A currency that is used worldwide by governments and businesses is called a reserve currency. Governments will hold a large portion of their reserves in this currency. International trade in goods and commodities will be transacted based off this currency. For example, gold is traded in U.S. dollars around the world. The current reserve currency is the U.S. dollar, although that may change over time. China has hopes that its currency, the yuan, will gain reserve status equal to or greater than the U.S. dollar. The U.S. dollar gained reserve currency status over the British pound following World War II.
As Congress has come to a decision about the debt ceiling and kicked the can a few months down the road, I hear a significant amount of noise about the U.S. dollar losing its reserve currency status. With this, I ask: could this really happen anytime soon? Before coming to any conclusions, let’s dive into the basics. A reserve currency is the currency that is commonly used in the global economy; central banks keep it in their foreign exchange reserves and businesses do international transactions with it. One of the other characteristics of the reserve currency i ... Read More
I realize gold is out of favor right now, but there are just too many technical and fundamental indicators pointing to the upside. With the yellow precious metal currently trading near a three-year-plus low, one has to wonder if now is a good time to get involved. While gold prices recently dipped below the 50-day moving average, they have been finding support on the back of the U.S. government shutdown and impending debt ceiling showdown. Gold prices were up earlier this week as the U.S. gover ... Read More