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Old 04-05-2012, 07:50 AM   #1
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Lightbulb EUR/CHF peg beeing attacked for the first time

Some pretty interesting developments this morning:
As most of you probably know, the Swiss National Bank has pegged the Swiss Franc to the Euro. They have announced back in September 2011 (on the day gold made it's all time high in USD!) that they will defend 1.20 for EUR/CHF at all costs, meaning the will sell unlimited amounts of CHF. Today, for the first time since the announcement, somebody briefly drove the CHF below 1.20:



I had been trading in a range from 1.207-1.203 for weeks.


This means:
Either some speculators thought that the coming holidays would allow them to make money in the fx markets, because volume is exceptionally low OR there is huge panic behind the scenes as Spain becomes the next target in the Eurozone tragedy. I tend to think that the second scenario is unfolding. Why?
1. Gold and Silver are holding up remarkably well today, despite significant USD strength. Back in August/September when gold made all time highs in USD, the CHF was basicly trading in a 100% correlation to gold. The CHF wanted to go up today, it couldn't.
2. European banking stocks, especially Spanish and Italian ones, have been crashing since a few days. Therefore the significant underperformance of the Eurostoxx 50 index relative to the US indices. Even in the US, banking stocks were amoung the biggest loosers
3. 1 year Euro basis swaps are slowly starting to deteriorate again, a sign of trouble in money markets:
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Old 04-05-2012, 09:09 AM   #2
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Possibly related:
Quote :
IMF managing director Christine Lagarde implored the United States to help back-stop debt-ridden European countries Tuesday, wading neck-deep into bubbling US political waters.

Speaking in the US capital, Lagarde said the 187-nation International Monetary Fund needed more firepower to tackle financial crises raging around the globe, arguing it was in the US interest to pitch in and help Europe.
...
http://timesofindia.indiatimes.com/b...w/12522131.cms

Euro pain imminent...
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Old 04-05-2012, 09:18 AM   #3
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Yesterday, uncle Ben made a rare appearance on Wall Street, too:
Quote :
Ben Bernanke makes a rare Wall Street appearance

After completing a series of public lectures in Washington, D.C. last week, Federal Reserve Chairman Ben Bernanke quietly slipped into New York City for a private luncheon on Friday with Wall Street executives.

Fortune has learned that attendees included Jamie Dimon (J.P. Morgan), Bob Diamond (Barclays), Brady Dougan (Credit Suisse), Larry Fink (Blackrock), Gerald Hassell (Bank of New York Mellon), Glenn Hutchins (Silver Lake), Colm Kelleher (Morgan Stanley), Brian Moynihan (Bank of America), Steve Schwarzman (Blackstone Group) and David Vinar (Goldman Sachs).
Sources say Bernanke spoke at length about monetary policy, in an apparent effort to persuade attendees that they needed to take a more active role in helping to deal with the European debt crisis. He spent virtually no time discussing regulation, although that mantle got taken up by both Dimon (domestic regulation) and Schwarzman (global regulation).
http://finance.fortune.cnn.com/2012/...h-top-bankers/
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Old 04-05-2012, 09:33 AM   #4
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Sigh. I really need my check to show up so I can buy some gold n silver.
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Old 04-05-2012, 01:34 PM   #5
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I said in anbother thread that I believe we will not see much more in the way of recent attacks on silver for a while. I've been watching a lot of banker resignations and retirements lately and wonder if they know something we don't know. Same with corporate insider selling, which has never really abated. These guys are on to something, or at least have a better vision of the financial world from a semi-inside perspective. I think there may be blood in the water already, just not enough for us peons to detect quite yet. If we had taken our clues from the elites the last go around, we could all have made a fucking mint from the bottom all they way back up.

If I had the balls, I should have loaded up on BAC down around five, but I was afraid to go all in. If I had, I would be close to having enough to retire twelve years early.
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Old 04-05-2012, 03:34 PM   #6
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Originally Posted by ancona View Post:
I've been watching a lot of banker resignations and retirements lately and wonder if they know something we don't know. Same with corporate insider selling, which has never really abated. These guys are on to something, or at least have a better vision of the financial world from a semi-inside perspective. I think there may be blood in the water already, just not enough for us peons to detect quite yet.
My thoughts exactly
Mainstream medias not gonna tell us though ..........
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Old 04-05-2012, 07:07 PM   #7
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Bruce Kasting thinks robots were behind the plunge:
http://www.zerohedge.com/contributed/2012-14-05/fx
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Old 04-05-2012, 07:41 PM   #8
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I give Bruce Krasting the same credibility I give spammers.
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Old 04-06-2012, 06:35 PM   #9
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Seems like Egon von Greyerz reads my posts here, because he said nearly exactly the same things I posted here yesterday in an interview which was posted today on KWN (just kidding)

