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EURCHF Hits 2-Year Low As Swiss Gold Referendum Looms
EURCHF is rapidly falling towards its 1.20 peg level - not seen since September 2012 (when the SNB described the "massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.") It appears the CHF buying pressure is based on traders betting on the Swiss Gold Initiative (SGI) referendum on Nov 30th - if it were to pass, the SNB would be forced to choose between buying gold or giving up on the peg (and allowing even more "massive overvaluation" of the swissy). For now, it seems EURCHF is the best indicator of SGI risk as precious metals remain unimpressed by the potential demand. Of course, as ForexLive notes one trader's comments, "even if the gold vote goes against them they can still hit the print button to infinity," to defend the peg; though that may just viciously impact the cost of the physical gold they would be forced to buy.
The Swiss Franc is the strongest against the Euro since the peg began in 2012...
but it appears traders are fearful of the peg being broken as implied volatility surges (hedgers?)
As we concluded previously,
The Swiss establishment has been reliant upon the public’s ignorance in these matters, but now they are up against a formidable opponent in Egon von Greyerz. Not only that, but they can clearly see that, as elsewhere around the world, the public is fast becoming disenchanted with the status quo; and that is potentially very dangerous for these people.
What is important to understand here is that if the initiative passes it will be part of the Swiss constitution IMMEDIATELY — not in two years, as many blogs and websites are suggesting. This means that the government and parliament cannot touch it. Only another referendum can change it. This is proper democracy for you.
The closer we get to the vote on November 30, the bigger this story is going to become, and the bigger it becomes, the higher the chance that the yes vote wins.
Should that happen, it will undoubtedly set off alarm bells throughout the gold market, as yet more physical gold will need to be repatriated and another sizeable, price-insensitive buyer will enter the marketplace.
Charts: Bloomberg
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Oh puhlease.
The Swiss gold referendum is a non event for all practical purposes.
Did you forget the sarc tag? Otherwise, I would tend to disagree.
Just that referendum happening can have some serious consequences, even before the end of November.
I would go as far as saying that under some circumstances, this referendum (= democracy!) could crush the Euro alltogether.
You need to check the outcome of 12:1 initiative.
Who wants Gold when you can print money?
The Swiss people want to remain independent (from the EU!) and economically successful. And they want to keep a strong currency. They are very aware that the limitless expansion of balance sheets of the central banks is not a good thing and in my opinion, the majority of the Swiss people also don't think pegging the CHF to the EUR was a good idea (except for tourism industry and some of the weaker export companies).
And here the Swiss people have a possibility to put a stop to this CB-madness. I think the outcome will be a "Yes".
Plus the campaign is very well done and posters are everywhere.
Finally, I personally really like the logo: http://gold-initiative.ch/wp-content/uploads/2014/10/logo.jpg Such a sweet piggybank!
Let's talk again in December...
Swiss people want a strong currency so they peg it to the Euro?
When your customers go broke, you also go broke soon after.
When the EU goes under, Swiss people will be back to eating Polenta and fighting over toll on Salt trade.
+1 the Swiss Economy minister just reminded France and Germany that Switzerland has more trade with them then... China
IF the economies of europe go under, Switzerland for sure will suffer, too. now of course if the european trade partners were willing to bear the pain now, restructure, balance their budgets...
but wait... some of this is already happening, otherwise Dr. Krugman would not be so... livid about the eurozone
Swiss people want a strong currency so they peg it to the Euro?
That is exactly the point. The majority might not want the peg to the Euro. And guess what: There was no referendum on that central bank move back in 2012...
how about a popular demand for... brace for it... price stability? which, by the way, means... jobs? then enterprises like the typical Swiss workhorse, the SME, need price stability. both domestic and in the eurozone. I, for example, have many suppliers from Switzerland. They send me pricelists in... EUR
if you want to vote for national bank moves in Switzerland, you can buy SNB shares, btw. but eventually you'll find that the majority is in the hands of their semi-sovereign states, their Cantons
"massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development."
