Gold News

Gold: Air Raid Shelter in a Currency Blitz

The Swiss Franc was supposed to be a safe haven – until it got pegged to one of the weakest currencies around... 

AND SO the Swiss apparently got tired of the Franc being a 'safe haven' in a world of no such thing – so last week they hitched their paper currency to a much sicker inmate in the currency leper colony, the Euro, with a 1.20 upper limit, writes Gene Arensberg of GotGoldReport.

Then they made really, really sure that traders would believe it, causing a blitzkrieg exodus from the formerly safe paper to other monetary non-safety. The momentary mayhem resolved itself in a much cheaper (devalued) Franc – and a higher US Dollar in minutes, which stood in as the suddenly least sick member of the asylum. 

One gets the impression that the wealth that has flown into US Dollars did so not because Dollars are more desirable than the Swiss Franc, but instead Dollars were merely a liquid place to run to in a time of crisis. US Dollars are the convenient foxhole in an air raid, with the foxhole occupants looking all around for somewhere better to escape to. 

Dollars may be an earthen depression one can hide in temporarily, but some likely will travel to a better fortified air raid shelter in gold and silver. Trouble is that a great deal of wealth in Europe had migrated to the Swiss Franc precisely because it was 'safe.' 

The message of this past week: "Think again, Mr. Wealth, no 'paper' and no bureaucrat or central bank promise is safe anywhere in the world. It was not in the past, it is not safe now, and certainly will not be safe looking ahead. In a global printing press currency war there are no saver prisoners taken, but also, eventually, no winners." 

It may not sink in right away for everyone, but the desperate move by Switzerland to tie its monetary heritage to a possibly dying currency is yet one more nail in the post Bretton Woods floating fiat currency experiment coffin. Let's label this particular nail the capricious central banker nail and be glad we trust hard assets, not governments and central bankers. 

It may not manifest immediately or even visibly at first, but Switzerland's action is very supportive of precious metals, especially of gold. The propensity of wealth still parked in the former banking powerhouse and all across the continent of Europe to Buy Gold just got a boost...in size. 

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A land developer, professional numismatist, self-taught bullion trader and investor since 1980, Gene Arensberg analyzes technical and fundamental developments in the precious metals markets. In 2000 Gene started sharing his own market research with fellow traders and fund managers. Those email reports evolved into his popular Got Gold Report, a biweekly look at important indicators for gold and silver published on the web. Gene's more in-depth market reports, insights and trading ideas are available at GotGoldReport.

See the full archive of Gene Arensberg.

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