Monday, July 11, 2011

The Gold Swiss Franc and Greshams Law

Here's a follow up from my previous blog on Friday.

It appears Switzerland is moving to introduce a Swiss Franc in gold. This could be a classic example of Greshams Law in action if this goes ahead. You will see 'bad money driving out good money'. Practically speaking (if this goes ahead), when people do transactions in Swiss Francs, and hold both the paper francs and the gold backed francs, they will more than likely use the paper francs first and hoard the gold francs.

"ZURICH (MarketWatch) — The Swiss Parliament is expected later this year to discuss the creation of a gold franc — a parallel currency to the official Swiss franc, with the fringe initiative likely triggering a broader debate about the role of the precious metal in the Alpine nation.

The initiative is part of “Healthy Currency,” a campaign sponsored by politicians from the right-wing Swiss People’s Party (SVP) — the country’s biggest — that is seeking to capitalize on popular fears about global financial turmoil and inflation to reverse the government’s current policy on gold...more

Gold in New Zealand dollars: $1849.92 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $43.86 per oz
Previous all time high: $48.58
per oz

Articles of interest:


Frank Rich Blasts Obama For Letting Wall Street Off the Hook

See article here
Rolling Stone


Gold Chart update and comments 

See article here
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