CHF as VP speculation
Posted: Sat Nov 08, 2014 5:29 pm
I think there is a non-negligible chance that this referendum (actually a set of three related referenda) will pass:
http://www.kitco.com/news/2014-11-07/Co ... asses.html
If this does happen, I would expect that the CHF will get a bigger boost than gold will. After all, a few hundred tons of gold, while a lot compared to annual mining production, isn't very much compared to the overall amount available for them to purchase.
But the CHF has been held down by SNB purchases to keep it aligned with the Euro. Having a big gold backing would probably put the kibosh on such purchases because they would require the SNB to buy even more gold to back the larger money supply.
Since most people don't consider this a high likelihood, it probably isn't priced into the CHF exchange rate already, so if it happens there could be a surprise on the upside.
http://www.kitco.com/news/2014-11-07/Co ... asses.html
If this does happen, I would expect that the CHF will get a bigger boost than gold will. After all, a few hundred tons of gold, while a lot compared to annual mining production, isn't very much compared to the overall amount available for them to purchase.
But the CHF has been held down by SNB purchases to keep it aligned with the Euro. Having a big gold backing would probably put the kibosh on such purchases because they would require the SNB to buy even more gold to back the larger money supply.
Since most people don't consider this a high likelihood, it probably isn't priced into the CHF exchange rate already, so if it happens there could be a surprise on the upside.