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Old 31.10.2011, 10:20
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The Swiss central bank said on Monday that high gold prices helped to lift its nine-month profits to 5.8 billion francs ($6.7 billion) despite massive losses on some of its foreign currency positions.

Read the full article: Central bank posts gains on high gold prices

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Old 30.07.2013, 09:38
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Re: Central bank posts gains on high gold prices

The situation is now reversed, losses on gold, gains on currency,

http://www.derbund.ch/wirtschaft/unt...tory/25787238v
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Old 30.07.2013, 22:51
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Re: Central bank posts gains on high gold prices

The beauty of a diversified portfolio
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Old 30.07.2013, 23:04
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Re: Central bank posts gains on high gold prices

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The situation is now reversed, losses on gold, gains on currency,

http://www.derbund.ch/wirtschaft/unt...tory/25787238v
Soon we will see more losses on gold & huge losses on currency
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Old 07.08.2013, 22:11
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Re: Central bank posts gains on high gold prices

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Soon we will see more losses on gold & huge losses on currency
All depends on whether there will be another wave of money quitting the Eurozone and moving over to Switzerland. The SNB may be forced to purchase either Euro or as in the past Eurobonds and company shares in the Eurozone- Possibly even Yens and Dollars and whatever. The job of the SNB basically is not to make profits but to keep the economy running. They may well need the profits gained now for future operations.

Why they sold gold and made losses is something I cannot tell you, but I am sure that those in charge know why. My guess is that there was simply too much gold in their cellars

"More losses on gold" ?? As above, the question is WHY they are selling gold at a time when the value of gold is down
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Old 07.08.2013, 22:15
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Re: Central bank posts gains on high gold prices

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"More losses on gold" ?? As above, the question is WHY they are selling gold at a time when the value of gold is down
Very simple, they realise it's way overpriced on historical terms and 500 or less is more than likely in the next 10 years, so you sell whilst there is still a greater fool!
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Old 07.08.2013, 22:22
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Re: Central bank posts gains on high gold prices

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Very simple, they realise it's way overpriced on historical terms and 500 or less is more than likely in the next 10 years, so you sell whilst there is still a greater fool!
In that case, it is rather a disastrous matter as the SNB has far too much gold. As they in this case have no alternative to selling fast, considerable losses (at least "book-losses", as a lot of the stuff was bought decades ago) are unavoidable.

I am wondering rather who the buyers are ?
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Old 07.08.2013, 22:35
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Re: Central bank posts gains on high gold prices

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I am wondering rather who the buyers are ?
'Little people' who missed the boat & think because it fell it's a great bargain.
I suspect the SNB's average buy price is under $40, or 172 CHF . I am sure they held more gold in 1970 than today.
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Old 07.08.2013, 23:25
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Re: Central bank posts gains on high gold prices

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'Little people' who missed the boat & think because it fell it's a great bargain.
I suspect the SNB's average buy price is under $40, or 172 CHF . I am sure they held more gold in 1970 than today.
You of course are right. The Gold Reserves of the SNB until a decade or two ago were still as in the times when the Gold Reserves were regarded as a requirement to maintain a currency. But the Gold held by the SNB is still very substantial. And the SNB as a result to an agreement with Saudi Arabia and the five exUSSR Central Asian Republics still is the SalesAgent for surplus gold from Kazakhstan and Uzbekistan
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Old 14.08.2013, 17:18
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Re: Central bank posts gains on high gold prices

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Soon we will see more losses on gold & huge losses on currency
Paradoxically that would be nearly impossible since the CHF is now pegged to a maximum rate, so the SNB itself makes sure it can gain from its currencies portfolio but not lose (it loses when currencies converted to CHF decrease their value). Of course it's possible that the CHF appreciates against the USD, that would mean the EUR too appreciates against all the major world currencies in which the SNB has invested (mainly USD, GBP, JPY) but that's rather difficult and in any case it wouldn't lose a cent from its EUR portfolio, which is still the largest by far.

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Why they sold gold and made losses is something I cannot tell you, but I am sure that those in charge know why. My guess is that there was simply too much gold in their cellars

"More losses on gold" ?? As above, the question is WHY they are selling gold at a time when the value of gold is down
huh? these are unrealized gains/losses; they don't need to sell the gold to register a loss if the market price falls from one quarter to the other.
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Old 14.08.2013, 19:34
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Re: Central bank posts gains on high gold prices

The peg is not guaranteed for ever, could end anytime , always when least expected.
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Old 15.08.2013, 00:56
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Re: Central bank posts gains on high gold prices

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The peg is not guaranteed for ever, could end anytime , always when least expected.
The peg is guaranteed forever if the BNS wants to: Opposite to a more "normal" peg where a central bank tries to oppose a devaluation tendency of a currency, the BNS needs to oppose the appreciation of the CHF and therefore it has unlimited ammunition since all it needs to do is print as many francs as needed, which do not really impact the country's inflation since those go outside and it keeps the EUR and USD (see link for the actual distribution: BNS distribution by currency) in its vaults.