Quote :
Today Egon von Greyerz told King World News that around the world, the average debt to GDP is at a staggering 350%. Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Von Greyerz also stated that even if the number was cut in half, to 175% debt to GDP, it would require the elimination of $25 trillion of debt. But first, here is what Greyerz had to say about what is happening in Europe: “Yesterday the Swiss franc came very close to the 1.20 level versus the euro. This is happening because bad economic news is coming out of Europe. Industrial production is falling and Spanish rates versus German rates, there is now a 4% gap, now people are getting worried about that again. So they are buying the Swiss franc.
The problem is that Switzerland is expanding its balance sheet like every other central bank. Switzerland is no better off, and to buy Swiss francs is not the solution. These investors are now attacking the euro/Swiss franc spread.
By doing that they are increasing the deficit of the Swiss National Bank because the Swiss are having to spend more and more money to protect their currency. So investors buying the Swiss franc is actually very bad for Switzerland. These investors are totally mad if they think that is protection for them...
Very soon, these investors will realize that the only protection is to buy gold. So it’s quite possible gold has bottomed now. If you look at the move since the top of September, 2011, after the first reaction we have basically just had a sideways move.
We have basically seen $1,700 gold, plus or minus a little over $100, for the last seven months. This has not been a big correction. So, the correction has been relatively tame since the run-up to the high last year.
If you look at 2008, the correction lasted seven months at that time as well. From that perspective, it could be we have bottomed out. Regardless of the price action, the fundamental situation is improving by the day.
Both the ECB and the Fed, they are in total denial. Here you have a week when the ECB said, ‘No more support to the eurozone governments.’ Well, these governments are all hemorrhaging. Without additional financing, they will go under.
The ECB, so far, in the last few months, has given them 1 trillion euros, but as I said in my last discussion with you, my estimation is they will have to give them tens of trillions of euros.
People are now worried about Spain. Portugal is the same and every country in Southern Europe will go through the same thing. Unemployment is rising fast. These countries are going through austerity programs, which means their budget deficits will increase, not decrease because every single economic figure is declining.
So, these countries cannot survive without more money. Therefore, as I said, the ECB is in denial because it will only be a very short time before they will need to print again. It’s the same with the Fed and the FOMC minutes. The are saying no new asset purchases.
Well, it’s ridiculous because here you have a country that is not doing anything to cut down on its deficits. Consequently the US deficits will continue to increase at an accelerating rate. So, the Fed will absolutely be forced to print money.
This money printing, whether it happens today or tomorrow, it’s actually ongoing all of the time. We see it in all of the central banks balance sheets worldwide. They are all expanding. They might pause for a few weeks, but it is absolutely clear that they will continue to print. Participants in the gold market shouldn’t believe a word of what the central banks say.
The bottom line is investors must protect themselves with gold because QE will continue and it will accelerate. The average debt to GDP around the world is something like 350% and that excludes the unfunded liabilities. That’s total debt, private and government debt.
Even if we cut that 350% figure in half, to 175% debt to GDP, it would mean a reduction in debt, worldwide, of roughly $25 trillion. This just reinforces the point that governments will need to print in the tens of trillions of euros. Keep in mind this is the current situation, without any further disasters in the derivatives area.”
http://kingworldnews.com/kingworldne...iss_Franc.html
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Old 04-06-2012, 07:07 PM   #10
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Originally Posted by ancona View Post:
I give Bruce Krasting the same credibility I give spammers.
Seriously? I always thought Bruce made a lot of good points. Is there something in particular he's said or done that you disagree with?
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Old 04-10-2012, 10:27 AM   #11
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Doodoo

Top 5 loosers in the Eurostoxx 50 index (hint: 1 insurer and 4 banks)

AXA SA
-4,75 %

INTESA SANPAOLO SPA
-5,23 %

ING GROEP NV
-5,37 %

SOCIETE GENERALE SA
-5,85 %

UNICREDIT SPA
-7,21 %
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Old 04-10-2012, 02:45 PM   #12
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Swiss government bond market now has negative yields on the short end:
http://www.zerohedge.com/contributed...em-switzerland
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Old 05-14-2012, 03:45 PM   #13
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The SNB is ardently defending the peg. The don't let the EUR slip below 1.2010
The new quartly SNB balance sheet numbers will look very ugly.


