Tag Archives: gold

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Looming bond market crisis set to improve gold demand


Historically low bond yields across both the private and government sectors are reducing the margin for error when it comes to the ability of financial markets to withstand a bond market shock.

Global quantitative easing (QE) has seen bond yields driven to low and often sub-zero levels in many economies. The European Central Bank is currently undertaking a EUR60 billion a month eurozone bond buying programme, this is expected to last at least until September 2016. In the past Japan, U.K . and the U.S. have been very active when it comes to QE to stimulate their economies and create inflation with the bond market being a key asset.

Why would investors essentially pay good money to lend out their own money? Well, one reason an investor would do this is if they expect to see a decline in prices such, as in a deflationary environment when negative yields can in fact be higher than other variable yields offered. Another reason is an investor wants to store their wealth in what they believe to be a safe asset. Investors often like to park their money in German and U.S. government bonds in times of uncertainty, both are considered by many to be safe-have assets.

It is however risky for any investors to invest in long term fixed income with low or sub-zero returns. It certainly is not the safe bet that many investors think, nor should these low rates of returns be considered the new normal. At the other end of the scale and what is even more risky are junk bonds and bonds such as those offered by troubled governments such as Venezuela and Greece. In the current low yield environment too many investors are chasing higher yields without considering the significant consequences, the attraction of double digit yields blinds them to the risk. This is a similar thought process, or lack of thought process that in hindsight we saw before the GFC when the price of risk was often undersold or not properly priced in. It will only take one or two high profile defaults from these high yielding investments and we can expect to see investor expectations shift and potentially cause a run on bonds as investors head for the door.

While banks and financial firms in the U.S. have reduced their exposure to the more questionable grade bonds due to new regulations, what we have seen in the past 6 years is that insurance firms, mutual funds and other institutions are taking up the slack. This would see the reach of any crisis spread beyond ‘Wall Street’ and into other sectors of the economy. Restricting financial firms also has the unintended consequence of reducing liquidity, should we see investors move quickly out of bonds in search of higher returns (something entirely possible with the Fed set to lift rates soon), or we see general bond market jitters then do not be surprised to see investors scramble to be first to get to the exit door, no one wants to be last out. This scenario could see prices dive in a short period, not helped by the lack of support and buying from financial firms as they are restricted on what and how much they can purchase. A number of financial market experts such as JP Morgan Chase CEO Jamie Dimon and billionaire investor Jeffrey Gundlach have expressed concerns around the lack of liquidity in the bond market.

The big losers from a bond market crisis will be governments, corporations, pension holders and funds, money managers and other institutions. This would be significant as most, if not all investors would be touched in some way by a bond market crisis, just as all investors were when the GFC hit.

The big winners from a bond market crisis are those investors holding gold and other precious metals, just as we saw following the GFC.

Adding to the concerns around financial markets is the fact that equity markets in key markets such as the U.S. and Germany have reached fresh new highs, highs not even seen before the GFC. Investors need to be wary about investing in the bonds or equities as we are moving closer to a crisis, it is not going to take much for financial markets to tip over with bonds often of questionable grades potentially being the match that starts the fire. It was the subprime crisis that sparked the GFC and it could be a bond crisis that sparks the next global financial crisis.

The closer we move to a new financial crisis, the more funds investors should be allocating to precious metals. Investors should currently be looking to position their portfolios to withstand a crisis by re-weighting their portfolios to include approximately 20-25% of their funds in gold.

Courtesy of Bullion Index .

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Gold Trading Week Ahead 20th April 2015


Gold Trading Week Ahead – 20 April 2015

Gold treaded water last week with gold finishing the week almost identical to where it closed the previous week. Last week was all about CPI data while this week we have a number of economic, political and cultural factors that will drive sentiment.

European indices have seen sentiment begin to turn after the initial enthusiasm for Mario Dragi’s QE. Greece is also back in the spotlight, the Eurozone has a crucial meeting later this week regarding Greece. A Greek default is certainly figuring in traders’ minds, with this increased concerns I expect demand for gold to increase.

Demand from both India and China has been weak in recent trading sessions, not entirely surprising given the recent strength of the U.S. dollar and the fact that many Indian buyers have been awaiting Akshaya Tritiya which is Tuesday 21st April. I expect Indian demand will increase this week as Akshaya Tritiya is considered auspicious for starting new businesses, investments and the like.

