Dear PGM Capital, blog readers,
Today, Monday July 25th 2011The Swiss franc hit record highs against the US-Dollar and Euro as the safe-haven currency continued to benefit from economic uncertainties.
At 11:25 EST the euro slumped to an all-time low of 1.1582 Swiss francs (-1.481%), while the US-Dollar weakened to 0,8059 Swiss francs (-1.553%).
From below 5-year charts of the Euro and USD against the Swiss Franc, we can clearly see the free fall of both currencies against the Swiss Franc.
The Australian dollar also leapt to a record high of $1.086, thanks to rallying commodity prices.
The resources-based Aussie has traded near or above parity with the greenback since first breaking through on October 15 2010, having surged about 20% since June 2010, as Australia experiences a robust mining boom.
Here below you’ll find a 5-year chart of the Australian Dollar against the US-Dollar.
The US dollar also fell against the yen to a record low of 78.3300 Yen for 1 US-Dollar as can be seen from below 5 year chart.
We believe that the days of the US-Dollar as reserve currency are numbered and that much sooner than most people think, international trades will be done in combination with barter deals and the usage of a basket on currencies of the new rich countries and precious metals.
Yours sincerely
Eric Panneflek
Chairman
Of course these devaluation results were to be expected and had been predicted by several experts in the field. Nevertheless, the process has accelerated due to the EU’s uncertain handling of the PIGGS situation and Washington’s insufferably childish behavior towards a practical joint tackling of the deficit problem. This comes on top of the already devaluated UD$ as a result of Bernanke’s money printing madness.
With Moody’s warning that there could be a further downgrading of the US$, investors are scrambling for the exit and are madly looking for safe havens: gold, silver (which will explode), Swiss franc, Aussie $ and possibly also the Can $
However, as usual, this is the hype of the moment. One piece of good news from Washington and the stampede will turn the other way. That is the mindset of the trader; he can’t help it. The long-term investor should not fear, as these trends can no longer be turned around. The US & EU will have to go a slow & painful turnaround process, during which gold and other currencies will remain the safe havens.
We will go through enormous swings, though, as the volatility of the market will be influenced by every breath or shadow of a doubt in a financially, globally connected world, making it a ver turbulent affair, quite in keeping with Alan Greenspan’s book. It will be a time for selling & buying, depending on the mood and mindset of the investor. BUT BEWARE of the hype: when everybody wants to buy Swiss francs, gold, silver, and so forth, this will have a negative impact on these very safe havens. Then it is time to sell and wait and see what’s next. The Swiss franc should not rise too much either, or it will cause a problem at home (Switzerland) causing the Swiss to take measures to remain competitive.
One should always stay alert as the market is a human-sensitive organism, as liable to gyrations as the human’s mood.