The Swiss Central Bank has declared an “unlimited” expansion of her balance sheet to prevent continued appreciation of the chf. The euro and yen surged 10% at times this am vs the chf as the Swiss Bank sold newly printed CHF’s and purchased Euro Usds, GBPs, Yen, adding them to her hugely bloated balance sheet. Of course capital holders desire a safe store of value and so they rushed into AUDs and NZDs and Gold. With negative rates and bonds at 30 year high valuations its very easy to see the challenge capital has to stay intact. This is again very bullish for precious metals.
http://uk.reuters.com/article/2011/09/06/uk-swiss-snb-idUKTRE7851LF20110906
http://www.marketwatch.com/story/euro-soars-as-snb-sets-floor-versus-franc-2011-09-06
I hope no one has been caught by this move. The 10% move was against the technicals and occurred lightening fast. ‘Its no good being right but the governments being wrong’. We have central bank and government intervension in capital markets at unprecedented levels. These interventions can and will destroy capital in moments. Diversification the key. Emerging markets face less interventions then developed markets. Allocate assuming continued interventions because as Bunker Hunt discovered, ‘they change the rules of the game’.
Rich
(7 votes, average: 4.86 out of 5)
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