NORWEGIAN KRONE – AN INVESTOR CHOICE FOR THE NEXT 2 YEARS – OR GOLD?
The analyst David Bloom in HSBC characterized the Norwegian Krone – NOK as the worlds best currency.
Time Magazine had an article about the Norwegian Krone and Norway with the title; “Why the Norwegian Krone is the safest Currency”.
There is no doubt about that the Norwegian Krone is in good shape. Several cuts in the interest rate the last few months has begun to have an effect not seen in any other economies around the world. The latest cut done on March 25th with 0.5% making it the lowest interest rate ever in Norway. It might also be a signal on how bad shape the global economy is at the moment.
The last months activities has shown that USD, GBP and Yen are in worse shape than originally thought. No effect on their government’s economic measures makes investors to look for new safe havens for their money.
The reason the Norwegian Krone is seen as a safe investment at the moment, is the low price any loan taker has to pay to ensure himself against Norway defaulting their debt. This price is amongst the lowest of the 10 most traded currencies in the world at the moment,
The Norwegian Krone weakened last year following the oil price and reached its lowest level against Euro in December last year.
Since then, the Norwegian Krone has stabilized itself and begun to strengthen towards major currencies, like towards the USD.
There is an expectation that the Norwegian Krone will keep its strengthening trend for the next 18 months or so, says the analyst Bloom to the Times Magazine.
The Norwegian BNP increased with 1.3% through the last quarter of 2008, as most other major western economies experienced a drop. Norway is also one of the few western countries with a surplus on their National Budget Balance sheets, with a net export value.
The battle between the USD and Euro has made their relationship going up and down in the last 6 months, from the low of USD in July 2008.
Any prognosis for which economy is going to be the stronger in the end, whenever that is going to be is any ones best guess these days. However logically we would expect the country with the stronger BNP and balance sheets to be the stronger one. However to many other variables including those irrational ones, makes it impossible to make this assumption.
Personally I would hold on to the Norwegian Krone and raw materials during these turbulent times. As the gold prices are prognosed to be around 2000 USD/ ounce in 2 years time. Today it straddles in the mid range of 900 USD/ ounce.
The reasoning for this assumption is that there is not many larger deposits of gold to be found or has been found, which means the demand will overpower the availability of this raw material. Also there is associated a production cost to gold, which makes it a real asset seen fro ma production standpoint of view.
He has a background as civil engineer and geoscientist. He has worked mainly within the oil and gas industry from the mid 1980s. He has written a few fictional novels as well as being the author of some professional litterature within oil and gas sector, he is now an editor of some web sites.
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