Free Market Propels Swiss Franc 30% Higher [CurrencyShares Swiss Franc Trust, SPDR Gold Trust (ETF)]

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January 22, 2015 12:50pm NYSE:FXF NYSE:GLD

switzerlandThe Silver Bug: Central bankers believe they can control the markets.


They believe they can guide an economy and point it in the right direction.

They believe they control the fate of their fiat currencies.

Central bankers are wrong.

In the short term, perhaps this is correct, but in the long term, the free market always wins.

The Swiss Franc is the most recent example of the free market destroying this absurd belief shared by many politicians, Keynesian economist and Central bankers.

Swiss central bankers finally had to admit defeat in a battle they have been losing since inception.

That being the artificial peg they created to the Euro, which has been draining resources and funds from the Swiss people since it began.

The cost have been mounting for some time, but given the strong likelihood of a huge QE announcement from the European Union soon being initiated, the Swiss have correctly gotten ahead of the curve and broken the peg.

This announcement came as a surprise to many market participants and sent the dollar and euro plunging, while the franc itself exploded 30% higher!

A monstrous move that showed the true pent up demand of the free market.

Another explosion higher, which occurred as a result of this announcement was gold.

Gold exploded higher in a move that delighted precious metals investors, moving up a whopping $50.00 on the Swiss Franc announcement.

This move propelled gold to $1270, a high not seen since September 2014.

This strength has carried over and continued the following day, with gold hitting as high as $1280 at one point.

Although these gains were very positive, what was even better, was the fact that gold rose in ALL major currencies, not just that of the USD, which was plunging on the Swiss announcement.

The Swiss have taken this drastic move in order to protect themselves and separate from what would of been a monumentally costly peg.

This was smart on their part, as it needed to happen, even if it was not what they ultimately envisioned.

Once again, this has shown that the free market can be contained in the short term, but never in the long term. In the long, the free market will always break free and exert itself.

This article is brought to your courtesy of The Silver Bug.


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