This week is packed with economic data that could set the direction for precious metals.

Monday the Chicago Federal Reserve National Activity Index data for March is released.

Tuesday sees the Reserve Bank of Australia (RBA) meeting minutes released, if the RBA signals that is moving closer to a rate cut then we may see gold in AUD edge higher.

Wednesday will see the release of the Bank of England (BoE) minutes, Australian CPI, US Existing Home Sales and Crude Oil Inventories.

Thursday is full of economic data with Manufacturing PMI data out for Japan and China, UK Retail Sales, US New Home Sales and importantly US Jobless Claims. Westpac is forecasting a drop in Jobless Claims to 286,000, down from 294,000 as at the last reading.

Friday the Eurozone will meet to discuss Greece and its further reforms that it needs to provide by Friday. The odds of a Greek default are certainly shortening with Friday being the next critical hurdle for Greece and the Eurozone. US Durable Goods Order data is also out later on Friday, the market is expecting a rise of 0.6%.

This week also sees the release of a number of key US company announcements which will give investors a better understanding of the strength of these key companies. The companies with announcements include Wal-Mart, Yahoo, IBM, Morgan Stanley, AT&T, Boeing, Coca-Cola, Facebook, Microsoft, 3M, Procter & Gamble, Costco and Starbucks.

It could be a volatile week across all markets this week, with gold set to benefit, I expect to see gold test the US$1,220/oz resistance level, a level gold needs to consolidate above this level before moving higher.


Courtesy of:  www.bullionindex.com.au

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Gold bulls are thanking the Fed


Bullion Index report that, leading into the Federal Reserve March monetary policy meeting last week investors dumped gold sending it to a 4 month low, while at the same time trades went long dollars on expectation the Fed would suggest it will move as early as June on raising interest rates. While the Fed dropped the highly anticipated word ‘patient’ from their statement following the meeting, the statement however contained a number of surprises which have sent gold higher and the US dollar lower since its release. The Fed statement saw it lower the GDP growth forecast and importantly also lower its forecast for inflation. This is important to financial markets as the Fed has said it will look to tighten rates when it is “reasonably confident” that inflation will hit its 2% objective over the medium term. With the lowering of its inflation forecast this will see it take even longer to get back to its 2% inflation objective. The Fed now sees inflation running at between 0.6-0.7% for 2015 and between 1.6-1.7% in 2016, still materially lower than the 2% figure the Fed has said it needs to be confident of hitting before it pulls the trigger on rates.



Export growth in the U.S. is also weakening according to the Fed which is an acknowledgement by the Fed of the recent strength of the US dollar. Even taking into account the dollars biggest weekly fall since 2011 the dollar is still strong by any standard. According to the Bloomberg Dollar Index, a measure against a basket of 10 currencies, the US dollar is trading near its highest level in at least 10 years. The dollar strength is something that is coming into consideration by the Fed, traditionally it steers clear of commenting on the dollar. Any rate increase by the Fed is expected to send the dollar even higher. The strong dollar is making imports cheaper, reducing inflationary pressures, something the Fed is trying to lift, while at the same time making exports more expensive which puts pressure on GDP growth. A high dollar should be of a concern to the Fed.


The consensus in financial markets suggests the Fed is on track to raise rates in 2015, however it now seems the market is expecting rates to move later (e.g. September instead of June) and possible not hit the high levels previously expected.  Leading Banks such as Bank of America Merrill Lynch and Deutsche Bank suggest the Fed will increase rates in September, while a recent Reuters poll of top Wall Street banks also favour a September rate increase. I still believe we will not see a US rate increase in 2015 and even more so after the Fed statement and continuing weak data that seems to be coming out of the US such as the recent worse than expected durable goods data. The Fed noted in its statement that “economic growth has moderated somewhat” since its January meeting, that is not a foundation for a near term rate increase. Federal Reserve Bank of Chicago President and a voting member of the Federal Open Market Committee Charles Evans said in a speech this week that he thinks “economic conditions are likely to evolve in a way such that it will be appropriate to hold off on raising short-term rates until 2016”. He suggests that inflation will not hit the 2% target until 2018 and that inflation is currently “uncomfortably low”.