Translated from Swiss into English, this says "sound currency poses a massive threat to the bankster skimming, political systems, welfare / warfare state, and we need to scare the public"
Fuck popular demand... when there's article 5 of the National Bank Act.
The referendum doesn't change the law to allow the SNB to sit idly by while the currency explodes, it will still be forced to intervene in pursuit of its single mandate -- price stability.
This leaves some really ugly options for the SNB like- outright printing CHF and dropping from helicopters without acquiring foreign reserves (which they sort of did prior to the peg- when they offered assistance to business OWNERS who were getting hammered) or leasing out or otherwise encumbering any and all of the SNB's existing gold reserves.
I swear... this fucking referendum must have been written by paper pimping bullion bankster.
A Toz of Ag will buy at least 4 liters of petrol, even in CH! "Price stability" with paper munny? Get Real (physical!)
I tend to agree with this. Psychology is what will kill this system--nothing else. Real human psychology does not trade on a market or exchange. Unfortunately, for TPTB, they cannot DIRECTLY alter perceptions/sentiment.
So over the span of a few months we have had the Scots voting for independence from the UK; the Catalons voting for indpendence from Spain; and now the Swiss voting for indepence from the fiat currency, house-of-cards financial system. There was also German protests of the Federal Reserve in Berlin.
The upshot of these events is not what's ultimately important here--it's the shifting psychology.
the Swiss would be voting for independence from fiat IF they would have a gold-backed quota while allowing the SNB to give gold for CHF. what they are proposing for referendum is a quota while prohibiting gold sales by the SNB. for me, it means the CHF keeps being a fiat currency, before and after the referendum
alternatively, why is the USD a fiat currency? because Nixon closed the last "Gold Window"
.
Unfortunately, for TPTB, they cannot DIRECTLY alter perceptions/sentiment
Perhaps not today, but it's coming. And won't it be convenient when they can do this remotely--much less stressful than Room 101. http://www.bbc.com/news/science-environment-23447600
lol, why should this referendum crush the EUR? remember that the ECB is very busy talking down the EUR. from their perspective, the little CHF is doing the opposite, buying boatloads of EUR every time speculation hits it. and so forcing the EUR a bit... up. which is the wrong direction, remember?
yes, the S-word. SPECULATION. You know you are among free market fundamentalists when this word is never used or discouraged. But this is the current environment for currencies, in the world. Rampant speculation
of the casino kind of everybody and their grandmother's dog betting on this or that currency, or in this case of the CHF becoming gold-backed but not too much, then the referendum would prohibit any gold sales for currency valuation purposes, as it was something like a totemic power to hide in cryptas, instead of "just money"
stop pretending that you care about democracy, dear average "rah rah rah" ZH reader. stop pretending you care about anything except the next betting opportunity. remember that it's YOU the real reason why bigger currencies fare better then smaller ones. have a look how the Russian Ruble is faring. no wonder Putin is venting an EurAsian Currency Union. Yup, the EUR might get a brother. At the end, all results of the Dollar Hegemony during this wonderful little Currency War we are all enjoying
The Euro only survived until now because people still believe Mario Draghi's "promise" to do "whatever it takes". This means printing unlimited amounts of Euros devaluing the currency. The SNB joined the party at one point. If somebody stops the SNB, people might "revisit" their belief in the other Central Banks pseudo-omnipotence. So it could be the first domino.
As for the rest of your post, I am not quite sure I understood what you are trying to say... fundamentalists? betting? rampant speculation? pretenting to care about democracy?
Are we reading the same website?
we might be reading the same website, but perhaps we don't use the same vocabulary
take this meme about the ECB "printing". what has the ECB been really doing, since a year and a half? or take Draghi's "whatever it takes". believe it or not, for continental europeans it meant something related but completely different, and it has a lot to do with that very word, "speculation", which has lost any meaning except for us Old Worlders, including Russians and Chinese, mind you
Draghi cain't pull a Bernank without the blessings of Deutschland and other countries that would have to pay for it!
