Here Is How Switzerland Caught Up To The Rest Of The World In Devaluing Paper Currencies Against Gold

Tyler Durden's picture

There is just one chart that must be seen to appreciate the rationale behind the SNB's action earlier today: the relative performance of any given currency against the absolute: gold. Just like back in FDR times, the only thing that mattered was how to devalue the dollar against the yellow metal, so too now various fiat issuers realize that while they all devalue relative to each other on a step-wise basis, they all must devalue in absolute terms against such undilutable "constant curerncies" as gold. As the chart below shows, the CHF was dangerouly lagging its own devaluation relative to gold, with even the Brazilian Real doing far better, er, worse, in absolute terms. Which is why today's action resulted in a nearly 10% devaluation in the currency against what matters. As for the relative devaluation, well, trade flows will take care of that. Or so the rabid Keynesians roaming the countryside believe. The final take home from the chart is that the SNB still has quite a ways to go in devaluation before it catches up with the rest of the 'developed' world.

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CPL's picture

Least appealing horse at the glue factory.

nope-1004's picture

Criminals know no boundaries when it comes to debauching money.  Hell, why should they care?  The ship sinks without a fight, so better to fight and lose than just accept losing.

At any rate, this ship is sinking fast.  Good job criminal banksters.  You've entered the realm of demonic, phase 2.

 

FreedomGuy's picture

Isn't really just about banksters. It's about centrally planned collectivist governments and the need to keep them going. Currency devaluations, artificially low interest rates, money supplies, QE's are all part of bandaging the beast. Bankers are the enablers...at a price. They are in it together in the end.

nope-1004's picture

Of course.  The banks just use others to achieve their goals.  But I firmly believe the gov't is too stupid to realize the banks are really running the show, not the other way around.

Can you honestly say someone like Maxine Waters has power and influence over JPM?  The gov't is being played.

Just as banks use real estate agents to sell mortgages, but the agent mistakenly thinks he or she sells homes, so too the banks are using money as a weapon to force gov't policy.

Crooked to the core.

 

Pladizow's picture

Why do you think these scum bags waited for US markets to be open and didnt do this on Monday?

CClarity's picture

Excellent point Pladizow!  Easily coulda done it yesterday.

Q for y'all.  Maybe not important.  But do you see the CHF peg to Euro as merely devaluing their currency or is it an implicit endorsement of Euro and Eurozone promulgation?  Thanks for your views.

nope-1004's picture

Neither.  IMO a formal default from one or more of the PIIGS is coming, and a run into CHF needs to be stopped beforehand.

 

CClarity's picture

Plausible.  Hadn't considered that.  Thanks!

arizona11912's picture

No, a EURO-Bond will be created in due time. This action of the SNB just gave the Euro more qualitative control. Just give it time. I'm selling pre-order Euro-Bonds... Anyone in? Come on China and Japan, y'all be the first to load up. The Eurocrats aren't done yet. This party has just begun. 

akenathon's picture

Switzerland was the 1st country to leave Bretton Woods in the early 70's and it's now the 1st country to re-enter a new money system in a sense. So it's both of your suggestions....

Here what I think we are likely to see

1) Japanese are going to peg to the US Dollar

2) Euro going to peg to the US Dollar

3) Gold or a new SDR to be pegged to the US (not sure about the ratio as there's not enough gold to cover the money supply)

4) Nationalization of most (if not every) banks in Europe and the US

5) Money supply will be contained and reassure investors that their paper money is backed by something (SDRs???)

6) China obliged to revalue its currency or the difference will be taken in the form of higher tariffs

7) Obama administration likely to change the job market (those who export jobs are likely to get a penalty while those who keep jobs within the country are likely to get preferential treatement)

Job inflation to be contained by lower energy and commodities prices, China left out, Russia to join the Euro, South America going back into poverty - Africa to stay in poverty - A 10year breath for eastern world to reshape the sytem

 

 

PaperBugsBurn's picture

The US will also continúe sinking into poverty. The damage has been done and this manipulation is no fix. Remember, one of the main reasons for deindustrializing the US was to weaken democracy ie weaken the middle class. They aré not about to turn around and empower their rivals.

Prison planet, bitchez.

akenathon's picture

Switzerland was the 1st country to leave Bretton Woods in the early 70's and it's now the 1st country to re-enter a new money system in a sense. So it's both of your suggestions....

Here what I think we are likely to see

1) Japanese are going to peg to the US Dollar

2) Euro going to peg to the US Dollar

3) Gold or a new SDR to be pegged to the US (not sure about the ratio as there's not enough gold to cover the money supply)

4) Nationalization of most (if not every) banks in Europe and the US

5) Money supply will be contained and reassure investors that their paper money is backed by something (SDRs???)

6) China obliged to revalue its currency or the difference will be taken in the form of higher tariffs

7) Obama administration likely to change the job market (those who export jobs are likely to get a penalty while those who keep jobs within the country are likely to get preferential treatement)

Job inflation to be contained by lower energy and commodities prices, China left out, Russia to join the Euro, South America going back into poverty - Africa to stay in poverty - A 10year breath for eastern world to reshape the sytem

 

 

akak's picture

3) Gold or a new SDR to be pegged to the US (not sure about the ratio as there's not enough gold to cover the money supply)

If you (wildly erroneously) truly believe that there is currently "not enough gold" to back the money supply, I will await with fascination and baited breath your argument for just how much gold would in fact be "enough".

