Official Swiss Bank Denials Of SNB/Fed Dollar Swap Line Usage Sends Gold To New Record Just $120 Away From $2000

Tyler Durden's picture

When we first presented yesterday that the SNB had used $200 million in FX swaps with the New York Fed, we speculated that this "means that it is not some usual PIIGS suspect, but one of the two "big ones." Obviously by this we meant Credit Suisse or UBS. It took the banks about 12 hours to come out and deny officially that it had been either of them. Well, it simply it is someone else, and hence someone with far less in deposit-based capital buffers. And then, of course, you know what they say about official denials... Anyway, whoever it was, Europe is not waiting to find out: this morning most European bourses are down between 2 and 4%, Dax down 3.7%, CAC down 2.8% and the FTSE down 2.8% at last check, as the specter of a pan-European bank run is back. The net result: spam continues to be a drag in the gold-canned food pair trade, hitting a new old time high of $1878 in the spot market minutes ago, and just $122 away from $2000. Should the market rout persist, we may well see $2000 in the next 48 market hours.

From Reuters:

Switzerland's biggest bank UBS (UBSN.VX) (UBS.N) said on Friday it had not made use of the Federal Reserve's swap facility via the Swiss National Bank.


There had been speculation that a Swiss bank had accessed the U.S. liquidity facility via a $200 million repurchase transaction with the SNB the previous week.


"UBS has not made use of the Fed facility through the SNB," it said in a statement.


The Federal Reserve provided $200 million of liquidity to the Swiss National Bank in the latest week via its swap lines for foreign central banks, the New York Fed said on Thursday.


The SNB was the sole institution to tap the swap lines in the week ended August 17, swapping the full amount.


That was the first time the SNB has tapped the swap lines since they were reopened in May 2010.

And from the market:

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ArkansasAngie's picture

Well ... it is Friday

pesamystik's picture

The WSJ story planted by the Fed (as noted by ZH yesterday) about the Fed's "concerns" about Euro banks is still hitting the Euro markets.

The Fed and the financial cabal are attempting to force the Eurobond issue, and score the coup of centralization they so deeply desire. Merkel is the last line of defence against the evil squid sucking every last bit from humanity. My guess is she is going to fold, just like she has time and again.

markmotive's picture

If anyone doubts the long-term trend in gold I suggest listening to this interview with the dude from Ertse Group:

However, the short-term picture could be quite volatile.

HitTheFan's picture

Whilst I like gold long-term, the jump from $1500 to nearly $1900 has been too fast, look out for a very quick sharp correction, just like we saw with silver. Hot money in, hot money back out I suspect.

DogSlime's picture

Maybe, but this is in response to other investments looking like shit.  Unless some confidence comes back to the markets (HAHAHAHA!), people are going to put their money in gold.

I'm not sure the gold situation is bullish in the normal sense.  If the "hot money" leaves, where can it go right now?

Surely confidence in the markets, sovreigns, banks etc.  needs to be restored before the trend in gold will reverse significantly?

Maybe an Obama speech or some reassurance from Bernanke will do the job?

MFL8240's picture

Where does a person go if they sell Gold?  Bonds, Stocks, Currencies, Real Estate???...they are all broken and confidence will not be back for years to come.  The US stimulus con game that ran the stock market higher on printed money is just another example of why the Federal Reserve needs to be abolished.  Real Estate, Bonds, Dollars, Stocks, you name it and they are all broken because of the insane policies of Greenspan and Bernanke.

GIANTKILR's picture

Dude, it's the end of the finacial world as we know it. You can't base your assumptions on past results. There has NEVER been anything like this in history! And stop comparing it to 2008, people!

scratch_and_sniff's picture

right you are kid. Keep buying...infact if you bought enough now you could become very rich, very quickly, not a moment to waste. (p.s. dont look at the monthly chart of gold, it will only mislead you)

iota's picture

Be very surprised if we don't. Too much, too quick. Racing through $100 price changes like that screams 'bubble'.

GIANTKILR's picture

Sometimes I feel like I am talking to a brick wall!

gtb's picture

Not a brick wall...just idiots.

Badabing's picture

"Be very surprised if we don't. Too much, too quick. Racing through $100 price changes like that screams 'bubble'."

look at it like 5%

achmachat's picture

honestly. Who is still in the market with their own capital?
the only thing I've been doing the last 2 months is to sit on the side and watch everything fall apart.

foofoojin's picture

Did silver just jump a dollar in one min?

jubispupper's picture

According to Kitco it would appear about right.

mayhem_korner's picture


I just heard a round of "thuds" on the street outside of the Morgue...probly some pm shorts takin' the ez way out.

Badabing's picture

A ploy to move day traders out of gold and into silver?

cowdiddly's picture

With the margin requirements as high as they are in silver, this is not daytraders  or short term speculators driving the price. Throw the stock chart mumbo jumbo away and get some phyzz while there is still some available to buy at any price. This crash is global, They wanted a global economy, but like the euro it all comes down together. Now they don't have enough money on the planet to bail the whole world out without killing all fiat currency. GBP/JPY, USD/EUR..? Totally useless, Its like comparing one steaming pile to another steaming pile and trying to decide which one dies first. Only tangible items are worthy going forward.

