It is because of this kind of stupidity that I moved from the US to Switzerland.
The Swiss have a long tradition of treating gold as currency. This is safest
place in the world to store gold.

DavidSJC

You moved in 1933?

Hi, the article is no longer available online. Do they really expect the SNB to go further with the Euro?

I am enjoying the weekends lack of market news. It seems like the monday on is just crazy.

Had to read that so did a search....
http://www.cash.ch/news/topnews/ubs_...er-1105134-771

Quote "Chinese gold imports from Hong Kong, a proxy for overseas buying, hit a fresh record high in October and accounted for more than one-quarter of global demand.
Data from the Hong Kong government showed that China imported 85.7 tonnes of gold via Hong Kong in October, up 50 per cent from the previous month and up more than 40 times from October last year. It is the fourth consecutive month that China’s gold flows through Hong Kong have hit new highs"

China is the world's largest gold producer & now the largest gold importer

Gold in CHF is currently within 4% of the all time maximum.

But the CHF is undervalued today because of the peg with the EUR.

In any event, buying and storing physical gold in large reinforced safe boxes at home is probably an attractive option for US citizens residing in Switzerland.

It doesn't have to be reported in FATCA or FBAR as there is no account with an FFI involved plus your assets will be appreciating constantly over the major debasing fiat currencies. Then when you acquire a Swiss Passport, you can renounce the US one and realize gains afterwards .

The peg is costing 45k per day per resident, the chf will be worth a great deal less if the peg is not dumped asap.

That is a fantastic amount. It must be benefitting some of us though. For example, those of us that have bought a house using pension funds and a larger mortgage?

I recently read in Jim Willie's latest article that a very large amount of "Allocated Gold" has been raided and sold off by banks. And not just anywhere but also here in Switzerland, i.e. he claims there are 'major lawsuits in Switzerland' though to date the 'press has kept a lid on the story'.

BANKER BRUSHFIRES RISK JUMPS
The article is long and the bit I am referring to comes under this heading:
ALLOCATED GOLD & 40 THOUSAND METRIC TONS SHORT

This is one of several instances where I have seen this subject or similar being mentioned on alternative Internet media. But as said in the article to date there is nothing in the mainstream media.

If it really is so then when this story does hit the press gold will suddenly become very scarce.

it is benefiting those buying CHF at low prices. imagine the SNB had the power to force you to sell you house, car, and any other property at 70% of its market value. the buyers have a good deal, the sellers have a terrible deal.

by selling CHF at a reduced price, foreign currency holders are effectively able to buy CHF denominated assets for a lower price at the expense of CHF holders.

CHF denominated assets (particularly real estate) are already super high that I don't think the peg would make that much of a difference for the average Joe.

The most worrying collateral damage of a currency peg is inflation because of increased consumption resulting from a larger money supply while not being able to correspondingly expand the supply of goods and services. Swiss inflation for 2011 was 0.2% and there is talk we may see deflation. This indicates that the new CHFs being printed to buy foreign currency is either be lent back to the Swiss Government (which is awesome for the country's fiscal situation considering bond yields are between negative and zero), just sitting dormant in Swiss Bank accounts or going into purchasing Swiss real estate (average Joe in Switzerland rents and lower interest rates actually benefit him since rent goes down). Essentially, newly printed CHFs are being helf by foreigners for safe haven purposes, not for a massive shopping spree. Once the peg ends, the foreign currencies the Swiss government purchased will be used to buy back these CHFs printed due to the peg and the Swiss government will simply remove them from circulation, thus correspondingly decreasing the money supply.

the perfect scenario you outlined will happen only if the Eurozone economies recover and the Euro value increases to more that 1.2 - given that practically all of the Eurozone countries are about to go bankrupt, this doesn't really appear to be a likely scenario at all.

Gold will ultimately replace the US dollar as the world's premier reserve currency/asset class.

