Ranting Andy: Swiss Cheese

I wasn’t sure what to write this morning, until I just saw another “rumor” about what the Swiss National Bank might do next to manipulate its currency.  And then it became obvious.

Two weeks ago, to be specific 4:00 AM EST on September 6th, the Swiss National Bank decided to PEG the almighty Swiss Franc to the dying Euro, a move that devalued the Franc by a whopping 8% in a matter of minutes.  This action, more akin to those of Banana Republics, not only was a blow to holders of Francs, but the end of the LAST REMAINING COMPETITOR to GOLD and SILVER for the role of SAFE HAVEN CURRENCY.

But before I go into the specifics, I wanted you to see how COORDINATED the Central Bank GOLD MANIPULATION IS! 

As noted above, the announcement occurred at 4 AM EST on September 6th, with gold literally sitting a few dollars from its ALL-TIME HIGH.  This INCREDIBLY GOLD-BULLISH news would have easily catapulted it above $2,000/oz in a freely-traded market, but the Swiss made sure the banks ATTACKED gold with a DEATH STAR assault just minutes BEFORE the announcement, to the tune of roughly $50/oz!

Then, when it naturally recovered, at EXACTLY 12:00 PM EST a second DEATH STAR assault, this time of roughly $40, to make sure the “excitement” over gold losing a primary safe haven competitor would be quashed (but just TEMPORARILY, gold warriors!).

Back to the devaluation news…

The Franc is just as much a FIAT CURRENCY as the others, and ultimately in line for the same fate.  However, it has been historically viewed as a safe place to store wealth due to the nation’s military and monetary neutrality, favorable tax laws, and relative fiscal conservatism.  In fact, up until 2000 it was national law that outstanding Francs must be backed at least 40% by Central Bank gold reserves, so (assuming TRUTHFUL gold and Franc reserve accounting), the Franc was in fact the last remaining currency to have some semblance of a gold standard.

But Swiss monetary reversed dramatically after 2000, yet investors as a whole, as is typical, still live in the past, as if they still think Switzerland is a “safe haven” (not much different than the 2002 mentality that internet stocks would revive, or today’s HOPE that real estate will “bottom” any day now).  Back to the Franc, nearly all semblance to “Old Switzerland” is gone, aside from its avoidance of joining the Euro and its complex, in many cases legally questionable, tax haven practices.  The Franc essentially joined the Euro on September 6th as a de facto member, abandoning its conservative monetary history by committing to PRINT UNLIMITED FRANCS to ensure it trades at parity with the Euro, no different than what the Chinese do to peg the Yuan to the dollar or the Fed to peg the Fed Funds rate to ZERO (sorry, 0.00% – 0.25%).

Moreover, the reason Switzerland repealed the 40% gold backing referendum in 2000 was due to its decision to dishoard the majority of its gold under the Washington Agreement (1999-2004) and Central Bank Gold Agreement (2004-2009) accords, discussed at length in yesterday’s RANT, “CENTRAL BANK GOLD – THE LAST BASTION OF LIES”.  In fact, of the roughly 4,000 tonnes of gold sold under that agreement, nearly 40% of it, or 1,550 tonnes, was by the supposedly conservative SWISS!

To wit, for all the heat the UK (rightfully) has taken for selling more than half its gold at the politically-motivated “Brown Bottom” in 1999, it ONLY sold 400 tonnes of its 715 tonne reserve, while Switzerland from 2000-2008 sold 1,550 TONNES of its 2,590 tonnes reserve!

Perhaps the tabloids aren’t as vicious in Switzerland as Britain, or (as noted above) the world continues to lionize the Swiss conservatism of the PAST, but irrespective I find it REMARKABLE that the SNB (Swiss National Bank) is not EQUALLY VILLIFIED for the sale of 60% of its reserves at an average price well below $1,000/oz, just as the gold bull (and fiat bear) started to gain strength.  And not only that, but taking the remaining fiat shell and pegging it to the EURO, a currency which literally might collapse ANY DAY, in my view completes one of the most spectacularly ruinous decades of financial policy of ANY NATION IN HISTORY. 

I mean, Switzerland didn’t NEED to sell its gold, and didn’t NEED to peg the Franc to the Euro, but did so anyway because its bankers are as equally EVIL and SELF-MOTIVATED as the SOCIOPATHIC monsters in charge of the Fed, the BOE, the ECB, and BOJ!

OK, forward again to TODAY, when this shocking news just hit the tape!


Apparently, the Swiss people are fighting back against the lunacy, submitting a referendum to prevent the SNB from selling ANY of its remaining 1,040 tonnes of gold, and demanding that gold back at least 20% of the outstanding currency, compared to just 16% currently (assuming the SNB is not lying about the amount of outstanding currency or unencumbered gold, of course).  This represents a DRAMATIC reversal of the current course of currency destruction, and if passed would require the SNB to either BUY gold in the open market or once again delink the Swiss Franc from the Euro!

No matter what the SNB does, fear not gold and silver army, the tides are washing over the fiat currency evil, soon to be permanently.  The financial tsunami is now in full view, and the Western world is helpless against it.  Their politicians must “inflate or die”, although what that really means is “inflate and die more horribly later”, and that “later” is getting awful close now.  To use the tsunami analog, printing more money is just enabling the peasants to walk a few yards further from the beach.

In the coming weeks, you will be besieged by propaganda trying to convince you the Euro is sound and the U.S. economy recovering (or, more likely, it WILL thanks to QE3 and Obama’s jobs bill).  But we all know it won’t, and I’m hard pressed to believe ALL won’t be out on the table by the middle of 2012, if not sooner.

Use ANY AND ALL opportunities, such as the one afforded this week before the Fed and G20/IMF meetings, to LOAD UP THE BOAT on GOLD, SILVER, FOOD, and OTHER ITEMS OF REAL VALUE.


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