Swiss Francs and Gold: A Breakthrough

Submitted by Jesse Colombo

Jesse Colombo, a financial analyst, uses a unique approach to analyze gold and silver. He prices these metals in currencies other than the U.S. dollar. This method helps filter out the impact of U.S. dollar fluctuations, revealing the true strength of gold and silver. Technical analysis on gold and silver priced in non-U.S. dollar currencies has proven to be highly effective, often providing insights that remain hidden when analyzing these metals solely in dollars. This method helped Colombo anticipate the recent surge in gold prices. However, he noticed that while gold had broken out in most currencies, it was resistant in Swiss francs—until now. This article discusses the significance of this development.

Gold Priced in Swiss Francs

Gold priced in Swiss francs, or gold/CHF, traded in a well-defined range between 2,050 and 2,225 for five months. A breakout from this range would be a strong bullish signal for gold. Switzerland, with its numerous mints, refiners, vaults, and a robust gold trading and banking sector, is a key hub in the global gold industry. A breakout in this context is likely to have a significant psychological impact on the Swiss gold industry. The breakout has finally occurred. The Swiss franc has been one of the world’s top-performing major currencies this year, making the recent gold/CHF breakout even more significant.

Gold in Swiss Francs, Euros, and British Pounds

Pricing gold in a combination of Swiss francs, euros, and British pounds has also proven valuable. This combination revealed a nearly perfect 400-point trading range since April, with support precisely at 6,000 and resistance at 6,400. A breakout from this range would represent a valuable bullish confirmation signal, and it has indeed proven to be. Gold priced in U.S. dollars, the standard international benchmark, has surged since breaking through the critical $2,475 and $2,525 resistance levels.

Switzerland's Role in the Gold Industry

Switzerland has long been a significant hub for the gold industry, making the breakout in gold priced in Swiss francs particularly noteworthy. Switzerland is the world’s largest importer and exporter of gold, primarily because it imports unrefined gold and exports it in refined form. In 2023, Switzerland imported $102.3 billion in gold and exported $107.2 billion, highlighting its crucial role in the global gold trade. Switzerland’s gold refineries, including Argor-Heraeus, Valcambi, Produits Artistiques Métaux Précieux (PAMP), and Metalor Technologies, refine approximately 70% of world gold mine production. They are known for their high-quality, ultra-pure gold bullion products. Most of the gold bars produced by the Swiss refiners are .9999 fine gold, meaning they are 99.99% pure. Swiss gold products are renowned for their sleek and elegant design. Switzerland is globally recognized as a banking powerhouse. Its leading banks, UBS and Credit Suisse, play pivotal roles in the gold trading arena. UBS is one of only six London Bullion Market Association (LBMA) Full Market Makers, specializing in gold and silver spot trading, forwards, and options. Credit Suisse established its gold trading business in the 1960s and 1970s, rapidly growing to become one of the world’s largest gold dealers by the 1980s. Other key players in Switzerland's gold market include Raiffeisen Bank, Zürcher Kantonalbank (ZKB), Julius Baer Group, and Pictet & Cie. MKS (Switzerland) SA is a precious metals trading firm and LBMA associate that serves banks, fund managers, gold miners, and jewellery manufacturers. It also owns the PAMP refinery. MKS (Switzerland) SA is part of the MKS PAMP Group, which owns the New York City-based gold dealer Manfra, Tordella & Brookes (MTB). Switzerland is also renowned for its ultra-secure gold vaults. Despite being a small country, Switzerland holds the world’s seventh-largest gold reserves, totaling 1,040 tonnes and valued at $89.4 billion. The six countries with the largest gold reserves—the United States, Germany, Italy, France, Russia, and China—have significantly larger economies and populations compared to Switzerland. Central banks maintain a portion of their reserves in gold to diversify their holdings, as gold is a time-tested safe-haven asset with no counterparty or default risk.

Bottom Line

The recent breakout of gold priced in Swiss francs marks an important confirmation for the bull market in gold. This breakout is especially significant given the strength of the Swiss franc. It underscores the momentum and staying power behind the 2024 gold rally. Switzerland, with its extensive network of mints, refiners, vaults, and a robust gold trading and banking sector, is a pivotal hub in the global gold industry. This breakout is likely to have a meaningful psychological impact on the professionals and companies within it. What do you think about this development in the gold market? Do you think this breakout signals a continuing bull market for gold? Share your thoughts and this article with your friends. Also, remember to sign up for the Daily Briefing, which is available every day at 6pm.