The Fed’s monetary policy is very much driven by data flow and what is expected and what is actually delivered and at the moment most of the data coming out is not setting the markets alight. The longer the Fed holds off moving on rates the better it will be for gold demand given it reduces the opportunity cost between holding non-interest bearing gold and investing in interest bearing assets or term deposits. Gold also performs well in times of uncertainty so with the increased confusion as to when and by how much the Fed will increase rates, it is only going to add support to the price of gold.


With weak data coming out of the US along with exceptionally low inflation rates, well below the Fed’s target of 2%, the Fed would be reckless to move on rates until they see solid evidence of underlying economic growth, positive wage growth and inflation heading to 2%. I do see that happening in 2015. The risks on moving too soon on rate hikes are too significant while the benefits remain relatively low which leads me to believe the Fed will be very conservative and hold off on raising rates until 2016. In the meantime while interest rates remain low and uncertainty is at the forefront of investors’ minds gold demand is going to increase.


Now that gold has broken through US$1,200/oz, the next upside target to watch is US$1,208/oz which is the 100 day simple moving average followed by US$1,22o/oz the 50 day simple moving average.



Courtesy of: http://www.bullionindex.com.au/

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Gold Trading Week Ahead


Bullion Index report: Late last week gold managed to stem the recent losses as the dollar rally paused. An 8 day run of consecutive losses on gold came to an end on Thursday, not before posting a new 4 month low.

Last week we saw solid buying from our clients at the low US$1,150’s/oz levels.

This week is going to be a key week for gold with the Federal Reserve’s two day policy meeting Tuesday and Wednesday. The main focus will be Fed Chair Janet Yellen’s press conference following the FOMC announcement at 2pm Wednesday New York time. The price of gold is being driven almost solely by US dollar movements at the moment (dollar up, gold down or dollar down, gold up), so if any wording coming out of the Fed next week hints at a June rate rise, look to see further US dollar strength and gold soften. If the Fed notes that it still remains ‘patient’, the market is going to take that as a post June rate rise which should give gold a boost. Gold investors should also look out for any commentary from Yellen surrounding the US dollar. Traditionally the Fed would not mention the US dollar however given its stunning run it may play a factor in the Fed’s monetary policy. If it does come into play then the Fed may look to hold off tightening until later on in the year or even possibly next year.

The Fed is facing one of its biggest decisions since the GFC, they do not want to go too early or too late when it comes to raising interest rates.

The other events of the week that gold traders should be aware of include; ECB President Mario Draghi’s speech on Monday, US Building Permits and Housing Starts on Tuesday, Swiss National Bank Monetary Policy Decision and Philadelphia Fed Manufacturing Index both on Thursday.

I do not expect to see any further big moves on gold until after Yellen’s press conference on Wednesday. Between the open on Monday and her press conference I expect to see investors adding to long gold trades on any dips.

Investors have been showing more interest in platinum in the past week as they look for value, platinum has recently hit lows not seen since mid-2009.

Gold closed at US$1,158.60oz in New York on Friday, down US$10oz on the week.


Courtesy of:  www.bullionindex.com.au

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Gold trading week ahead – Bullion Index


Bullion Index report “gold starts the new trading week at a 3 month low after a strong reaction to data out of the U.S. on Friday. News of better than expected jobs data in the U.S. saw gold shed 3% in the session as investors saw the improving employment outlook in the U.S. as a signal that the Fed will move on rates sooner rather than later.

Following on from a busy week last week from an economic data standpoint, this week sees a bit of a lull in key data as traders await the Federal Reserve meeting next week (17-18 March).

The big event of the week will be happening later today when the ECB kicking off its massive QE/ money printing program. Gold has been tracking the ECB balance sheet up and down in recent times so with the ECB today effectively printing more money will we see gold track back higher. At the moment gold is being driving by both the ECB and the Federal Reserve but the battle for gold is which way will it break especially now we are about to see an even more significant divergence in policies between the ECB and the Fed.

Other major events and data flows this week include, Greece’s Finance Minster presenting 6 reform proposals to Eurogroup members on Monday. On Tuesday the UK Manufacturing Productions numbers are out, this will give traders an indication as to the health of the UK economy, it has been improving fast so we will see if it is still on track. On Thursday  we see the U.S. Retail Sales data, if sales come in above expectation then we may see a rally in the US dollar an in turn a dip in the price of gold. If however it comes in below forecast then we may see gold bounce higher. The forecast is for retail sales in February to be +0.5%.