Agreed. The myth that the Swiss people would be knowledgeable in monetary matters is baseless. The establishment and their media propaganda will win again, and the lesson will be a severe punishment. Paper gold will be shot down to $800/oz the day after.
Which would make it that much easier to buy some new Swiss Au! The Banksters are in a double-bind and their only way out is watching the house of cards fall down!
Good for the Swiss. They should pass that and blow up the world financial system when everyone discovers the gold is long gone from where it was supposed to be.
IN OTHER NEWS... Whatever happened to the Catalonian secession vote? Wasn't that supposed to happen around now?
80% voted yes in Catalonia I believe - but the result was non-binding.
Watch for Podemos.
how many participated to the Catalan referendum? or is this... irrelevant?
Answer: How many Catalans were afraid of all those APCs rumbling around? (Answer to my question: population minus 2 Million)
It happened and guess what...it was declared UNdemocratic!!! Of all things...This one is for the guiness records: An undemocratic referendum! Hab noch niemals gesehen....
Yeah, it's a real shocker that Spain won't let them go based on an overwhelming vote in favor of it. Nobody could have seen this coming. I guess all that remains now is arresting a few Secessionist leaders and this whole episode will be all mopped up.
Place your bets, people.
Who wants to become George Soros II?
I shorted gold - the paper not the metal.
Ahhhh, the Swiss, they sold all their clients out and sold most of their gold - all to keep the US banking licences for Credit Suisse and UBS.
Still, a stable and democratic country is a threat to all others and has to be weeded out from the system. Chaos and instability are far more profitable.
Sooner or later, Julius has to cross the Rubicon, then the game's rulez are gonna change!
GOLD - YA!!! posters are appearing all over the place now! Bus shelters everywhere, and I also saw one at the train station yesterday. Oh and one on my garage door. hehe
www.gold-initiative.ch
Gold bitchez!
You mean the average Swiss worker--unlike the Euro-impoverished region-- will receive a REAL pay raise, and be able to practically accumulate savings? Surely this must be viewed as absurd...
/s
Some hedgetards around here seem to think that a rising Swiss franc is a pay raise for the po' folk... one is only enriched by deflation if they already have excess cash just sitting around (i.e. they are already rich, and so they get even richer). For the wage/income slaves- not so much. And unlike much of economics- it's not theoretical, since we have the experience of when USDCHF dropped below 80. (30% currency strengthening in 6 months).
What will the banks threaten? "We are going to leave Switzerland" People...."Good Riddance"
Lots of things I will never understand; but still, why would anyone, especially the Swiss, given their generally conservative financial nature, allow a "central bank," or any other financial institution, to destroy the value of their savings, wealth and hard work for the exclusive benefit of the banks and the particular detriment of all producers and savers in their economy, why?
Swiss will not be allowed to vote "No" on gold.
If the vote looks to be even remotley close, you can bet BofA and UBS bankers will be running around raping and killing people and stuffing prostitutes into suitcases - just to send a message about whos in charge.
Yeah, but they'd still be readily identifiable as classless. Now, if they were to stuff dead prostitutes into vintage Louis Vuitton Steamer Trunks, that would be a different matter entirely.
Gold repatriation is already in progress and will increase with Swiss vote:
http://katchum.blogspot.be/2014/11/monitoring-foreign-gold-deposits-held...
Why the fuck aren't silver premiums going down? These greedy fuckers still want $20/ounce when silver is <$16? Why?
Because $20/oz is (somewhat) closer to the true supply/demand price of an ounce of silver - not the paper (fiat) price of silver.
Current best price/single Toz: http://www.silver.com/1-oz-ntr-metals-buffalo-silver-rounds/ <-- ($16.81)
WTF? You mean paper Munny is worth less than Hard MONEY?? Whocouldanode? Paper, even with fancy printing on it, is still only worth around $85/TON!