EURCHF At New All Time Low: 1.3386 And Dropping, As Gold Surges Again

Last week we pointed out that the CHF could be quickly becoming at least a figurative reserve currency. With it promptly approaching parity with the USD (1.0840), and hitting new all time highs against the Euro, the market may have just taken such musings seriously. Regardless of where this slide ends, all it shows is that ever more deposits from across Europe keep getting shoved into Swiss banks - can you spell ongoing, behind-the-scenes, European bank run?

As for the forced return to the gold standard, that is continuing as planned: gold is back to just off all time highs.

Comments

[jbc77]

It's amazing the amount of euros being dumped for Swiss Francs. Why though, has the euro seemingly ended it's slide. Past few trading days as the Franc has risen in value the euro has declined only slightly. Shouldn't the euro, absent intervention, be slipping into the abyss?

[themosmitsos]

because the Dollar may be an even worse piece of toilet paper,and so long as DXY fails to regain and sustain >90, it is.

[fajensen]

The EUR is holding because the ECB is printing and intervening endlessly - that is, ironically, also why there is so much interest in SCF: If you are one of "The Boyz" you can pawn any kind of OTC-Shite* at the ECB in return for crispy new EUR that you might want to convert immediately into something more tangible since there is no way that the "turn shite into money" will last!

They are grabbing it while its there and locking in the profits. 

*) Because it is OTC, the banks can probably print and backdate as much as they feel like - as long as they buy EUR-Denominated government bonds with the loot, keeping the deficits rolling without, technically, printing; That was The Plan - It is good to see it Fail!

[themosmitsos]

What choo talkin bout Swissy? ;)

[valeriobrl]

?!? : "As Gold Surges Again" ?    http://hopersomianonna.blogspot.com/2010/06/bpgdm-dailyif-u-notice.html

[FranSix]

Swiss 10-year bond yields 1.5%:

http://www.tradingeconomics.com/Economics/Government-Bond-Yield.aspx?Sym...

[RockyRacoon]

Mr. Buckler at The Privateer puts it simply:

China’s Take On The Yuan Fix:
As already stated, the Chinese government never officially announced a policy of fixing their currency to the US Dollar. But they did it, and they wasted little effort on denying that they were doing it. Throughout the two years since July 2008, the Chinese have maintained that their action of fixing the Yuan against the US Dollar made the “recovery” which began in March 2009 possible. They have also never flagged in pointing out the unviability of a global financial system with the US Dollar - the currency issued by the world’s most indebted nation - as its sole foundation.
The Chinese are right up to a point. Had they NOT fixed the Yuan to the US Dollar, the darkest fears held by Treasurer Paulson when he announced the Fannie/Freddie bailout in July 2008 would have come to pass. An appreciating Yuan would have made it difficult or impossible for the Chinese to go on absorbing the GARGANTUAN quantity of Dollar-denominated paper the US was trying to paper-over their economy with. If the Chinese had stopped buying, the rest of Asia would have been hard on their heels. And if THAT had happened, the US would have indeed fallen into the deflationary abyss that Mr Paulson and Mr Bernanke were staring at in July 2008.
The problem, for China, for the US, and for everyone else is that the stay of execution afforded the US financial system by the continued buying of its debt paper was NOT used to address the problem. Instead, it was used by the US and the rest of the world (including China) to make the problem worse.
In July 2008, the US Dollar (as measured by the USDX) was threatening to revisit the all time lows it had set back in March. China almost literally saved the US Dollar by pegging its Yuan to it so the oceans of new debt which they knew the Treasury would have to issue could continue to be absorbed by overseas (mainly Asian) central banks. What ensued was a huge global credit deflation but NOT a US Dollar meltdown. Instead, the US Dollar soared - as did the Yuan - with the world scrambling to pay down debt and meet margin calls. Then came the quantitative easing in March 2009 and the “recovery” set in.
The world and the US had a window of opportunity to get their fiscal houses in order. They didn’t.

[DavidC]

Just a thought, this would be a great time for a bit of intervention with the amount of shorting in the ERCHF...

DavidC