We expect to see investors adding to long gold trades at the current market levels.

Source: Bullion Index

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Gold price forms a base at US$1,194


Gold prices have been range bound in recent trading session as traders await the nonfarm payroll data. Bullion Index report to its clients that while  the ADP Employment numbers for February are out later today in the U.S. that they do not expect to see any surprises and expect Friday’s nonfarms to be the key to driving gold in the short term. Bullion Index notes that spot gold is range bounce between US$1,194 and US$1,224. They maintain a buy limit at US$1,188oz.

Source: http://www.bullionindex.com.au




ANZ buy spot gold on dips to US$1180


ANZ, the Australian Bank saying while they see no clear impetus to push gold significantly higher or lower in the near-term they suggest to clients to ‘buy spot gold on dips to USD1,1180/oz’. They expect gold to trade over the next 12 months in the USD1,150/oz to USD1,300/oz noting that gold has a tendency to trough well before the USD peaks suggesting we may have seen the bottom of the gold price in this current cycle.

Source: ANZ

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Euro Issues Will Underpin Gold Prices


Bullion Index report that Euro issues will continue to prop up the price of gold. They note the Greek Eurozone creditors that have been keeping Greece afloat since 2010 have extended the country’s bailout by four months however it is only the beginning from what we see as a number of key flash points facing the Eurozone which will in turn support the price of gold over the next 12 months.

The ‘extend and pretend’ charade Greece and the Eurozone have been playing can only go on for so long. Greeks have shown that they want to remain within the European Monetary Union (EMU) and want to stay with the euro currency, however they are strongly opposed to the anti-austerity measures in place which is going to come to a head at some point. What Greeks also haven’t taken too kindly to in the past two weeks is what they see is a lack of respect or understanding from key Eurozone creditors and personal. The veteran German Finance Minster Wolfgang Schauble patronizingly said after the extension agreement that ‘the Greeks certainly will have a difficult time explaining the deal to their voters’, while also noting of the Greek Syriza party that ‘being in government is a date with reality, and reality is often not as nice as a dream’. The hostility between Greece and its creditors, in particularly Germany, is palpable and it really is only just the beginning of what will be tense negotiations throughout this year.

Many economic experts are suggesting that Germany is managing Greece out of the EMU, having decided that as far back as 2012 when they reduced their banks exposure to Greek debt.

In getting an extension, Greece had to stick with the basic terms of their original bailout package, something the Greek prime minster Alexis Tsipras has said he would ditch altogether. This has put him at odds with his own election promises, already he has been forced to abandon or water down his commitments to the Greek people in order to win an extension. It will not be long before Tsipras feels the heat from both those inside the Syriza party and voters. Tsipras has begun the near impossible task of selling the extension to voters, noting in a speech that “we won the battle but not the war as the difficulties, the real difficulties, not only those related to the discussions and the relationships with our partners, are ahead of us’. We do not see how Tsipras is going to get any significant austerity measures required by creditors through the parliament, which may lead to a snap election causing more uncertainty and instability in Europe.

The extension agreement must be understood for what it is, just an extension. Greece still needs to play its high stakes poker game with the Eurozone and so far it really has just kicked the can down the road by extending the bailout. Greece will need more cash to save itself from default when the bailout extension expires in June. Greece also faces €6.7 billion of bond redemptions in July and August this year which will require more cash and more negotiations no doubt. This has not been a focus however it needs to be on the radar of investors.

At what point will we see the Greek creditors turn-off the credit lines to Greece? We do not see extension after extension being given to Greece as the Eurozone cannot continue on the same path it is currently on. They will not continue to provide billions of euros in loans to Greece given it really needs significant structural reforms to boost growth, not tighter German-led austerity measures which are not working in reducing the levels of debt.

It is not just Greece who will be keeping the Eurozone in the headlines, we are bound to hear more and more rumblings out of other Euro countries over the next 24 months with key elections in both Spain and France. Spain is holding elections later this year with the focus on the anti-austerity Podemos party which runs on a similar platform to the Syriza party in Greece. While the Podemos party in Spain is less than a year old it is increasing its prominence. Podemos leader Pablo Iglesias campaigned for the Syriza party in before the Greek elections last month saying “a wind of change is blowing in Europe”. In France the far-right anti-euro National Front party is gaining traction with mainstream voters, the party advocates France exiting the euro and going back to the franc. France has general elections in 2017. Populist parties from all sides of government are growing in voice across Europe and this is expected to continue.

