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ShareAlmost every money manager seems to be worried about holding on to the US dollar. And with the euro becoming stronger against the US dollar in recent months, there is growing speculation if one should keep one's surplus foreign exchange designated in euros instead of dollars.
Then there are those who believe Japan's yen, or Singapore's dollar, or the Australian dollar could be better bets.
And, there are many who believe that gold is still the best place to keep money.
But each of these options is fraught with problems, and opposition. Even gold.
First, do bear in mind that those who purchased gold in 1980 at the peak price of $800 an ounce had to wait for almost 28 years before they could even get back the principal amount invested.
Gold has a habit of going up, and then falling down. Even its reputation as a hedge against inflation is not guaranteed. It all depends on whether you buy this yellow metal at the bottom or at the top.
Second, take a look at the currencies of countries that have strong foreign exchange reserves, and also have a decent stockpile of gold.
One would have normally expected these countries to have very strong economies. But at least two --- Greece and Cyprus --- have trundled along only because of the support of the other EU countries.
Both France and the UK had to sell gold (at very low prices given the benefit of hindsight today) to meet their financial needs.
France sold around 600 tonnes between 2000 and 2009, while the UK sold 200 tonnes. Even the IMF is considering selling some of its gold.
Holding gold alone does not indicate a strong economy and a safe currency. Earning a good rate of return (indicated by strong GDP growth and good foreign exchange reserves) is more important.
Then there are other problems. Greece appears to sport good numbers, but is poor on governance. Tourists point to the way most banks in Greece refuse to honour even euro denominated travellers cheques at par value.
Some, (including the National Bank of Greece) demand a commission ranging between 15% and 40% (depending on the avariciousness of the banker).
Most shops do not accept credit cards (notwithstanding the displays indicating their willingness) without charging overriding commissions of 10-20%.
Mere numerical indicators, it would therefore appear, are just not enough.
Then there is a problem with gold itself. For 30 years, its prices did not rise. And now, it
threatens to become another asset bubble.
Moreover, with all government holdings of gold forming just 1.6% of the global GDP, it appears unlikely gold will ever return to become a reserve currency.
Some new thinking could usher in new solutions for this turbulent age.
