ZURICH / BERN, SWITZERLAND – The Swiss National Bank is showing a consolidated profit of CHF5.8 billion for the first nine months of the year, thanks primarily to gold prices. The profit was achieved despite an over-valued Swiss franc that caused losses of CHF4.7 billion.
Other currency positions resulted in gains of CHF5 billion, giving the central bank a net currency position of CHF0.3b. The over-valued Swiss franc and intervention by the SNB, particularly in August and September, were the main factors in the bank’s currency situation at the end of nine months. The bank notes that at the end of the quarter, the US dollar was trading 3.1 percent lower than at the beginning of the year, and the euro 2.8 percent lower.
The SNB’s currency investments are 55 percent in euros, 25 percent in dollars, 9 percent in the yen, 4 percent in sterling, 4 percent in Canadian dollars and 3 percent in other currencies.
The price of gold at the end of September accounted for the bulk of the profit: it was around CHF47,089 per kilo, giving the bank a valuation gain of CHF5.0 billion. But the bank noted in a statement issued Monday 31 October that “the SNB result depends largely on developments in the gold, foreign exchange and capital markets. Consequently, strong fluctuations are normal, and only provisional conclusions are possible as regards the annual result.”
UBS bailout fund loan down by CHF4b to outstanding CHF7.9b
The stability fund, created for the government’s bailout of bank UBS in 2008, contributed CHF573 million in interest payments, to the central bank’s profits. “The loan to the stabilisation fund was reduced from CHF 11.8 billion (USD 12.6 billion) to CHF 7.9 billion (USD 8.8 billion), and the total risk exposure decreased from almost CHF 14 billion to around CHF 8.7 billion.”
Melting old metals, Heraeus in Switzerland (photo, ©2011 Heraeus)
BERN, SWITZERLAND – Deep in the trade figures published 20 July by the Swiss government is a note that imports were down largely because no gold was imported from Vietnam.
Switzerland melts down the gold for use mainly as bullion, although some is used by the watch industry and increasingly, by the electronics industry.
Switzerland is one of the world’s leading gold smelters, partly as a result of its currency being the last to be linked to gold, until 1999, when Switzerland joined the IMF (International Monetary Fund).
The Swiss trade surplus, the difference between exports and imports, grew by a mere 2.7 percent in the first half of 2011 despite a very strong franc that should have made imported goods cheaper, giving imports a boost. Imports in fact slipped, and Vietnam’s gold was the reason, or lack of it, was the reason, but mainly because imports earlier were very high.
Three factors played a role, says economist and spokesperson for the Swiss Federal Finance Department Sébastien Dupré: Vietnam’s export quotas, the record high price of gold, and the “immense” stocks of gold in Vietnam.
“The Vietnamese government delivered export quotas for gold at the end of 2008. Before then, gold exports were strictly forbidden. Companies that are active in the market tend to use their quotas as rapidly as possible in order to get a new one; in other words, before the government makes an about-face.” China Post this week in an article on the Swiss trade balance notes that media in Vietnam say the government is considering tightening gold trade restrictions.
The price of gold in mid-July rose to a record high of $1,600 per ounce, and has since continued to climb, with a dip Friday morning below $1,600 following news of a second bailout for Greece. The price rose 8.1 percent in the second quarter of 2011, compared to Q1, according to the World Gold Council.
Analysts are offering varying predictions for how high it can go, reports the Financial Times 21 July in a series of interviews.
“The high price of gold has encouraged potential sellers in Vietnam to sell their gold immediately, in other words, to fill their export quotas right away,” says Dupré. “For the Vietnamese, the rise in the price of gold is made yet more attractive by the simultaneous depreciation of their currency, the dong. As a result, theincentive to sell gold is more marked in Viettnam than elsewhere.”
Vietnam has always been a huge gold importer, he notes, with 80 to 100 tons a year. “Given the longtime ban on exporting it, the gold stocks in the country have risen so that the country now has immense stocks.”
The country is reported to make massive quantities of jewelry, which can be exported, in part to get around government restrictions on exporting it in a monetary form.
