Dollar may continue to be reserve currency for decades

It was not very long ago when pundits had written off the US dollar as the world's reserve currency. The problem, they argued, lied with the incessant money printing and the trillion dollar debts that Uncle Sam had buried itself under. However, as things stand today, the greenback is still going strong. It has not only survived but is touted to be the safest currency around. So, what changed? Well, it isn't that the fundamentals of the US dollar have improved a great deal. The improvement is mainly because its rivals, aka the Euro and the Japanese Yen have fared even worse. Thus, in what looks like a very bad neighbourhood, the US dollar seems the only safe house.

But how long will this trend last? If an analyst at UBS is to be believed, US dollar's status could be safe for another 50 years. Quite simply because as per him, nothing in the world is as liquid and as widely held as the US dollar. Besides, the dollar also benefits from the military protection the US offers to many reserve holding nations. Well, the analyst's theory does have pretty strong legs to it. And dollar may well remain the reserve currency for many more years to come. However, what we are pretty certain about is the fact that the dollar's devaluation is here to stay. Thus, it will not be a bad idea to keep piling on to that yellow metal called gold.