By the way, gold is very close to a major low in CHFs.
During the last few years, it always made a huge run-up when the SNB was forced to intervene in the currency markets (early 2009, May 2010, August 2011) It then retreated to the highest point of the preceding intervention over the following months and returned to it's inevitable rising pattern again. The current downside target is CHF 1450, the initial may 2010 high:


5 year chart, watch the periods of fx intervention (early 2009, May 2010, August 2011)
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Old 05-18-2012, 12:39 PM   #14
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As I said in the post above. Gold touched the long-term support of CHF 1450 ... and bounced back. Now it's over CHF 1500 again. It once again proves that gold is a currency, no matter what fiat you mesure it in.

In the meantime, the SNB is trying hard to defend the EUR/CHF peg, keeping it in a very tight trading range (1.2009-1.2011) This has been going on for more than a month now.
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Old 05-24-2012, 02:49 PM   #15
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Presented without comment :

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Old 05-24-2012, 04:50 PM   #16
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so what did it cost SNB to knock down a 0.7% spike ?
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Old 05-24-2012, 08:00 PM   #17
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Originally Posted by rblong2us View Post:
so what did it cost SNB to knock down a 0.7% spike ?
Pressing a few buttons on a computer keyboard ... that's what "money" creation looks like these days

They've more than doubled their balance sheet since the Euro crisis started in late 2009.
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Old 05-25-2012, 07:30 AM   #18
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Originally Posted by swissaustrian View Post:
...
They've more than doubled their balance sheet since the Euro crisis started in late 2009.
"This is not the monetary inflation you are looking for."

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Old 05-26-2012, 06:11 AM   #19
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http://www.goldmoney.com/gold-resear...012-newsletter

Swiss franc peg called into question
2012-MAY-23
In recent months the Swiss National Bank (SNB) has been facing growing criticism as a result of its attempts to suppress the value of the Swiss franc. The SNB has been buying euros in an effort to stabilise the euro at the 1.20 Swiss franc mark. Swiss parliamentarians have also started to question the auditing processes for the country’s gold reserves, while some conservative politicians are backing a private initiative promoting the introduction of a new gold franc.

Many Swiss are asking why the SNB is trying to prop up the euro. In Q1 alone the bank spent 1.7 billion francs on open market operations, buying the euro whenever it has looked like falling through 1.20. These measures are aimed at protecting the export and tourism sectors. The 2008 financial crisis also forced the SNB to engage in unprecedented money printing in an effort to prop up the country’s banking system. But critics say that this is destroying the country’s sound money reputation and undermining generations’ worth of hard-earned national prosperity.

“The Gold Initiative” led by Luzi Stamm's SVP party has also been attracting attention. This initiative is trying to promote greater disclosure about the status of the nation’s gold reserves, and – as with similar campaigns in Germany – is trying to get the SNB to repatriate gold held abroad. The initiative also wants to place strict limits (golden chains if you will) on the SNB’s ability to sell gold. Supporters of this campaign hope to collect at least 100,000 signatures from Swiss citizens in a push for a national referendum on the issue.

Another private initiative that is finding support among conservative politicians is calling for a prompt introduction of a new gold franc. This gold franc should function as a parallel currency to the Swiss franc and protect citizens from devaluation and the financial market risks. Yesterday the National Council's Committee for Economic Affairs discussed this issue, and supporters also hope that this idea can be put to a referendum.

Gold is slowly moving back into favour among Switzerland’s economic elite.

Roman Baudzus
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Old 05-31-2012, 10:27 AM   #20
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As of today, I've started to buy currency hedges for my USD-denominated assets (stocks, speculative paper trades). USD/CHF is above 0.97 CHF, close to the long term downtrend line which is currently at 1.01 CHF. The chart ends on 7/31/2011, right before the SNB started the peg to the Euro. Everytime it has come close to the trendline, it was a good time to hedge. Additionally, the peg to the Euro might not be defendable, sending the CHF massively higher in a huge spike. I'm not taking these risks:


The other side of the trade for the US traders here on pmbugmeans buying CHF with USD. But don't blame me if the CHF falls further
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