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  #21  
Old 24.11.2013, 17:10
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Re: Central bank posts gains on high gold prices

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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.
So once all the fiat currencies drop to 0, who will buy your gold & with what?
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  #22  
Old 24.11.2013, 18:14
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Re: Central bank posts gains on high gold prices

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So once all the fiat currencies drop to 0, who will buy your gold & with what?

Historically fiat currencies didn't all drop to zero at the same time. That being said it may be a different story now as we are living in the rather unique situation that all fiat currencies have no backing.

(You could argue that the USD still has some sort of backing in the petrodollar I guess but it seems like a very insecure backing to me)

I would imagine we will see a complete reset of the monetary system in our lifetime and hopefully we will move back to sound money principles where money is backed by a commodity rather than debt, because that is what our current currencies represent... debt. Without debt we have no currency.

And to answer your initial question. I am rather confident that you will still be able to get resources & goods for your gold when fiat currencies die.

Because that is what you actually want not? The fiat currencies are just an intermediate in the transaction.. As an example you could take a look at how Iran is exchanging oil for gold nowadays.
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  #23  
Old 07.12.2013, 12:07
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Re: Central bank posts gains on high gold prices

If Euro is going to be more affected by south europe, it is going to be a nightmare for the Swiss National bank to support the currency

Let's hope Eurozone gets out of recession.
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  #24  
Old 11.12.2013, 16:41
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Re: Central bank posts gains on high gold prices

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If Euro is going to be more affected by south europe, it is going to be a nightmare for the Swiss National bank to support the currency

Let's hope Eurozone gets out of recession.
More important than the monetary side is the markets. Much of the Swiss exports go to countries in Europe.

THIS is the reason why the SNB over the past 10 years but "corporate values" all over Europe, in order to help those countries, of course to help them to remain useful markets.

To turn it around, the German economy in the past 3 years has made a remarkable recovery, and Germany is as large as Portugal, Spain, Italy and Greece together. The economy in countries like Finland, Sweden, Norway, Denmark and the Netherlands is at least in an acceptable shape, and the French economy not as bad as some "specialists" had forecast.
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  #25  
Old 12.12.2013, 12:38
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Re: Central bank posts gains on high gold prices

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More important than the monetary side is the markets. Much of the Swiss exports go to countries in Europe.

THIS is the reason why the SNB over the past 10 years but "corporate values" all over Europe, in order to help those countries, of course to help them to remain useful markets.

To turn it around, the German economy in the past 3 years has made a remarkable recovery, and Germany is as large as Portugal, Spain, Italy and Greece together. The economy in countries like Finland, Sweden, Norway, Denmark and the Netherlands is at least in an acceptable shape, and the French economy not as bad as some "specialists" had forecast.
For France, I can't say about the economy as the reports are contradicting, and french government and institutions lie A LOT!
(just like when the government lied about Tchernobyl and they stated that the nuclear cloud did not cross the french borders)

But I can say that the french people are feeling it very hard. So I do think the economy is not good especially when growth is estimated to less than 0.2%.
France require a 2 to 3% growth if it wants to at least include the new people arriving on the market (not including unemployed)
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  #26  
Old 13.12.2013, 04:37
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Re: Central bank posts gains on high gold prices

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For France, I can't say about the economy as the reports are contradicting, and french government and institutions lie A LOT!
(just like when the government lied about Tchernobyl and they stated that the nuclear cloud did not cross the french borders)

But I can say that the french people are feeling it very hard. So I do think the economy is not good especially when growth is estimated to less than 0.2%.
France require a 2 to 3% growth if it wants to at least include the new people arriving on the market (not including unemployed)
That the growth-rate of the French economy is insufficient is as old as Methusalem
Already Mr Napoleone Buonaparte complained about this

And French people complained about feeling it very hard long before the French Revolution

--------------------------------------------------------------------------------------------------

and here the recipe to re-arrange Europe

http://www.youtube.com/watch?v=xdReh4le7x0
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  #27  
Old 13.12.2013, 11:18
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Re: Central bank posts gains on high gold prices

SNB would likely make big gains on EURO peg, or go bankrupt.
There seems no way out of it, at least at the moment.
But, they helped to save the euro! Good guys.
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  #28  
Old 13.12.2013, 12:51
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Re: Central bank posts gains on high gold prices

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SNB would likely make big gains on EURO peg, or go bankrupt.
There seems no way out of it, at least at the moment.
But, they helped to save the euro! Good guys.

The SNB can print money so will never be bankrupt .
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  #29  
Old 13.12.2013, 12:59
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Re: Central bank posts gains on high gold prices

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The SNB can print money so will never be bankrupt .
not strictly true. e.g. following scenario:

they can have foreign denominated liabilities and if they print too much, CHF becomes worthless and they can print as much as they want of worthless currency and still not be able to settle their liabilities.

also, even if you are unconstrained in law in the amount of money printing (i.e no debt ceiling, no constitutional limits etc.) you may be constrained by practical limits where printing more money actually degrades your financial standing by devaluing the value of your CHF holdings.
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  #30  
Old 13.12.2013, 14:32
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Re: Central bank posts gains on high gold prices

of course they could print (theoretically) in unlimited quantities! But CHF would be worth like a Zimbabwean dollar. Also inflation would likely go through the roof. So most likely they are better off to take it like a big kid, and admit the loss if such a scenario happens.