DosZap's picture



The NADS was on yesterday, telling of a SMACKDOWN coming...............what a penis.

alexwest's picture

hey bruce,

it so #UCKUING BULLISH FOR SWISS FRANK.. one of  biggst swiss bank basically was running out of $$$$

cant wait to buy more franks on leverage 1:1000



jubispupper's picture

Last weekend I picked up another 70 Gold Eagles and 4000 Silver Eagles to round up my allocation (about 40% of capital in PM -- started doing so in 2006).  I thought I overpaid at 1707 for the gold, and 41 gross for the silver.  Amazing movement.  Any thoughts if it's wise to allocate more money to PM?


Also any thoughts when the time will be right to sell large pieces of muni portfolio (i.e., probably when the 10-year is yielding around 1%? but before everyone freaks out about muni world again ....

Thanks for your thoughts.

alexwest's picture

if its true, i'd NOT brag too much about buying physical on i-net.. kind of lame...


sudzee's picture

If estimtes of paper pm' certificates writen against your physical are correct, you sir, could buy a country. Many thx for doing your part to bring the EE down. You are a true patriat.

Snidley Whipsnae's picture

The only thing the Fed can do at this point to hurt PMs is to jack interest rates above inflation. What is the likelyhood of that happening, since such a move would destroy what is left of the US Economy? My guess is very unlikely.

The other moves available to the metals exchanges are margin hikes. I look for those soon... depending on how much the hikes would hurt the big shorts that are 'doing gods work'... But, this option is not going to slow central banks from accumulating physical PMs, nor for that matter, anyone from accumulating PMs.

Hiking margins to lower the price of PMs is counterproductive... since it does not effect those buying physical and buying it for a new lower price after the hikes...

RockyRacoon's picture

It's all about opportunity cost at this point.   When the realization that gold is money sinks in the real run on gold will begin.  Folks smarter than the average American have already made the moves -- like Indian and Chinese peasants.

DosZap's picture


The Indians I Expect, Chinese peasants..................uh,not so much.

When your bested by them, you know your SHEEPLE.

RockyRacoon's picture

I'll agree, and narrow that China range to the fact that you can walk into many Chinese banks and buy gold.   Try that in the U. S.!  We are indoctrinated not to think about gold -- at all -- period.

Pegasus Muse's picture

I use the Eric Sprott asset allocation philosophy.  To hell with diversification.  If you have thoroughly researched and believe in an asset class, go for it.  He has 90% of his personal wealth invested in gold bullion, silver bullion, and gold and silver miners.  That seems about right to me.   

snowball777's picture

Sure you did, Glenn. At Goldline, right? LOL

If you were going to throw down over a quarter mil on physical, why didn't you just buy a handful of kilo and 1k oz bars?

DosZap's picture


Want an opinon HERE, forfukingetIT.....................

People do not give advice.Other than Buy Gold & Silver Bitchez.

40% (if you started in '06, should have you set.............esp if you just added another 70/4000-IMHO

Ben Davies of Hinde Capital thinks the .Gub, is going to Scr@* us over at $2,100.00.

Freebird's picture

Who would have thunk it?

legal eagle's picture

Something has to break

ZeroPower's picture

One last swift move higher (maybe nice gap open over a weekend close in Sept with a $100+ gap) and we are ready for the downturn to start. A la silver on May 1.

slaughterer's picture

The suspicion is great that Gold will hit $2000 on Sunday in Asian markets, and then be taken down by 8 successive margin hikes and 1,000s of short contracts next week.  However, it would provide a great entry for what is to come at Jackson Hole.

ZeroPower's picture

Not hearing anything, but the action literally seconds ago definitely says something is brewing. $1876 to $1851 in a blink, with spreads 2x as large currently (from $0.90 to ~$2)

dollarmite's picture

What happens when the day comes when everyone is all in and nobody is on margin? 

A Man without Qualities's picture

Having thought further, I wonder if it was done to provide liquidity to a bank which is a collateral counterparty to one of the Swiss banks?  Those cross currency swaps must be hurting...

slaughterer's picture

My early morning suspicion wasit was done to destroy confidence in the CHF--in a minor, measured way--and allow the currency to correct a little.  

topcallingtroll's picture

Shit is starting to get crazy again.

Badabing's picture

$36 drop from this mornings high with no margin hike looks like the big guys hammer.

expect GLD to take a shit and then buy your ass off

Version 7's picture

Regardless ups and downs, imho when it comes to gold, there's a certain time after which its future can only be parabolic.

disabledvet's picture

Have no fear Inspector Clouseau is on the case as i you tubed earlier.

Imminent Collapse's picture

Ladies and Gentlemen, we are nearing the abyss.  Please secure all personal property, place your seats in the upright locked position and prepare for a rough landing.

Sudden Debt's picture




 now I'll never know how it ends...


Sudden Debt's picture






Oh..... looks like somebody wanted to put his feet up.....