In an incredible development the Swiss Central Bank has released a press statement that it will “No longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20″.

This is in effect a policy statement of a Franc to Euro peg at 1.2.

Further, the SNB has stated “The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.”

With the Swiss Franc no longer the last currency safehaven, the short term effect we are witnessing is a massive rush into USD, however over time as the Eurozone’s financial situation continues to deteriorate capital will flow strongly into gold.

Gold is now the LAST MONETARY SAFEHAVEN. It will of course be interesting to see if the SNB can actually pull this off. This statement of “Prepared to buy foreign currency in unlimited quantities” may be the equivalent of a massive bluff at the poker table. Should the Eurozone collapse, the Swiss may be absorbing huge currency flows.

You can download the original press release here: http://www.anglofareast.com/downloads/swiss-pegs-to-euro-at-1.2.pdf

This entry was posted on Tuesday, September 6th, 2011 at 11:36 am and is filed under Archived. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.