The reason we study history is not to take tests.
I believe that the purpose is to understand our current position through the past and to draw the optimal future based on a clear understanding of the present.
In this book, I will examine how gold and the dollar have competed over the past 100 years.
Through this long history, I believe you will be able to understand the "characteristics" of gold and the dollar as assets through the actual market trends.
And, through the unusual financial market movements amid the COVID-19 pandemic in the first half of 2020, we aimed to vividly demonstrate the characteristics of these assets.
And based on the diagnosis so far, we have drawn a picture of the future of these assets.

--- p.10~11

The quantitative easing program implemented by the Fed in March 2020 was initially planned to be $700 billion, but when the market showed no signs of responding, it was changed to unlimited quantitative easing.
In just over a month, nearly 2 trillion dollars will be supplied to the market.
Zero interest rates and the resumption of quantitative easing...
This is how the world has changed in just a few months.

Now, let's look again at why the dollar has been strong over the past several years.
The first reason cited was the US interest rate hike.
Up to 2.25~2.5%.
While other countries were lowering interest rates, the United States was the only country raising them.
But now? The situation has changed, with zero interest rates and unlimited quantitative easing, and the country is actively increasing its dollar supply more than any other country.
Then, we can see that the first cause of the dollar's strength, the US interest rate hike, has disappeared.

--- p.88

Wouldn't foreign investors prefer government bonds from countries with less volatile exchange rates? Yes, even during the currency war, Korea didn't undergo a significant devaluation of its exchange rate.
Even in a situation where the dollar was extremely strong, the won did not show any indiscriminate weakness.
If this trend continues for the next decade or so after the financial crisis, wouldn't investors develop a perception—or more accurately, a sense of "trust"—that the Korean won is stable? Yes, trust isn't gained overnight; it's built over time.
Since the emergence of stable demand for Korean government bonds, the Korean won has maintained its stability.
This will contribute to increased demand for Korean government bonds from foreign investors.

--- p.134~135

The dollar is one of the global safe haven assets.
Safe assets are those that rise in value when other assets are falling.
You can think of it as an asset to prepare for a so-called recession.
Let me explain a little more.
Let's say the dollar rises 20% in value during a crisis.
A 20% increase in value might be a significant return, but if other assets rise by the same amount or more, it could be disappointing from a relative perspective.
However, in the case of the dollar, you can see that when it rises by 20%, other assets fall by 20%.
Yes, absolute returns are important, but relative returns can be important too.

--- p.154

The coronavirus situation here is a so-called pandemic, something we have never experienced before.
No one has any idea how long it will last.
So, if the current situation continues, cash will become even more necessary in the future, right? Then, people will start thinking like this.
'We don't know how long this will last, so let's secure as much cash as possible.'
(Omitted) In the asset market, there is panic selling, or so-called ‘panic selling’, indiscriminately selling off blue-chip stocks, gold, Korean government bonds, and even U.S. government bonds.
The stock market took a nosedive, and gold prices also collapsed.
If gold were a safe-haven asset, it would have to show considerable defensive capabilities when the stock market collapses like this, but it is showing a downward trend, suddenly falling below $1,500 per ounce from around $1,700.
Looking at these cases, it seems that we will be more convinced that gold cannot be considered a safe asset.


So what are safe assets? In situations like this, when most other assets collapse, wouldn't even gold, a safe asset, struggle? You might counter with, "What if I just hypothesize a few extreme scenarios?"
The ultimate safe asset you mentioned does exist.
What is it? That asset is the US dollar.

--- p.208

What choice did the Fed make amidst the market turmoil? While he must have hated the feeling of being dragged along by the market, Chairman Powell ultimately stated that if the market were to remain volatile, he might consider cutting interest rates.
And the tense situation in the stock market ends with this statement.
An interest rate cut ultimately signals further economic stimulus.
It is a signal of economic recovery and, in effect, what the market was hoping for.
Wouldn't a child who was throwing a tantrum have smiled brightly after receiving the gift he wanted? Yes, the global stock market, which had been on a downward trend, has quickly rebounded.

And there's one more thing.
I mentioned lowering interest rates, didn't I? Raising US interest rates means reducing the supply of dollar liquidity in the market.
The asset that has been most depressed by the U.S. interest rate hike cycle that has continued since 2015 has been gold.
But now we hear that the interest rate hike cycle is over and now the rate cuts are starting.
Then, wouldn't it have been possible for the gold that had been suppressed for so long to come out and let out some steam?
--- p.275

When we look at gold as a physical currency, we see that it is significantly affected by changes in the value of the dollar, the opposite asset of physical currency, which represents paper currency.
When the dollar's appeal declined, the value of gold tended to rise, and conversely, when the dollar gained traction, the value of gold tended to fall.
With these past characteristics in mind, I considered what the future might hold, and I focused on debt levels around the world, including in the United States, which have increased significantly since the COVID-19 outbreak.

To resolve this debt, we examined the fact that each country had no choice but to continue ultra-low interest rates for a long time and to actively provide liquidity, such as through quantitative easing.
In the United States, too, government debt has increased significantly, so it is likely that a prolonged period of zero interest rates and a large-scale expansion of dollar supply through quantitative easing will follow.
If the supply of dollars appears likely to increase significantly, and if the supply of paper currency appears likely to increase even more in the future than it does now, wouldn't gold's appeal as a physical currency be further enhanced?

--- p.303~304