Therefore if a risk of appreciation of the franc against the EUR persists, it just needs to keep guaranteeing that "peg". Right now the EUR is appreciating so one day or another the BNS will drop that policy, but only if the risk of seeing the CHF getting under 1.20 is nil, since otherwise it would face gigantic losses; it's not yet clear what would happen in that case, but theoretically even a central bank can sustain a maximum of losses since it also has a capital base.
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Old 15.08.2013, 01:05
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Re: Central bank posts gains on high gold prices

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Paradoxically that would be nearly impossible since the CHF is now pegged to a maximum rate, so the SNB itself makes sure it can gain from its currencies portfolio but not lose (it loses when currencies converted to CHF decrease their value). Of course it's possible that the CHF appreciates against the USD, that would mean the EUR too appreciates against all the major world currencies in which the SNB has invested (mainly USD, GBP, JPY) but that's rather difficult and in any case it wouldn't lose a cent from its EUR portfolio, which is still the largest by far.



huh? these are unrealized gains/losses; they don't need to sell the gold to register a loss if the market price falls from one quarter to the other.
About "all the major world currencies in which the SNB has invested (mainly USD, GBP, JPY)"
Roughly 50% euro, 25% USD and then the rest
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Old 15.08.2013, 06:12
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Re: Central bank posts gains on high gold prices

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The peg is guaranteed forever if the BNS wants to: Opposite to a more "normal" peg where a central bank tries to oppose a devaluation tendency of a currency, the BNS needs to oppose the appreciation of the CHF and therefore it has unlimited ammunition since all it needs to do is print as many francs as needed, which do not really impact the country's inflation since those go outside and it keeps the EUR and USD (see link for the actual distribution: BNS distribution by currency) in its vaults.

Therefore if a risk of appreciation of the franc against the EUR persists, it just needs to keep guaranteeing that "peg". Right now the EUR is appreciating so one day or another the BNS will drop that policy, but only if the risk of seeing the CHF getting under 1.20 is nil, since otherwise it would face gigantic losses; it's not yet clear what would happen in that case, but theoretically even a central bank can sustain a maximum of losses since it also has a capital base.
Never assume risk of nil...........
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Old 17.08.2013, 16:36
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Re: Central bank posts gains on high gold prices

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Never assume risk of nil...........
The only reason they would stop printing money is inflation going crazy (20-30% per annum). And so far, we are nowhere near that.
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Old 17.08.2013, 17:26
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Re: Central bank posts gains on high gold prices

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Never assume risk of nil...........
There is ALWAYS a risk of Nil.....

Oh sorry, missed the point
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Old 18.08.2013, 00:08
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Re: Central bank posts gains on high gold prices

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The peg is guaranteed forever if the BNS wants to: Opposite to a more "normal" peg where a central bank tries to oppose a devaluation tendency of a currency, the BNS needs to oppose the appreciation of the CHF and therefore it has unlimited ammunition since all it needs to do is print as many francs as needed, which do not really impact the country's inflation since those go outside and it keeps the EUR and USD (see link for the actual distribution: BNS distribution by currency) in its vaults.

Therefore if a risk of appreciation of the franc against the EUR persists, it just needs to keep guaranteeing that "peg". Right now the EUR is appreciating so one day or another the BNS will drop that policy, but only if the risk of seeing the CHF getting under 1.20 is nil, since otherwise it would face gigantic losses; it's not yet clear what would happen in that case, but theoretically even a central bank can sustain a maximum of losses since it also has a capital base.
Absolutely so. The PEG is maintained as long as the CHF threatens to get up too far. As soon as the Euro gets stronger again and up to realistic levels the PEG will become history
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Old 18.08.2013, 00:20
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Absolutely so. The PEG is maintained as long as the CHF threatens to get up too far. As soon as the Euro gets stronger again and up to realistic levels the PEG will become history
The peg will be maintained until somebody decides it's a bad idea or gets fired.
Realistic levels are probably 0.75 euro..........
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Old 18.08.2013, 00:26
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The peg will be maintained until somebody decides it's a bad idea or gets fired.
Realistic levels are probably 0.75 euro..........
It is neither a bad nor a good idea. it is not an idea but the only way through
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Old 24.11.2013, 15:56
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Re: Central bank posts gains on high gold prices

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Very simple, they realise it's way overpriced on historical terms and 500 or less is more than likely in the next 10 years, so you sell whilst there is still a greater fool!

I would say the risk of the Euro not even surviving ten more years or the US defaulting on it's debt/losing it's petrodollar reserve status between now and ten years is substantially higher than the risk of gold losing 2/3rds of it's value between now and 10 years...

And even if you would still have a third of the value left... fiat currencies drop to absolute zero value after a while with a 100% 'succes' rate of this happening so far.
 




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