The chances of a ‘Grexit’ are in our view still very high, if a ‘Grexit’ happens this would create damaging volatility and turmoil for global financial markets. We see significant instability and headwinds for the Eurozone over the next 12 to 24 months and expect this to provide a solid foundation for the price of gold. We are suggesting to clients to add to their gold holdings on price dips such as the one we are experiencing right now.

For more information please visit Bullion Index .


Gold downside support at $1,260


A strong US jobless claims number on Friday has seen the market factor in a quicker than expected tightening in US monetary policy. This has put a dampener on safe haven assets prices such as gold and silver.

Bullion Index notes “we see the downside support on gold sitting at $1,260. If this level can hold then we look for gold to climb back to $1,275. If $1,260 however is broken we could see the $1,250 level tested in the short term”.

(Source: Bullion Index)

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USDCHF eyes 0.9529 as gold referendum looms


Capital Trust Markets reports “the US Dollar (USD) extended upside movement against the Swiss Franc (CHF) on Thursday, increasing the price of USDCHF to more than 0.9630 ahead of the Swiss Gold Referendum. The short term sentiment remains bearish due to Lower High on the daily chart thus the pair is expected to print a Lower Low below the 0.9529 support area.

Technical Analysis

As of this writing, the pair is being traded around 0.9635. A hurdle can be noted around 0.9660, the 61.8% fib level ahead of 0.9691, the 76.4% fib level and then 0.9740, the swing high of the last upside rally as demonstrated in the following chart.

On the downside, the pair is expected to find a support around 0.9610, the 38.2% fib level ahead of 0.9579, the 23.6% fib level and then 0.9529, the swing low of the recent downside move.

Gold Poll

Switzerland seems to be in the eye of a storm lately, as several indications have resulted in a code red situation. The Swiss Franc is trading at its highest level versus the Euro since 2011 when the central bank had to intervene in the forex market to safeguard its purchasing power. The USD/CHF exchange rate is also vital for the Swiss economy, and the Swiss National Bank needs to keep a very close eye on this exchange rate as (unfortunately for Switzerland), the CHF is still widely being considered as a safe haven. Back in 2011 the fear for the collapse of the Eurozone was absolutely real and investors were scrambling to get their hands on Swiss Francs in a flight to safety.

 Trade Idea

Keeping in view the overall technical and fundamental outlook, selling the pair around the current levels still appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing above the 0.9741 resistance area”.

(Source: Capital Trust Markets)

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A technical take on precious metals – SwissQuote



Long-term technical structures call for further weakness on precious metals reports SwissQuote.

Looking at long-term price configurations of precious metals, three (gold, silver, platinum) out of four have validated multi-months distributive patterns since September. The duration of these bearish patterns and the implied downside risks suggest that a bottom in this commodity segment has likely not been made yet. Palladium has also declined sharply since September but the long-term succession of higher lows remains intact, as can be seen by the rising trendline. However, a break of the resistance at $811 is needed to alleviate concerns of an upcoming second leg lower.

Gold likely to decline towards $1045
The bearish breakout at $1181 in gold has validated a 16-month declining triangle formation, calling for a decline towards the key support area between $1045 (05/02/2010 low) and $1027 (29/10/2009 low). In the shorter term, the recent rebound has thus far been unimpressive. As a result, the resistance at $1194 (given by the 50% retracement from the October high at $1255) is likely to curb any prices appreciation.

Monitor the short-term price action of Platinum
The short-term technical configuration of Platinum is worth monitoring as prices are challenging the key support at $1190 (06/10/2014 low). A decisive break lower would confirm the downside risk at $1072 implied by the recent validation of its multi-months distributive pattern. It would also not bode well for the short-term performance of gold and silver.

swissquote gold nov14

(Source: SwissQuote)


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EUR/CHF attractive for a “no” in Swiss Gold Referendum


SwissQuote report “the tensions in Switzerland have been mounting over the past weeks due to unexpectedly balanced election polls on the Gold Referendum. However we believe that the rational will finally win over the Swiss gold debate. In our opinion, the markets have gone well beyond themselves. EUR/CHF edges the oversold conditions (RSI at 30%), the 1-month implied volatility advanced to 4.45%, highest levels over more than a year. The 1-month (25-delta) EUR/CHF risk reversals became quite negative as demand for put options increased overly. The rational calls for action. Given our biased view in favor of a “no” outcome, we believe that there is opportunity in the topside OTM calls. On the spot markets, EUR/CHF is seen at optimal entry levels for long EUR/CHF positions”.

