Gold Sector Analysis: Gold Explodes Against the Dollar as Swiss Erase Euro Peg
TheDailyBell.com
January 17, 2015
In two explosive movements, gold ran up to nearly 1,280 as gold bulls cheered.
This Week’s Monetary and Industrial Trends What a week it was.
In battling a referendum, the Swiss National Bank warned citizens against backing the franc with gold and then reversed itself only weeks later and removed its euro peg. Immediately, the Swiss franc jumped 16 percent against the euro.
The turmoil forced gold up against the dollar as well. Ultimately the dollar dropped by US$50 against gold in only two days, though it is not known whether gold will hold these gains.
It is very expensive for bankers to keep a strong currency like the franc in line with a weakened currency like the euro. It is obvious that with the European Central Bank focused on further debasement of the euro, the Swiss have decided they simply can’t keep up.
Now the Swiss have another problem, though, as it is not clear where all this will end. If investors continue to buy the Swiss franc, they will force it higher, inflicting more chaos on currency markets.
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