IF 200 -- August 29, 2011 -- 5/20

When liquidity is abundant and money supply M1 tends to reach out to the sky, gold follows -- see historical charts on bottom of page 4 -- also aided by escalating sovereign debt crises and a global economic cooling sentiment.    In plain English, as savvy investors, facing major real losses, are turning increasingly to gold, paper currencies, even though no longer on a gold standard, are being “redeemed” for gold in the marketplace.    There is out there a crying evidence of general distrust of politics’ ability to lead effectively economies and countries, both in the old and new continent.    Politicians have irresponsibly accumulated large public debt and, as a consequence, reduced the world’s richest nations to the position of the largest global debtors.

Aside from Treasuries and gold, the Swiss Franc has consistently been targeted by global investors seeking a safe haven for their wealth.    The Swiss Franc surge is affecting domestic exports to a point that businesses are exerting significant pressure on politicians and the central bank to take action.    The Swiss National Bank (SNB) expanded sight deposits to 200 billion Swiss Francs from 120 billion and slashed interest rates to zero, while expressing the intention use forex swaps to accelerate the increase in Swiss Francs’ liquidity.    Despite all these measures, the Swiss Franc remains largely overvalued.