Could a Swissy rally be on the cards?
The Swiss Franc (CHF) nicknamed the Swissy could be undervalued in a deteriorating geopolitical climate. US-China relations are at an ebb with both sides locked in a long-standing trade war. There is unrest in Hong Kong and even recent protests in Russia. In the heart of Europe, the ‘Yellow-vest’ protesters clashed with French police on Bastille Day, Moreover, the UK looks set to exit the EU with no deal under WTO terms which has done little to placate the exodus of auto manufacturers in the UK.
Despite the current tumultuous geopolitical situation the Swissy rally has failed to materialize
Swissy is often referred to as the safe-haven currency, as it is a backup for investors during times of geopolitical tensions or uncertainty.
Switzerland is renowned for its political stability, sound fiscal and monetary policy.
So a currency basking in political stability and steady macroeconomics makes the Swissy the quintessential safe-haven currency to which international investors shelter in times of crisis.
Who thinks we are not in a crisis?
The world central bank, the Fed doesn’t have many rounds in its chamber to prevent asset prices collapsing to fair value.
With the economic cycle turning again unmistakably downwards the Fed’s monetary easing policy is now looking jaded. With interest rates already hovering near historic lows all that is left to keep the asset bubbles inflated is more quantitative easing QE.
More QE will debase the world’s reserve currency, halt the USD rally and create even more unsustainable debt.
All this could be sweet music to the years of the Trump administration. The US is locked in a bitter trade war with China, it wants its manufactures to make its products at home and export. So a nation that wants to reinvigorate its manufacturing would see a strong currency as its Achilles’ heel. Trump is also known as the king of debt.
Investors will seek safe-haven assets, CHF could be the next defensive play making a Swissy rally a not too distant future
If we go back to 2010 when the central bank was nearing the peak of its asset purchase, which is known as QE we can see an inverse relationship between the central bank’s QE and the exchange value of its fiat currency.
In a few words, QE debases the central bank’s currency and excessive QE risks destroying its value completely. It risks creating a monetary crisis similar to that experienced in the Weimar Republic which made the German mark worthless.
The US national debt clock continues to tick away.
The last count shows that US national debt at 22.5 trillion USD which equates to a debt per citizen of 68,293 USD.
Meanwhile, approximately 9.2% of American households, 40 million American are on food stamps. But the central bank’s product is debt. So we have a debt-fuelled speculative economic recovery driven by asset bubbles. It is a surreal situation which is not sustainable in the long run.
A Swissy rally could, if it does materialize, be the story about a central bank which continued to back its currency with gold
Indeed, the Swissy is the only currency in Europe which is 40 percent underwritten by the shiny precious metal, gold.
But the Fed, the world’s most powerful private banking cartel, doesn’t want its power curtailed by a shiny metal.
Fiat money debt is the way those at the apex of the new world order will control the global serfs, governments, corporations and everything in between.
In 1815, Rothschild made his famous statement: “I care not what puppet is placed upon the throne of England to rule the Empire on … 99 “Permit me to issue and control the money of a nation, and I care not who makes its laws.
A Swissy rally is similar to a gold rally and everything that is outside the fiat system
We are seeing a scramble into the diversification of tangible assets.
The fiat money kings of the universe may sacrifice their brand of fiat currency but it will only soon be replaced by another brand of fiat money, and you bet your bottom dollar that the existing kings will want to control it. That kind of unimaginable power is never given up without a calamity.
So in the coming transition, it may indeed be wise to buckle down into haven assets. Maybe the Swissy rally along with a rally in precious metals could make the headlines going forward.
I do not believe that what we are witnessing is a cycle but a reset where safe havens will rally strong. Keep your eyes peeled to capital flows for a heads-up.
Stay tuned, keep focused and calm, as with every crisis there also comes great opportunities. Maybe the Swissy rally is just one of them.