blame them? Just another reason why an unstable currency breeds social discord and unethical conduct, in addition to robbing the holder of his/her purchasing power. This year, one of the first actions that President Mauricio Macri took was to allow the peso to float whereupon it immediately sank 25%. (Here again, holders of precious metals would have completely side-stepped this event their purchasing power left intact. Venezuelas inflation rate is running at over 700% (unreported for the last few months, for obvious reasons). A few years ago, North Korea devalued its currency by 95% overnight. Yes, gold is up $100 an ounce from its recent lows. Silver is up $1.40. For profit considerations, look at where it was in 2011, and where its likely to go when, not if it breaks above those nominal high prices. For insurance considerations, the recent price increase should have no bearing on your decision to buy and hold precious metals, even if by some chance they make new lows in the process. As a Canadian would say, no worries. Just remember the old saw that youre holding for insurance first; profit second. And while youre at it, pat yourself on the back for living in a country where, in unlike a number of those mentioned above, you have a reliable source such as Money Metals Exchange from which to purchase your physical gold and silver. David Smith is Senior Analyst for TheMorganReport.com and is a regular contributor to MoneyMetals.com. For the last 15 years, he has investigated precious metals mines and exploration sites in Argentina, Chile, Bolivia, Mexico, China, Canada, and the U.S. and shared his findings and investment wisdom with readers, radio listeners, and audiences at North American investment conferences. They will throw their gold into the streets but it will do them no good. Bible great tactic to make people use the dollar In the UK some new gold coinage is legal tender and is therefore not subject to taxes on purchase or selling ie VAT or capital gains tax at the point of resale. Just thought I would point that out for clarity. @AntiLieGuy, Im in Vancouver, BC. Does that mean I may get the chance to meet my maker sooner rather than later too? Sounds great, I cant wait! 