Now I understand why some run to the Swiss franc as a safe haven:
Foreign Currencies Backed By Gold
The US Dollar was once backed entirely by gold, thus earning the term “greenback.” The Swiss Franc (CHF) was once 40% backed by both gold and silver, but in 2006 when the Swiss had to sell its gold and silver reserves to join the IMF. Today, not a single solitary currency on the face of the world is backed even 1% by gold or silver, as all nations have inflated their currencies to unprecedented levels in the past 50 years.
In hindsight, the link created to gold by Bretton Woods may have been best left alone. But in the 1970s, with the United States going through an inflationary cycle, the dollar’s connection to gold was eliminated. As such, global currency investors sold off the dollar as it was no longer one of the few currencies backed by gold.
Commodities, Gold and Currencies
Despite selling its large gold and silver reserves in 2006, the Swiss Franc (CHF) remains as an excellent bet on precious metals. Investors, seeing value in the anonymity and neutrality of Switzerland, typically buy the Swiss Franc as a safehaven investment during turbulent economic times. The USD/CHF pair performs to parity with the price of gold, with the dollar representing the “anti-gold” wager and the Swiss Franc being a partial gold hedge.
During the global financial crisis of 2008 and the subsequent European debt crises in Spain, Portugal, and Greece, investors started buying the Swiss Franc as a European alternative. The Swiss Franc, after all, is the only partially gold-backed currency in the world, but it is also one of the few currencies in Europe that isn’t the Euro. Currencies backed by precious metals simply no longer exist.
In truth, most countries do own gold, though their gold reserves are not explicitly owned for the purposes of backing their currencies.
The largest gold holders, measured in metric tonnes, are as follows:
United States 8,133.50
Germany 3,401.80
Italy 2,451.80
France 2,435.40
China 1,054.10
Switzerland 1,040.10
Russia 775.2
Japan 765.2
Netherlands 612.5
India 557.7
Note: The Eurozone as a whole (all countries that use the Euro) and the International Monetary Fund would rank as #1 and #3, respectively. However, as they are not individual countries, they are not included in the above list. For reference, one tonne of gold is worth $35,273,000 when gold is $1,000 per ounce.
Foreign Currencies Backed By Gold
The US Dollar was once backed entirely by gold, thus earning the term “greenback.” The Swiss Franc (CHF) was once 40% backed by both gold and silver, but in 2006 when the Swiss had to sell its gold and silver reserves to join the IMF. Today, not a single solitary currency on the face of the world is backed even 1% by gold or silver, as all nations have inflated their currencies to unprecedented levels in the past 50 years.
In hindsight, the link created to gold by Bretton Woods may have been best left alone. But in the 1970s, with the United States going through an inflationary cycle, the dollar’s connection to gold was eliminated. As such, global currency investors sold off the dollar as it was no longer one of the few currencies backed by gold.
Commodities, Gold and Currencies
Despite selling its large gold and silver reserves in 2006, the Swiss Franc (CHF) remains as an excellent bet on precious metals. Investors, seeing value in the anonymity and neutrality of Switzerland, typically buy the Swiss Franc as a safehaven investment during turbulent economic times. The USD/CHF pair performs to parity with the price of gold, with the dollar representing the “anti-gold” wager and the Swiss Franc being a partial gold hedge.
During the global financial crisis of 2008 and the subsequent European debt crises in Spain, Portugal, and Greece, investors started buying the Swiss Franc as a European alternative. The Swiss Franc, after all, is the only partially gold-backed currency in the world, but it is also one of the few currencies in Europe that isn’t the Euro. Currencies backed by precious metals simply no longer exist.
In truth, most countries do own gold, though their gold reserves are not explicitly owned for the purposes of backing their currencies.
The largest gold holders, measured in metric tonnes, are as follows:
United States 8,133.50
Germany 3,401.80
Italy 2,451.80
France 2,435.40
China 1,054.10
Switzerland 1,040.10
Russia 775.2
Japan 765.2
Netherlands 612.5
India 557.7
Note: The Eurozone as a whole (all countries that use the Euro) and the International Monetary Fund would rank as #1 and #3, respectively. However, as they are not individual countries, they are not included in the above list. For reference, one tonne of gold is worth $35,273,000 when gold is $1,000 per ounce.