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Market Chaos as Swiss Franc Surges 30% In 13 Minutes, Gold Rises Sharply
Market Chaos as Swiss Franc Surges 30% In 13 Minutes, Gold Rises Sharply
Chaos was seen in financial markets today as participants were thrown a curveball when Switzerland surprised the world by removing its three-year cap on the Swiss franc, unpegging it from the euro. This sent the undervalued currency soaring and Europe’s shares and bond yields tumbling.
In just 13 minutes, from 0930 to 0952 BST, the franc collapsed by 30%. Swiss shares fell more than 12% – their largest crash since 1987. Stock markets around Europe fell with investors buying “safe haven” assets such as German bunds andgold bullion.
Gold rose in all major currencies and approached a three-month high following Switzerland’s unexpected decision to decouple its currency from the euro.
In a chaotic few minutes on markets after the SNB’s announcement, the Swiss franc jumped to a record high against the euro, rocketed nearly 30 percent in a few minutes. The franc broke past parity against the euro to trade at 0.8052 francs per euro before trimming those gains to stand at 88.00 francs – it removed the 1.20 per euro cap it has had in place since late 2011. It also gained 25 percent against the dollar to trade at 74 francs per dollar.
Gold in USD, 1 Day, January 15, 2015 – (Thomson Reuters)
The SNB ended a three-year-old policy designed to shield the economy from the euro area’s sovereign debt crisis, prevent the Swiss franc appreciating and pricing Swiss exports out of markets. The central bank lowered the interest rate on sight deposit account balances that exceed a given exemption threshold to minus 0.75 percent from minus 0.25 percent, it said in a statement today.
This is likely a coordinated move by the SNB in conjunction with the ECB in anticipation of a move against the flood of money that will likely materialise with the ECB in Frankfurt looking likely to start quantitative easing.
Gold in USD, 5 Day, January 15, 2015 – (Thomson Reuters)
Gold climbed on the news and bullion for immediate delivery increased 2.3 percent to $1,257.01 near a 12 week high, as the dollar weakened. Gold is higher for a fifth day, the longest streak since June.
The move by the SNB is a dramatic one and smells of an emergency measure. Ultra loose monetary policies are here to stay and the SNB actions suggest loose money policies will intensify in the coming months.
The revaluation of the Swiss franc versus the dollar, pound and euro is a harbinger of what will happen to those same fiat currencies versus gold in the coming months and years. The Swiss franc is one of the safest fiat currencies in the world but gold remains the ultimate safe haven asset and form of money as has been seen throughout history and in recent years.
REVIEW of 2014 – Gold Second Best Currency, +13% in EUR, +6% GBP
OUTLOOK 2015 – Uncertainty, Volatility, Possible Reset – DIVERSIFY
Today’s AM fix was USD 1,235.25, EUR 1,055.41 and GBP 811.76 per ounce.
Yesterday’s AM fix was USD 1,228.75, EUR 1,044.99 and GBP 808.76 per ounce.
Spot gold in Singapore was flat and yesterday spot gold fell $2.40 or 0.2% to $1,228.00 per ounce yesterday and silver slipped $0.18 or 1.06% to $16.83 per ounce.
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I don't understand why global markets were "stunned," as the NYT described it.
You can't defend a currency forever. I actually thought this would happen last quarter.
Will this blow up currency-linked derivatives and thereby start the Ponzi unravelling?
This is likely a coordinated move by the SNB in conjunction with the ECB in anticipation of a move against the flood of money that will likely materialise with the ECB in Frankfurt looking likely to start quantitative easing.
I've noticed in recent discourse that it superficially might seem to be conversation but is instead rather a form of preaching where the self-annointed bully pulpiteer uses the omniscient "Voice of God" as if they and they alone know Truth and they therrefore talk down to everyone willing to listen to them. It's probably their own intellectual insecurity that makes them overestimate their own intelligence.
