Will gold, the dollar or the euro collapse?

At present, both gold and silver prices are declining. The psychological threshold of $1,400 per troy ounce for gold and $30 per troy ounce for silver has proven difficult to break, as investors are taking profits and selling their gold and silver holdings. The debt crisis in Europe is raising concerns that the end of the euro as we know it today could be near. However, as the debt crisis in the United States is even greater, it is time to question whether these three forms of money will collapse.
 

A Collapse of the Dollar

For years, there has been speculation about the fall of the dollar. It seems only a matter of time before the dollar collapses, given the enormous national debt that the United States carries, which is regularly increased by billions of dollars at a time. By March 31, borrowing limits must be increased to avoid a default in the short term.
 

A Collapse of the Euro

The problems in the Eurozone are also not being solved. Each day we hear more bad news. Greece wants more time to repay its bailout package, the government in Ireland refuses to accept the interest rate associated with its bailout, and countries like Belgium threaten to drift into the same situation as Ireland and Greece without proper governance.
 
If the EU also has to step in to save Portugal, Spain, and Italy, this will put heavy pressure on the value of the euro. Ultimately, the exchange rate could rise to $1, or even lower (depending on how quickly the dollar loses its value). It is still possible that these heavily indebted countries could be forced out of the Eurozone, but it is also possible that Germany could leave the EU.
 

A Collapse of the Gold Price

With so many investors hoping for an economic recovery, the correction in the gold price seems to signal the end of the gold bull market. Gold would then be sold, and confidence in currencies like the euro and the dollar would be restored. Despite the fact that both the dollar and the euro are not in great shape, it appears that at least in the short term, there is no reason for panic, which means that the gold price is no longer rising as explosively as in recent periods.
 

The Dollar, Euro, and Gold in the Future

Both the euro and the dollar seem to be holding up for now, while the gold price shows healthy recovery. According to Yi Gang, Deputy Governor of the People's Bank of China, the euro and the European financial market are an important part of the global financial system. This market will be one of the most significant areas for Chinese foreign exchange reserves to invest. The same applies to the $3 trillion (!) that the United States owes China. It is therefore in China's interest for these currencies to continue to exist. This is true for all other countries as well, as no one benefits from the collapse of the dollar or the euro.
 

The Role of China

One added advantage of having multiple currencies is that investors can look for ways to protect their wealth as much as possible. If this opportunity did not exist, there would be less trade between nations, and both currencies would have collapsed long ago.
 
Governments and central banks do not have this option when conducting international trade. From that perspective, it is advantageous for China to support the euro and the dollar so that China can continue exporting, increasing its power and ensuring steady interest income. This makes the exchange rate movements of the two leading global currencies very important for the profitability of world trade.
 
If there is a possibility of a collapse in the gold price, we should consider the unique characteristics of gold in measuring value and ignore all exchange rates. The President of the World Bank has suggested that the gold price could be used as a benchmark for determining currency value, and the President of the German Bundesbank recently called gold a useful hedge against fluctuations in the dollar.
 
In conclusion, a collapse in the gold price would only be possible if the inherent value of both the euro and the dollar were to rise to unprecedented levels relative to assets, including gold. Do you trust the dollar and the euro to grow your wealth to new heights? And can we expect Indian, Asian, and Chinese investors to trust these currencies instead of gold? The answer to this question will determine whether we can expect a collapse in the gold price.
 
Disclaimer: The Silver Mountain does not provide investment advice, and this article should not be considered as such. Past performance does not guarantee future results.