Wednesday, September 7, 2011

Swiss franc pegged to euro - More reason to buy gold and silver

Switzerland is becoming less "Switzerland" with each passing day. Following the banking secrecy scandals, which dimmed image of safe haven country, now even more shocking news emerge.

In a desperate bid to stop currency appreciation and protect exports, Switzerland took a drastic measure. They`ve announced pegging their currency to the euro at a minium rate of 1.2 francs per 1 euro.

Investors and some banks preferred to keep their investments in Swiss francs as it used to be one of the last currencies with big gold exposure, Switzerland having an annual inflation rate of just 1%.
Now that the major safe haven currency has gone bye bye, very few alternatives remain. Some say the Singapore Dollar, Norwegian Krona, Canadian or Aussie Dollar might present such safe havens.
However, all countries associated with these currencies run the risk of doing same thing as Switzerland. If their currencies will start to be seriously hunted by safe haven speculators, they`ll just try to devalue in a bid to protect their exports

Now what are the alternatives? There`s only the obvious choice of gold and silver and probably some mining stocks. The latter will be subject to a future piece, as it might present interesting alternative with much upside.

Suggested plays, silver and gold leveraged 2x etf/etns: $DGP, $UGL and $AGQ.

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