Link to: wikipedia on gold, video: the making of gold ingots at Heraeus
GENEVA, SWITZERLAND – The price of gold, like the Swiss franc, continues its meteoric rise, reaching the record price of $1,600 an ounce as worries grow about the US debt ceiling negotiations and sovereign debt in several European countries.
One-ounce gold US eagle coins are selling like hotcakes in New Orleans, reports USA Today. By Tuesday morning gold was hovering just below Monday’s record high, reports Reuters, as the dollar and euro remain weak.
Zurich, Switzerland (GenevaLunch) - The Swiss franc rose again against the US dollar, the euro and the British pound, 3 December 2010. The dollar slipped back under the franc in the wake of pessimistic figures on employment, while the euro fell amid a background of fears over the credibility of bailout packages for Greece, Ireland, Portugal and Spain. The dollar ended the week at about CHF 0.973, the euro at CHF 1.305 and sterling at CHF 1.536. The historically high rates for the Swiss franc show the traditional role of the Swiss franc as a haven in times of uncertainty. They also help keep down Swiss inflation and interest rates but are making it hard for Swiss manufacturers and the tourist industry to compete.
Gold also rose above $1,400 in the wake of uncertainty and substantial buying from China.
UBS stabilization fund not included: will make “significant positive contribution”
Zurich, Switzerland (GenevaLunch.com) – The Swiss National Bank expects a CHF4 billion loss for the first half of 2010, it announced Tuesday morning 21 July. The loss is the result of its active role in foreign currency markets from January to June, with CHF132b invested in other currencies.
The bank says in a press release that “the bulk was placed in euro-denominated investments. The sharp appreciation of the Swiss franc, in particular against the euro, resulted in exchange rate losses of over CHF 14 billion.”
The loss was, however, limited by the steep rise in the price of gold, which has risen about 12 percent since January, and a stronger Swiss franc. The definitive figures will be released 13 August 2010.
Zurich: ready to shop again
Zurich, Switzerland (GenevaLunch) - The Swiss franc rose against most other currencies Tuesday 11 May, while the euro wobbled: a rise in Swiss consumer confidence boosted the Swiss currency, while doubts surfacing in the wake of the eurozone bailout weakened the euro. The franc has been steadily appreciating against the euro, with the Swiss central bank intervening since March to keep the price from rising too rapidly. It was trading at 1.41 at the end of the day. Six months ago it was at CHF1.50 to the euro.
Spot gold also rose, to its highest price since the Lehman Brothers collapse in 2008: $1,232.40 a troy ounce, as investors appeared to seek safe havens.
Philipp Hildebrand, chairman of the Swiss National Bank, opened a high-level meeting of international monetary system expertsin in Zurich Tuesday. He remarked that “discontent with what is often perceived as excessive exchange rate volatility has been an important source of dissatisfaction with the present international monetary system. What constitutes excessive exchange rate volatility, and whether domestic policies or the international monetary system are at the root of it, is a matter of legitimate debate.”
Historical exchange rate graph, Swiss franc/euro, November 2009 to May 2010
Links to other sites: AFP, Bloomberg/Business Week, Financial Times
Zurich, Switzerland (GenevaLunch) – The Swiss National Bank (SNB) had cumulative profits for 2009 of CHF6.9 billion at the end of September 2009 thanks to the continuing high price of gold, improvements in financial markets and low interest rates that resulted in valuation gains in both gold and foreign currency investments. Gold accounted for CHF3.8 billion: the price of gold was at CHF33,304 at the end of the third quarter, compared to CHF29,640 per kilo at year-end 2008.
Rich investors are hoarding their gold, sometimes keeping it in their own vaults, the Financial Times quotes analysts as saying, as “safe haven” buying of gold and in particular gold coins continues to push up the price. It’s currently trading at $892 an ounce and precious metals experts at UBS and Goldman Sachs say the hoarding will drive the price up to $1,000. According to the FT, the US Mint in January 2009 sold four times as many US American Eagle gold coins as a year earlier. US Mint figures for gold coin sales, 2008
