Gold Reaches New All Time High in India

The rush to physical gold amid devaluing currencies is a world phenomenon largely unnoticed in the US because of the flight to safety in the US dollar and a strong institutional bias among Wall Street which prefers to deal in paper for its higher turnover and richer fees.

If this trend changes, if the dollar loses some of its own safe haven appeal, if the gold shorts are forced to capitulate despite the propping from the Central Banks, then this could be a surprisingly strong market move.

Gold is already proving to be a desirable alternative to the Swiss franc which as we have noted before has become a disgraceful shadow of its former self because of Swiss government mismanagement. Watch the Swiss howl when their interest rates must move higher to accommodate the debasement of their currency to salvage a corrupt banking sector.

The Economic Times (India)
Gold at all-time high of Rs 15,800 per 10 gm in Delhi
19 Feb 2009, 1350 hrs IST

NEW DELHI: Surging gold prices set yet another record of Rs 15,800 per 10 gram in the national capital on Thursday in line with the surging global bullion markets on speculation that the global recession will deepen further.

The precious metal recorded fresh gains of Rs 50 to Rs 15,800, a level never seen before, after poor economic data of Russia and Japan raised concerns of a growing malaise of global recession.

Jewellers and market analysts said the demand of the yellow metal picked up after the global equity and forex markets dropped in the recent past.

They said shaky investors find no other option but to park their funds in the precious metals, while physical buying for the current marriage season declined substantially

We do not see any customers these days as surging gold prices cooled down the demand for jewellery in this marriage season," said a Delhi-based Jeweller Gaurav Anand.

A similar firming trend in other regional bullion markets in the country also dampened trading sentiment to a great extent. In Kolkata, the gold opened at a record high of Rs 15,925 per 10 gram.

Meanwhile, gold in futures trading touched a new high by rising 0.88 per cent to Rs 15,712 per 10 gram at the MCX counter.

A Sad Day for the Swiss Franc

"What the Swiss government and central bank have done to their economy and finances is a disgrace. We hold no Swiss francs any longer. The Swiss people have been treated badly." 6 November 2008 Le Café Américain

We warned some time ago that the Swiss franc, long a beacon of monetary stability through the world, has been horribly compromised by a central bank with policies little different from those of the Fed, and other central banks using competitive devaluation to promote industrial policy.

If you are a Swiss exporter or a Bank you might be content.

If you are Swiss and you wish to preserve your wealth, buy gold.

"…the national bank will continue to act decisively to fight the impact of the economic contraction… a central bank can always increase the absolute amount of its own currency in circulation... the national bank could sell Swiss francs against other currencies without limits. In an extreme case, it could commit itself to buying foreign currencies at a fixed rate."
Philipp Hildebrand, Vice Chairman, Swiss National Bank

Hildebrand Says SNB Can Intervene in Franc Market
By Joshua Gallu and Simone Meier

Jan. 22 (Bloomberg) -- Swiss National Bank Vice-President Philipp Hildebrand said policy makers are prepared to intervene in currency markets at fixed exchange rates if necessary to prevent a “renewed appreciation” of the franc...

The franc has risen around 6 percent against the euro since October as the global financial crisis forced the Swiss central bank to cut its benchmark rate by 225 basis points, taking it to 0.5 percent. That’s smothering inflation and hurting exports, which make up more than half of Swiss gross domestic product. (And the other half is dominated by banks which are largely insolvent through mismanagement and various forms of fraud - Jesse)

“With short-term rates of practically zero, the SNB can’t prevent a further appreciation in the Swiss franc through a rate cut,” Hildebrand said in a speech in St. Gallen, Switzerland late yesterday. “The SNB is able to sell unlimited Swiss francs versus another currency. In an extreme case, it can commit itself at the same time to buying unlimited currencies at a fixed- exchange rate.”

The franc dropped after the remarks and extended its decline today. As of 7:51 a.m. in Zurich, it was at 1.5093 per euro from 1.5022 yesterday. It reached a record high of 1.4315 versus the euro on Oct. 27. Against the dollar, the franc was at 1.1562, having fallen late yesterday to 1.1616, the weakest since Dec. 15.

“The central bank can and will continue to provide liquidity, as much and for as long as needed,” Hildebrand said. “The SNB will continue to act in a decisive way in order to counter the effects of the economic contraction.”