I invested in the Swiss Franc both at Everbank and via the ETF “FXF” but withdrew when the Swiss pegged their franc to the euro in September 2011 to stop its appreciation.
The ratio chart below shows little better in performance for the franc than the Euro since then, trading in a tight band as one might expect. Do you like the SF because the potential is there to DE-couple if the Euro crashes again, then?
You bring up a good point and as long as the euro is holding it’s own against the dollar, the peg should continue. The Swiss are an “export” nation and the government is under pressure from the export sector to stay competitive. But as the euro starts to collapse, I don’t believe they will go down with the ship. They have a long-term history of being prudent, but less so lately. In the last decade they have sold off a significant portion of their gold reserves to the point that the Swiss franc is no longer fully backed by gold, but if things start to collapse around the globe, history suggests that the Swiss will land on their feet.
Remember, this is a defensive strategy and another form of diversification. Personally, for me, I stick with gold and silver and some platinum – physicals, of course. But if you want to diversify into another “currency,” the SFR should be on your short-list.
Hi! I have a question for your Q&A day on Wednesday.
I am looking at buying land and/or a house sometime in the future as a place to eventually retire to. I currently rent a house in the town where I work and for a variety of reasons (job security, etc) I feel while I am working, renting is a better option than buying right now. The question I have is (and I know this requires you gazing into your crystal ball) – do you think I would be better off going ahead and making the land and/or home purchase now with surplus cash I have on hand (and I have plenty of cash to do this) or would I be better off taking that cash and buying more precious metals with it now, and then at a future point in time, use those metals (which hopefully will convert to a lot more dollars!) to then buy the land/house at that time? I guess it all boils down to what does one think is going to happen with the price of precious metals in the next 2-10 years vs the price of homes and land. Obviously if one needed a place to live NOW then that somewhat affects the decision. But I am fortunate to be in a position where I can wait if, in waiting, I can grow my money faster in PM’s and thus get a better bang for the buck down the road. I guess you could extrapolate/generalize this question to ANY purchase – whether one might be better off converting cash to PM’s in the short term with the thought that it will exponentially increase one’s purchasing power of ANY item down the road. Thanks!
Mike in Idaho
This is a great question, as it draws on several different key issues – most importantly, the concept of savings versus investment.
We have long discussed how physical precious metals should be considered the former, as they have historically demonstrated the properties of money – which clearly, history’s 599 prior fiat currencies have not. Not to mention, as the current regime appears to be on its last legs, and so-called “money” doesn’t even pay interest – and in some cases, negative interest, whilst being destroyed by inflation, while sitting in banks that will eventually be bailed out or “bailed in.” In other words, so long as you purchase metals with funds you don’t anticipate “needing” to pay for something in the near future, you should fell safe holding physical PMs – so long as they are held outside the banking system. To that end, the same goes for a home, but only if you intend on living in it for a long period of time. Just as “falling prices” for metals are only a near-term issue if you intend on selling them, falling real estate prices are only an issue if you plan on, or need to, sell.
However, only you can know how comfortable you are with the current risk/reward ratio of both precious metals and housing; and that goes not only for relative prices, but the potential for both near-term and longer-term changes in regulations, fees, taxes, and other relevant issues in both asset classes. And when making such a decision, remember that things don’t change in a vacuum – as if the world goes to hell (or remains in “heaven”), both asset classes may or may not experience radical changes. And most importantly, don’t forget that when the end game arrives, it will likely be very difficult – if not impossible – to source physical precious metals, while real estate will likely be plentiful. – Andy Hoffman
Hi! I have a question for your Q&A day on Wednesday.
Have you been listening to James Rickards and i hear him pushing SDRs as the new global currency, he telling Washington groups the fed saved the system and now has a bad balance sheet and the IMF is clean and this the way to go i smell a rat.I s this not the same old fiat system just giving the same power to the same people calling it something new and improved. Wont They will still manipulate gold and silver and the fiat money with no end in site,To me i see j Rickards as a rat putting the IMF idea in everyone’s head and being ok.We the people should get rid of fed IMF and issue our own money.Have a real us dollar. What do you guys think?
I’m glad that you asked and I must agree and say “very perceptive”. I have written about Jim Rickards several times. I met Jim in London in 2011 at the GATA conference just as he was coming on to the scene. Jim was sitting at a table and had 5 or 6 people standing around him asking questions. Eric Sprott and I stood and listened to him for maybe 5 minutes regarding the SDR and that the Treasury could just mark up the price of gold to whatever they wanted to and recapitalize the Treasury.
Here is the good part, I asked him if he knew that our gold had not been audited since the 1950’s and then finished by asking him “how do you know that there is ANY gold left at all? This took him by surprise and I knew by his reaction he was being honest in his answer which was “really? I didn’t know that there had not been an audit? Are you sure?”. He then said that this was something he needed to look in to.
Eric and I walked outside and the general consensus was that if Rickards did not know there had been no audits for 60 years then what else didn’t he know? Also, if his “premises” were based on the belief that we “had the gold” we claim to, then whatever his conclusions were had to either be wrong, or correct but for the wrong reasons. In other words, “GIGO” garbage in, garbage out syndrome.
Please understand that he does in my opinion mix in some truth, just enough to give him credibility and be accepted as one of the good guys… I think it’s how the “company” works in matters like these. – Bill Holter