from Gold Core:
The weakness in the yuan is likely to be temporary as longer term the yuan looks set to appreciate against major currencies – intervention or no manipulation by the PBOC. Were there to be further weakness in the yuan and a prolonged bout of weakness, currency wars will likely rear their ugly heads again as other nations seek to devalue their currencies in order to maintain export competitiveness.
The plunge in the Ukrainian hryvnia this week and the risk of bank runs, not to mention the risk of contagion for European banks exposed to Ukraine should support gold. The Ukrainian currency has collapsed 22% versus gold this week – from 11,684 hryvnia per ounce on Monday to 14,235 hryvnia per ounce at 11:30 GMT today.
Rising geopolitical tensions between Russia and the West over developments in the Ukraine should also be supportive. This morning Ukraine has accused Russia of invading Ukraine and is considering a state of emergency after masked gunmen occupied two Crimean airports.
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