Monday, May 23, 2011

Belarus Devalued

When the people of Belarus went to sleep last night, most probably assumed that the following Monday would be just like any other when they woke up in the morning.

Reading the morning news they found out that something was different.  Overnight, their currency had been devalued by 56% percent.

Those holding assets denominated in Belarus currency (stocks, bonds, cash) were now 56% poorer.

Those that went to sleep holding assets not denominated in Belarus currency (gold, silver, foreign currencies) woke up much, much richer.  They can now go to the grocery store, the gas station, or the mall and purchase far more items than their neighbors.

Someone went to sleep in Belarus last night thinking they would put some of their hard earned savings into precious metals.  This is the equivalent of having fire, life, or auto insurance in a paper backed financial world.

Then they woke up and it was too late.

One night, it could be tonight, or it could be 5 years from now, there will be a run on American dollars.  Most likely the panic will start in the Asian markets (that trade during the hours we sleep) and Americans that went to sleep without insurance will wake up devastated.

No comments:

Post a Comment