Francogeddon: A Eurozone Luxury Problem?

Even though the rest of the world’s working poor dismiss it as a mere Eurozone luxury problem, will the Swiss franc no longer being pegged against the euro affect working class Swiss citizens?

By:Ringo Bones 

Back in January 16, 2015 the headline “Francogeddon” rattled the Eurozone economy when the Swiss government suddenly decided the morning before to suddenly “unpeg” the Swiss franc against the euro. The resulting monetary policy move resulted in the Swiss franc rising 40-percent against the euro to 0.85 Swiss francs against the euro as the Swiss government removed the cap on Thursday morning January 15, 2015 before settling down a few days later. 

Inevitably, Swiss stocks lost 10 percent of its value resulting in billions of dollars being wiped out in their value and a New Zealand based currency brokerage and investment firm Global Brokers NZ was driven into bankruptcy as soon as the de-capping of the Swiss franc hit the fan. And also, this results in additional burden to mortgage holders whose mortgages are in Swiss francs. But why did the Swiss government made such a seemingly “bone-headed” move? Well, at least the Swiss people now wanted why the powers-that-be of their central bank made such a move and wonders whether if the Swiss National Bank’s managers are really up to the job. 

As of late, central banks now have a hard time maintaining economic stability on their own in their respective jurisdictions. During the past three and a half years, the Swiss National Bank capped the value of the Swiss frank at 1.20 Swiss francs to the euro. Such monetary policy had made the Swiss franc one of those “safe haven investments” instrument akin to gold or the Japanese yen. Keeping the value of the Swiss franc artificially low – according to Swiss government economists – benefits the Swiss tourism and manufacturing industry by making their products and services lower in cost in comparison to the neighboring competition. Sadly, 99-percent of the world’s population still can’t afford to buy an entry-level Rolex or go skiing to the Swiss Alps on a whim.  

Silver: Safe Haven Investment of Choice for 2013?

Despite being relegated as the “poorer cousin of gold”, is silver now poised to become one the safe haven investments of choice for the year 2013?

By: Ringo Bones

As one of the top four precious metals – along with gold, palladium and platinum - that are traded on a per troy ounce that appear on the world market’s commodities tick , silver is on average 55 times cheaper than gold. And yet silver has been steadily rising in value – along with gold – since we have been hit by the global credit crunch back in 2008.

Even though this is a rare period in history where gold is now “slightly” more expensive than platinum despite gold being 1,000-times more plentiful than platinum on the Earth’s crust, platinum rose in value by 10% back in 2012. And not to be left behind, silver managed to rise in value by as much as 8% back in 2012 too, so does this mean that silver is now poised to be the safe haven investment of choice for 2013 for those wanting to have a more diversified safe haven investment portfolio?

Back in January 8, 2013, Gregor Gregersen, chief executive of Silver Bullion in Hong Kong says that during the first week of 2013, there has been a sharp increase of purchases of silver bullion and numismatic quality silver coins from his silver retail outfit and if trends continue, silver’s value could rise by as much as 500% during the next three years. And silver is still currently used to back the value of paper currencies in the banking systems of both the United States and The People’s Republic of China.

Despite the film-based sliver nitrate and silver halide based chemicals used in old-school “analog” film based photography being replaced by digital photography almost overnight that virtually relegated film-based photography to the technological dustbin of history, silver is still used for ultra-low electrical resistance traces on printed circuit boards and electrical connectors of today’s latest digital cameras. Looks like silver could well become the next safe haven investment of choice for those willing to diversify their own safe haven investment portfolio.

Super-Strong Yen in 2010: Bane for Japanese Exporters?

As one of the primary investment safe-havens, are currency speculators inadvertently creating a super-strong yen at the expense of high-quality Japanese exports?


By: Ringo Bones


The world’s currency speculators and hedge fund managers had been as of late using yet again the Japanese yen as a safe-haven investment, a move that could ultimately make the currency super-strong. Add to that the Mainland Chinese financial firms in a current buying frenzy of 5 billion US dollars worth of Japanese sovereign debt and one could wonder if this could spell a death knell to Japanese exporters – especially one specializing in the manufacture of premium-quality specialist products.

In the Far East, even though Mainland China have already matched – even exceeded - the production capabilities of Japanese export firms, China is still several years away from equalling Japan in quality terms. When it comes to manufacturing premium specialist products – as in scientific and precision engineering gear, even hi-fi - is still a skill that China has yet to climb a steep learning curve to match the Japanese and American and even German competition.

Never mind the American and German expertise in this field because in the ASEAN region, Japanese specialist products have already carved themselves a niche when it comes to reasonably-priced alternatives to American and German products of comparable quality. A super-strong yen also places most export firms at a disadvantage. Making their high-quality but reasonably priced products less competitive overseas when competing with cheap and wonky Mainland Chinese produced goods. A lower profit margin resting from a super-strong yen could drive a significant number of Japanese exporting firms into bankruptcy.