Pladizow's picture

#3 includes a novice argument, i.e., "...there is not enough gold to cover the money supply."

At what price per ounce?

What measure of money supply - M1, M2, M3?

What if gold was $1mil per oz - Isnt that enough to cover global money supply?

All it will take is a repricing of gold and that is what we are historically witnessing!

Jack Napier's picture

"I firmly believe the gov't is too stupid to realize the banks are really running the show, not the other way around."

This is their greatest defense. Ignorance is used as a veil for malice. Yes they make some very stupid decisions, but the end result is always the one that they desired. Sure the banksters are buying them off, but that doesn't mean they're stupid.

Mesquite's picture

>JN 17:39

Re: Assorted gov'ts..

I'm reminded of a phrase:

"Being on the take.."

quintago's picture

It's a good thing the swiss aren't self-sufficient, otherwise they could just sit back and in 2-3 years they could buy up everything. After all, there's nothing about going shopping that isn't neutral?

legal eagle's picture

Can someone please tell me what "three taps and out" on the gold diffusion index means?

Much abliged!

tmosley's picture

Hyperinflation, bitchez.

Phillips Capital's picture

if in a forex account, you go long XAUUSD and USDCHF, it's theoretically the same as being long XAUCHF. give it a try. if they really want to catch up to the pack of filthy debasers, let's see how quickly they can get there.  

Ahmeexnal's picture

time to buy the CHF dip?
how many hours will PM price rise be affected? already AG is picking up.

after all, seems like the SNB hasn't actually done anything other than bluff:
http://blogs.marketwatch.com/thetell/2011/09/06/swiss-estimated-to-have-...

are there any actual figures on how many euros they have bought if any?

NotApplicable's picture

Why they're buying unlimited Euros. Which is good, because that's exactly how many will be 'printed.'

outsidertrader's picture

What an extraordinary link. The "expert" is telling us how many reserves the Swiss have to spend and postulates that it will "put a dent in their reserves". FFS they are SELLING CHF. That ADDS to their FX reserves. They have infinite firepower if they are prepared to accept the collateral consequences. I cannot believe the basic lack of understanding of how FX intervention works in this thread.

tmosley's picture

Ignorance, ignorance EVERYWHERE.

I generally don't read outside links.  Good job dispelling backwards arguments there.

Ratscam's picture

as i have said in other posts no intervention figures mentioned, just propaganda with the help of CS, UBS, SNB, ECB and DB.
end of story

Fips_OnTheSpot's picture

I wonder how many EUR the SNB has to buy every day to keep up with this "performance"

outsidertrader's picture

It can buy as many as it likes. In addition to the one's i'm buying. The CHF is ridiculoussly overvalued on any metric. If it's no longer a safe haven what other reason is there to buy it?

 

Mountainview's picture

The SNB will be floded by this sick currency...

outsidertrader's picture

doesn't answer the question

 

hedgeless_horseman's picture

Over the last year, the CHF was definitely losing the fiat division of the race to the bottom.  Look who is winning.  USD! USD! USD!

Ahmeexnal's picture

but....it only costs 5 dollars to dig an ounce of silver outta MethMan's ass!!
now we know MethMan is the goatse dude!

FeralSerf's picture

Youse guys is always making fun of poor ol' MethMan, but the joke's on you. Rumour has it he has one of the richest silver mines in the world. Total costs only $5/oz! And that's before the gold credits!

caerus's picture

lookout bottom...here we come!

fuu's picture

That is a beautiful chart.

margaris's picture

indeed. Nice visualizations possible this way.

Lets take a look at CHF performance today:

http://finviz.com/fut_image.ashx?relative_d1.png&rev=634509223698437500

JW n FL's picture

 

 

Transitory in the since that Stored Value is being transported into silver / gold and or other tangibles at what would have to be an alraming rate for the central banking idiots.

baby_BLYTHE's picture

but I thought inflation was and entirely transitory?

tmosley's picture

It is.  It only lasts until the currency is reformed or abandoned.

InconvenientCounterParty's picture

the term "transitory" requires definition of units of time. Used without time units, the term is abstract at best.

Everything in the known universe that changes is transitory, if you don't specify units of time.

With a little thought, I believe that becomes obvious. What is less obvious, is the relentless obfuscation by financial sophists.

saulysw's picture

I agree - talking without saying anything clearly may well be a central bankers greatest skill. Greenspan was a grand master at gobbledy-gook. People spent days trying to work out what he meant. Key sentances could be interpreted several conflicting ways depending on your assumptions and perspectives. It's quite an art to sound like you know what you are talking about, but throw in so many double (or more) meanings. Dilbert calls these "weasle words".

0ppenheimer's picture

All those USD holdings have to go somewhere....

caerus's picture

no one debases like the bernank

Ruffcut's picture

Yes, When I debase meat and debase it again, it is so much tender.

DaBernank's picture

We're number less than zero! -- We're number less than zero!

gwar5's picture

Great chart, Hedgeless.  Everyone should note that bananas, from banana republics, did no do well and are not even mentioned. 

 

 

 

gwar5's picture

Great chart, Hedgeless.  Everyone should note that bananas, from banana republics, did no do well and are not even mentioned. 

 

 

 

JW n FL's picture

 

 

Nice Grab!!

Damn Nice Chart!!