And the Winner is Gold and Silver!
Following the Swiss National Bank (SNB)’s announcement this morning that it is ending its Euro peg, the price of gold quickly exploded as much as $35 or 2.9% from $1,227 per oz to a high of $1,262 per oz. The price of silver also exploded as much as $0.50 or 3% from $16.75 per oz to a high of $17.25 per oz.
Today’s news is a game changer for gold and silver! The SNB first announced that it would support the Euro at a floor of 1.20 Swiss Francs on September 6, 2011. This was the exact day that gold hit its all time nominal high of $1,895 per oz.
Afterwards, gold prices headed sharply south as the SNB began propping up both the Euro and US Dollar. The SNB printed Swiss Francs to buy Euros to prevent the CHF/EUR exchange rate from declining below 1.2, but during periods of strength for the Euro, it would use its Euros to diversify into other foreign currencies — mainly the US Dollar.
Therefore, with the SNB ending its currency peg supporting the Euro, it will also be ending its support of the US Dollar. The Swiss Franc is up $0.1618 or 16.5% this morning vs. the US Dollar to $1.1432. The Swiss Franc’s 2014 high vs. the US Dollar was $1.1463, reached on March 14, 2014. That same day was also gold’s high of 2014, with gold rising on March 14, 2014 to $1,385 per oz.
With the Swiss Franc now up to its high from March 14, 2014 — look for gold to rapidly rally by $135 or 10.8% to its March 14, 2014 high of $1,385 per oz in the upcoming weeks. Silver on March 14, 2014 was trading for $21.36 per oz. Look for silver to rapidly rise back to there and gain $4.18 or 24.3% in the upcoming weeks.