Will Easing By The Swiss Central Bank Drive Investors to Gold As The Only Safe Haven? → Washingtons Blog
Will Easing By The Swiss Central Bank Drive Investors to Gold As The Only Safe Haven? - Washingtons Blog

Thursday, August 4, 2011

Will Easing By The Swiss Central Bank Drive Investors to Gold As The Only Safe Haven?

After rising some $50/ounce in about a week, gold is slightly down so far today.

As Tyler Durden explains, margin calls are forcing the start of a gold liquidation:

As expected, the massive global rout is shifting to the best performing asset: gold, which courtesy of pervasive repo desk margin calls (which are merely trying to preserve capital for their TBTF holding companies) is seeing liquidations to satisfy collateral margin requirements.
Reuters confirms:

Gold recoiled from a record high in heavy volume Thursday, as mounting recession fears fed a global stock market maelstrom that forced investors to liquidate bullion profits to cover losses elsewhere.

But this may be only a short-term correction.

As MarketWatch notes, gold futures are soaring:

Gold futures tacked on as much as $18 an ounce Thursday as concerns about the U.S. economy and Europe’s sovereign debt crisis and Japan’s intervention in the currency market to stem the rise in the yen sent investors into their defensive shells — and to gold as a safe haven.

“Gold is still proving its character as a store of value in the current market environment, marked by equity markets tumbling sharply, in part, and continued high risk aversion,” analysts at Commerzbank [Germany's second-largest bank] said in a note to clients Thursday. “And the yellow precious metal evidently still has strong support.”


“Central bank currency intervention or money printing and competitive currency devaluations have resumed with gusto, which is of course bullish for precious metals as they cannot be devalued or debased,” analysts at GoldCore wrote in a report Thursday.


The Swiss central bank on Wednesday surprisingly lowered the key interest rate and announced a massive expansion of liquidity on the domestic money market, analysts at Commerzbank said. “These steps by the two central banks are aimed at halting the appreciation of their currencies and not burdening their domestic economies even more.”

“Up to now, both the Swiss franc and the Japanese yen have been regarded as ‘safe havens’,” they said. “If they lose this status, only gold would remain and the interest in gold should increase further.”

For an in-depth background on gold, see this, this, this, this, this, this, this and this.

Note: I am not an investment adviser and this should not be considered investment advice. Personally, I am long gold.


  1. Personally, and this is just my opinion, I think the only people making out in the current gold boom are the people selling it to panicked investors. In any market, what goes up will inevitably go down.

  2. Investors are panicked and rightfully so. The stock market is a total sham, treasury bonds are backed by the US government, the biggest bunch of crooks and liars on the planet and the dollar is losing value daily and soon to be worthless.

    At least gold is physical and not just a piece of paper that some con artist tells you has value.

  3. The margin calls are a joke. It is pretty clear this is a game to force the price of gold to go down. They increased the margin on silver 4 times when some rich customer placed a huge sale to hit at the close on a weekend that asia and europe were closed for may day. I have come to the belief that no one should ever buy anything dealing with all street. The entire financial market is there to support the interest of a very few rich people. We are broke because of this kind of activity.


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