As a matter of fact, Central Banks have registered their most intense gold buying spree since the 1960s; could be a game of musical chairs as governments continue to debase their fiat currencies to solve their fiscal problems.

I would hold on to Swiss Francs, its highly unlikely governments will conduct commerce in physical gold, instead they will conduct it in the most convertible and trustworthy fiat currency. Back in the 1930s and 1940s it was the Swiss Franc (hence why the Swiss were able to purchase large amounts of gold just by printing CHF). This ensured Switzerland's economic well-being and neutrality in World War II as most of Germany's trade with neutral countries was done via Switzerland.

It would also depend on what the Swiss government is doing with its newly acquired Euros; they could be buying negative yield German bonds or, what I would probably do, Gold. If it would be going into PIIGS debt, that would be worrying as there could be substantial losses during unwinding to cover the CHF they printed.

The Eurozone will be much smaller and will mostly cover solvent countries within the next few years. The smaller and more solvent it becomes, the stronger the Euro will become and the less will be the need for a EUR-CHF peg. If Germany dumps the Euro, however, the new Dmark will be Europe's premier safe-haven currency and the Swiss will definitely not need a peg anymore.

Ideally I would only foresee the Netherlands, Germany, Austria, Finland, Luxembourg and maybe Estonia (almost no debt) to remain in the Eurozone (who knows Sweden may join in if their strong currency kills them; Denmark is de facto an Eurozone country due to its mandated peg under ERM II).

Realistically, some insolvent countries may remain in the Eurozone:

-France, Belgium, Italy (we can say Italy has an industry if we can still call FIAT a car), Slovakia and Slovenia may remain in the Eurozone for political, historical and economic reasons.

-Portugal may be forgiven and stay in the Eurozone (at least they have shown seriousness and maturity in trying to solve their mess).

-Ireland should leave and maybe adopt the British Pound.

-Spain should definitely leave; an economy with no industry, overpriced real estate and overpriced tourism with 25% unemployment is hopeless.

-Greece, absolutely should leave; shouldn't have joined in the first place.

and what will happen when these countries leave the new smaller eurozone? there's no way that they can repay the debts. so you will end up with a national central bank default and boom, germany will go into hyperinflation and the euro is trashed anyway.

These countries are unable to even pay their national debts with the generous bail-outs they are receiving today. As more time passes, there will be more and more pressure from taxpayers in the solvent major Eurozone economies to question the logic of keeping these subprime countries on board the Euro project; and politicians always aim for reelection and wish to please their tax paying constituents.

I don't see how there will be hyperinflation in Germany though, and why the Euro would be trashed if it's most insolvent members get booted? Of course there will be a short-term market shock when countries leave the Euro, but capital flows into the Eurozone will normalize and strengthen if the single currency area no longer has to bailout insolvent countries.

It certainly won't be a walk in the park for countries leaving the Euro; Greece and Spain, in particular, will undergo a severe paradigm shift in their economic, political and social sphere. Massive amounts of debased currencies will require printing and lead to inflation, debt payments will stop, capital controls on hard currency will be implemented, industries may be nationalized, many people will lose their shirts, a lot of emigration will occur (already happening and to surprising destinations like Latin America, Angola, etc... where Spain and Portugal were once colonial masters). In essence, I would expect countries leaving the Eurozone to also be booted out of the EU to keep mass immigration out of the union and many policies booted countries may adopt post-exit may clash with EU law.

To put it simpler, Europe's economic, political and developmental borders will be redrawn, where the Pyrennes will become Europe's new southern border with Africa and the Carpathian, Serb-Kosovar and Montenegrin-Albanian borders will become Europe's new southeastern border with Asia.

Rumour has it that SNB is buying euro denominated bonds issued by non eurozone countries.

Of course the risk is that these foreign currencies holdings will buy substantially fewer CHFs than they originally cost.

if they exit and default, i think germany will suffer. just look at the target2 balances: