Gold is the only safe haven left as Swiss peg Franc to dying Euro

chart courtesy of xe.com

It seems Gold and Silver remain the only true safe haven as the Swiss announce they will 'peg' the Swiss Franc to the Euro at an exchange rate target of CHF 1.20 to 1 Euro. The fact they state they will buy foreign currency in unlimited quantities is extremely worrying, is Backdoor Benny going to provide swap facility to accommodate this or are they going to just blow all their foreign reserves shooting their own currency?

Press release
Communications
P.O. Box, CH-8022 Zurich
Telephone +41 44 631 31 11
communications@snb.ch
Zurich, 6 September 2011

Swiss National Bank sets minimum exchange rate at CHF 1.20 per euro

The current massive overvaluation of the Swiss franc poses an acute threat to the Swiss economy and carries the risk of a deflationary development.

The Swiss National Bank (SNB) is therefore aiming for a substantial and sustained weakening of the Swiss franc. With immediate effect, it will no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20. The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities.

Even at a rate of CHF 1.20 per euro, the Swiss franc is still high and should continue to weaken over time. If the economic outlook and deflationary risks so require, the SNB will take further measures.

Response from the ECB:

PRESS RELEASE

6 September 2011 - Statement of the Governing Council of the ECB on the decision of the Swiss National Bank

The Governing Council of the European Central Bank has been informed by the Swiss National Bank about its decision to “no longer tolerate a EUR/CHF exchange rate below the minimum rate of CHF 1.20.”

The Governing Council takes note of this decision, which has been taken by the Swiss National Bank under its responsibility.

European Central Bank
Directorate Communications
Press and Information Division
Kaiserstrasse 29, D-60311 Frankfurt am Main
Tel.: +49 69 1344 7455, Fax: +49 69 1344 7404
Internet: http://www.ecb.europa.eu