Pour qui "likely"? It reminds me of a very astute reviewer who often wrote AQs in the margins asking "by what authority which I might respect?" Respect is the crucial term. It's as if people have forgotten how to have a conversation of "equals" and there's often one loudmouth who thinks he knows everything but is instead showing themselves to be utter fools. I have nothing against fools or foolishness but have no patience for fools who seem to have a compulsive desire to constantly prove their own foolishness by the volume of their declamations.
It's very rare these days to find intelligent people who can converse with others without becoming a preacher and talking down to any and all listeners as ignorant nabobs.
In any group of people it seems there is a hierarchy based on intelligence. When a new person of intelligence appears it's as if they disrupt the ecosystem and established hierarchy.
It happened to me all the time in my childhood where I was constantly bullied as teacher's pet, sissy, fag, Jew, four-eyes, or what-have-you. And now that I no longer have the socially-respected position of being a world-recognized expert on something ... the very same thing is happening to me where former friends and family pretend that I don't exist because they are willing participants in a massive group psychosis straight out of Orwell's Nineteen Eighty-Four (originally titled Nineteen Forty-Eight, BTW). But while it bothered me greatly to be bullied as a child it no longer bothers me.
They had something on the radio this morning about humans who were pioneeers of some sort of other. The speaker used an analogy of ant behavior saying that "normal" ants will always follow in the paths of others. But ant colonies could not exist unless there were a minority who traveled new paths. So I've always been a pioneer unafraid to follow new paths; this makes me very different from the majority herd of humans who may never in their entire lives have a completely original thought.
@Same,,,thanks for your words you've written. Very uplifting for me. People have lots of 'repressed hostility' for sure and they manifest it exactly as you describe. About those that 'have never had a thought' wave...lol...I'm reminded of 'radical terrorists'. Maybe they should go to Colorado and 'inhale' then come back and tell us all about Allah's plant. Well, it's my solution, anyway.
@Lith, i'm grateful and humbled. please drop me a line.
@Same, that was reminiscent of Zh comments from yesteryear, great post. You nailed it.
@Same, that was reminiscent of Zh comments from yesteryear, great post. You nailed it.
@Petroglyph, Muchos Gracias!
Because birds of a feather flock together ZH is my only place for online journaling but there are some big negatives that might even be intentional ... namely, the snarkiness of Fight Club. And so there's no easy way to following anyone's posts. And in a sort of anti-Facebook and fear-of-monitoring reaction some folks might not want to leave any traces here of which posters they like to read. No problem. I send Contact requests to people who reply to my posts but it's not to try to get them to do anything, more like just a shoutout saying Hi. I understand that the Contact request if accepted supposedly allows people to create a "private chatroom" if they're online here at same time but that's never happpened even after more than two years of posting here. And ZChat is certainly not private in any way.
I'd love to hear from anyone here because ZH is my main source of news on what's happening in the world. And I get much more info from the Comments than I get from the Tylers.
If anyone wants to drop me a line, you can use the email in my Bio.
Anyone or any business holding debt in dollars in Switzerland is setting pretty right about now. Talk about diminishing carry trade!
Wasn't this supposed to happen if the gold referendum passed?
Looks like nobody is interested or knows what is going on!!!!!
WOW 2.3%, lock up the store Thelma we're going to live large in the alley out back. Wake me when it's 23%, oh by the way for you people who dont know.......SILVER BITCHEZ!!!
What happens to currency derivative trades? Any expert commentary on that subject would be helpful...
Something big just blew up. We don't know the extent of the carnage yet. Probably best get some cash out of el banco on the way home....
Isn't 9:30 to 9:52 twenty-two minutes? It's a new world. 2+2 is no longer 4.
he was short the franc.....
under the shock, forgot how to ad..... :)
And spel :-)~
And "Collapsed" = "Surged"
Whodathunkit?
The law of unitended consequences...on crack...
You wrote that the Swiss Franc "also gained 25 percent against the dollar to trade at 74 francs per dollar.". That is impossible - just a few days ago, the US dollar was worth 1 Swiss Franc or thereabouts. Today's rate is :
1 Swiss Franc equals 1.10 US DollarBitcoin down 46.7% in one month. 8% in one hour... Too late to buy gold suckers.
Rigolda.