The Paper Gimmick: Swiss Francs no longer a safe option

Gold Investment - 18 September 2011

Recently, the SNB (Swiss National Bank) abandoned the floating exchange rate of the Swiss Franc. This was done by lowering the limit of 1.20 on the EUR/CHF exchange rate. By doing this, the SNB has indicated that they will attempt to purchase as much foreign currency as possible in order to increase the rate above that level. The Euro responded accordingly by rallying to the challenge, and this was evident in the EUR/USD currency pair.

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Invest in precious metals today! Contact us for details.

Most precious metal investors become excited when the U.S. Dollar depreciates and when the Euro appreciates as a result. However, this is no longer the case as investors are realizing the error of this thinking. Because Switzerland is a tiny country, it will not be able to maintain a peg to the Euro should markets carry on buying Swiss Francs. The Swiss Franc will begin to appreciate and continue with this trend due to the financial tension in Europe. The Euro will only suffer under these conditions.

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Invest in precious metals today! Contact us for details.

News arising from America is not helping the cause either. Alan Krueger, a professor from Princeton University, was seconded by the White House to advise on the current unemployment crisis. Krueger was appointed as the Chairman of the Council of Economic Advisors as he is deemed to be an expert on the subject of labor. America currently has an unemployment rate of 9.1 percent and this need to be addressed urgently. This appointment is politically important as President Obama recently delivered a speech on Labor Day. Krueger offered some valuable input on the topic of jump-starting the economy and increasing jobs for unemployed American citizens.

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