World catches on to Swiss franc

Picture from the Bloomberg article mentioned below is a cash drawer of Swiss currency.

We’ve been talking for months about the increase in value of the Swiss franc. While IFO has been doing this in the context of the crash of the USD, Switzerland has finally realized that she is right from the other end as well.

The increase in value of the SFR is making “Swiss goods prohibitively expensive.” As we explained in our SWI – Swiss Watch Index, the value of our $50 Swiss Swatch watch had increased to nearly $64 today. If you were to buy a Swatch watch like IFO’s today, it would cost you $64, while it “only” cost us about $50 a year and a couple of months ago.

BTW, Mish doesn’t think the Swiss government currency manipulators can have much of an effect, and adds, “… note the relative size of Switzerland vs. all the Eurozone countries. Buying “unlimited” Euros could rapidly get out of hand.”

He forgets that Swiss banks are huge international organizations and that as small as the country is, it has outsize assets. Kind of like Israel. Also, the Swiss have connections with other huge institutions: Novartis, Ciba-Geigy, Nestle, the UN in Geneva… we could go on.

Finally, consider the lever effect. A small amount of pressure, applied intelligently, can move a large object.

Just sayin’


About InvestingforOne

I've been investing in various assets by myself using a discount broker for many years. Over that time, I've developed some theories that others might find useful. Plus, there is more to investing than money. Time, talent, work, friends, family all go into developing a good and satisfactory strategy.
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2 Responses to World catches on to Swiss franc

  1. meganwanders says:

    A little selfish of me but I have been cheering on the rise of the Swiss Franc against the USD. Mostly because I have American student loans I am paying on and I get paid in Swiss Francs. While a Swatch might cost more for you, my student loans are now cheaper. 🙂

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