Anyway, most countries are devaluating their currencies nowadays anyway.
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  #31  
Old 13.12.2013, 14:55
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Re: Central bank posts gains on high gold prices

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of course they could print (theoretically) in unlimited quantities! But CHF would be worth like a Zimbabwean dollar. Also inflation would likely go through the roof. So most likely they are better off to take it like a big kid, and admit the loss if such a scenario happens.

Anyway, most countries are devaluating their currencies nowadays anyway.
So you think the Swiss who have been printing for some time have not damaged the value of the currency.....Zimbabwe all the way.
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  #32  
Old 13.12.2013, 16:25
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Re: Central bank posts gains on high gold prices

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So you think the Swiss who have been printing for some time have not damaged the value of the currency.....Zimbabwe all the way.
Not yet, but it could bite them back. There seems still higher demand for CHF from investors and savers who park their money in Swiss banks, because of higher uncertainly surrounding many European economies and QE3 in the US. So CHF is still a safe heaven, compared to Euro and CHF. Once that is gone and money starts flowing out, CHF will likely fall quiet heavily and inflation will rise.
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Old 13.12.2013, 16:26
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Re: Central bank posts gains on high gold prices

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compared to Euro and CHF
I meant to say USD
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  #34  
Old 19.12.2013, 09:11
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Re: Central bank posts gains on high gold prices

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not strictly true. e.g. following scenario:

they can have foreign denominated liabilities and if they print too much, CHF becomes worthless and they can print as much as they want of worthless currency and still not be able to settle their liabilities.

also, even if you are unconstrained in law in the amount of money printing (i.e no debt ceiling, no constitutional limits etc.) you may be constrained by practical limits where printing more money actually degrades your financial standing by devaluing the value of your CHF holdings.
The intent is to make the CHF less worthy (more worthless). The last time in such a situation, they DID print money (more than now) which resulted in inflation. This is why they this time invest, not only in other currencies and national bonds but even in private corporations. I heard that Nokia becomes increasingly "state owned" by being owned in parts by Switzerland . The SNB is now shareholder in motorcar manufacturers, instruments producers, etc, all over Europe. Basically to stabilize the CHF (downwards) but also to make profits in the longer term.
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Old 19.12.2013, 09:13
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Re: Central bank posts gains on high gold prices

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Not yet, but it could bite them back. There seems still higher demand for CHF from investors and savers who park their money in Swiss banks, because of higher uncertainly surrounding many European economies and QE3 in the US. So CHF is still a safe heaven, compared to Euro and CHF. Once that is gone and money starts flowing out, CHF will likely fall quiet heavily and inflation will rise.
But the falling exchange rate of the CHF would help the export industry and the inbound tourism, the two mainstays of the Swiss economy
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  #36  
Old 19.12.2013, 10:30
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Re: Central bank posts gains on high gold prices

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But the falling exchange rate of the CHF would help the export industry and the inbound tourism, the two mainstays of the Swiss economy
Is there any hard evidence that exporters have been badly hit, or tourism is sharply down. Certainly not true in the watch industry or in Verbier.
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Old 19.12.2013, 11:01
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Re: Central bank posts gains on high gold prices

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Is there any hard evidence that exporters have been badly hit, or tourism is sharply down. Certainly not true in the watch industry or in Verbier.
I suspect it is just big business crying to the govt for support.
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Old 19.12.2013, 11:32
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Re: Central bank posts gains on high gold prices

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I suspect it is just big business crying to the govt for support.
Exactly, nothing to worry about, the CHF has been strong before & it never caused an issue. As salaries & general overheads don't really increase each year here, it's easy to cost save by sacking a few employees, and giving them some work on zero hour contracts when necessary & let the RAV pick up the difference.
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  #39  
Old 19.12.2013, 23:16
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Is there any hard evidence that exporters have been badly hit, or tourism is sharply down. Certainly not true in the watch industry or in Verbier.
According to Nick Hayek and other industrialists there is more than sufficient proof. In fact, the PEG has solved the problem to some extent. Tourism and industry clearly were and to some extent are hit by the still fairly high exchange rate. What is wanted is to have the EURO at CHF 1.40. The markets are very exchange-rate sensitive
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  #40  
Old 19.12.2013, 23:20
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Re: Central bank posts gains on high gold prices

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I suspect it is just big business crying to the govt for support.
Nobody asked the government for "support" but to take the steps necessary to defend the national economy. The government which in the past intervened when a rather useless but big bank was on the way to become sold with billions, but forgot the real economy for some years. Until Nick Hayek used his clout sucessfully
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