(Source: SwissQuote)

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Swiss Gold Referendum – Be Pragmatic


Societe Generale on the Swiss gold referendum report “the EUR/CHF vol market is in the starting blocks as the gold referendum places the SNB between a rock and a hard place. However, we believe that the final market impact will be higher EUR/CHF spot and lower volatility, whatever the outcome. A “yes” win could see a test of the floor and the SNB sweeping speculators via FX intervention in order to defend its credibility. In the event of a “no”, the market would unwind its precautionary long CHF positions. As such, we recommend buying a zero cost calendar structure taking advantage of a bullish spot move and a normalisation of volatility”.

(Source: Societe Generale)

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Increasingly negative sentiment in the gold market – ANZ


Gold declined sharply in recent trading sessions, taking prices to a fresh 4-year low and losses in the yellow metal to 40% since the peak in 2011. ANZ report “the bears seem to be well and truly in charge. Near term, it is hard to argue otherwise. The impetus for the sharp move lower was the Bank of Japan’s surprise decision to expand the annual monetary base by JPY80trn and increase their bond buying program to a similar amount. This announcement quickly saw the USD/JPY exchange rate rise to a 7-year high of 112, and gold fall to USD1,160/oz, from which it is yet to recover. The BoJ decision was the final nail that pushed gold below the crucial USD1,180/oz support level, though in truth gold was already on the back foot.

The USD continued to make new highs and physical demand visibly tapered off by the end of the month. The Chinese government’s investigation into precious metal shipments to Hong Kong may have hurt onshore sentiment, though it is unclear how much gold is actually involved in this “round-tripping”. What is clear is that the Chinese gold consumer is well and truly on the sidelines for the moment. We saw a pickup in physical demand in September (confirmed by Hong Kong trade figures), which continued through most of October. However, this seems to have dried up once more despite the continued decline in price. The Shanghai Gold Exchange premium to London traded flat to negative in recent days, which to us is a clear negative price signal.

With increasingly negative sentiment in the gold market presently, it is difficult to find any pockets of optimism. But while the outflows of gold from ETFs suggests sentiment is far from positive, investor positioning in gold miners paints a slightly different picture. At around 2, the beta of gold stocks to the gold price, is the highest it has been for years, suggesting mining stocks should outperform on a rebound in gold prices (though the opposite is, and has been, also true). Investor flows into ETFs backed by gold miners support this theory, despite the continued liquidation in physical gold ETFs”.

ANZ gold Nov14

(Source: ANZ)

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SocGen on the Swiss Gold Referendum


Societe Generale report on the Swiss referendum, they report “on 30 November Switzerland will vote on a referendum to prevent the SNB from selling Gold and forcing it to maintain 20% of its foreign reserves in Gold. The ban on selling Gold would go into effect immediately and the SNB would have five years to reach the 20% requirement. Over the five-year period, the SNB would have to sell part of its currency reserves (or theoretically print money) to finance the Gold purchases. Currently this amounts to selling USD68bn, mainly by selling EUR and USD, to buy 1,783 tons of Gold.

If the referendum were voted into law, the SNB could bypass it by retaining the tranche of foreign reserves needed for liquidity management while splitting off the rest in a Sovereign Wealth Fund nominally under the control of the ministry of finance. This would leave the SWF outside the definition of foreign reserves in the referendum.

The latest poll by gfs.bern indicated that 44% of voters support the Gold initiative, a move which the SNB is clearly against (SNB statements).

A gift to the markets. The new Gold rule would be the equivalent of giving a large put to the market. Each time Gold collapses, the SNB would automatically buy Gold so that the 20% reserves ratio is maintained, and this would presumably be achieved by mostly selling EUR and USD.

EUR/CHF short-term vols should see a mild bid as investors could use the poll as an excuse to challenge the EUR/CHF floor. The market would then start to speculate on an SNB rate cut to negative interest rates, especially as short-term rates are lower in the eurozone than in Switzerland”.

(Source: Societe Generale)