Protect Yourself Against The Coming Currency Crisis
Jeff D. Opdyke
ETFDailynews.com
January 21st, 2015
That is the only message you need to take away from the Swiss National Bank’s surprise, overnight action to abandon the three-year-old cap it maintained in the franc/euro trade. The Swiss had vowed to not allow the franc to rise beyond 1.20 francs per euro. With the removal of that cap, the franc soared as much as 30% against the euro on Thursday, an unheard of move in the currency markets.
It tells the world loudly that a global currency crisis — albeit unstated — is underway … that Western economies and Western sovereign debt is so out of whack that the only ammo left in the arsenal is currency.
Currencies are now being sacrificed in an effort to save economies. And the only winner in that environment is gold.
Switzerland and its currency has always been an island of safety in times of European turmoil. Most recently, European investors began flooding into the franc in 2011 to escape the fall out of the European debt crisis on the euro. That rising demand for the franc pushed the value of the franc up against the euro, making Switzerland, a country dependent on exports, increasingly uncompetitive in a global world.
So, the Swiss National Bank intervened in 2011. It regularly and routinely waded into the currency markets with baskets of money it printed out of thin air to keep the franc from breeching 1.20 francs per euro. That was a very expensive proposition — costing the bank billions of francs — and it promised to get increasingly more expensive in coming weeks because of pending actions by the European Central Bank (the ECB).
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