Choose one or the other

Sorry we are beating this one to death. Another post about the INR. We just think it is important in the global context. Important because it is a high yielder. Important because it has solid demographics. Important because it is (was?) a part of BRIC.

But what this post is about is a bit beyond the INR as well. Some of the worst performing currencies (taking a longer term horizon over, say, 10 years) in the world have something in common. They all love gold. Turkey, South Africa, India, Mexico (ok this one likes silver more, but still). It all starts to make sense. Blame it on culture, weddings and gifts but currency is a part of culture. And gold is a preferred currency over the ZAR, INR, MXN, TRY for a reason. These are all inherently weak currencies. Bottom line - you may not know it but if you like gold, you are bearish INR. If you are bullish INR, you probably don't like gold as much. Both gold and INR can't strengthen together in the long run, as we have seen.

Image: Gold price in INR - Gold still winning overall