The balance sheet that ate Switzerland

The Interest Rate Observer's Jim Grant nailed his bullish call for the Swiss Franc to appreciate back in September 19, 2014.  Long call options on the Swissie made a killing.  For the unwashed masses unable to participate in ISDA derivatives, Grant has been pounding the table on gold.


https://www.linkedin.com/pulse/balance-sheet-ate-switzerland-james-grant

we venture that the SNB will sooner or later be forced to permit the franc to appreciate and thus to enrich the holders of low-priced, three-year call options on the Swiss/euro exchange rate. It's a long shot, to be sure--the options are cheap for a reason--but we judge that the prospective reward is worth the obvious risk.

More money printing or sub-zero rates may once again set a fire under Swiss house prices, macro-prudential policies notwithstanding. It may ruin the life insurers. At some point, the Swiss National Bank would have to decide whether propping up the export sector is worth the cost. If these circumstances, a bet (and, to be clear, it is very much a bet) on the franc appreciating against the euro might pay. A three-year, at-the-money option on the franc appreciating against the euro is priced at 3.7% of notional today according to Bloomberg. To return to its high of 1.03 francs per euro on Aug. 10, 2011, the franc would appreciate by 17%.

While there is nothing especially exotic about this option, it is available only to institutional investors with an International Swaps and Derivatives Association agreement in place with a too-big-to-fail bank. For readers not so situated, there is always gold, which--in our opinion--the franc is no longer as good as.

Jim Grant And James Turk Discuss The Endgame Of The Keynesian Experiment

http://www.zerohedge.com/article/jim-grant-and-james-turk-discuss-endgame-keynesian-experiment

USDollar debasement

James Grant, editor of Grant's Interest Rate Observer, is widely followed by financial professionals on and off Wall Street alike, for his keen insight and witty historical references.

This Wall Street Journal op-ed clearly and succinctly maps out the history and fates of paper currencies (you may need a subscription to read the whole article):
http://online.wsj.com/article/SB10001424052748704342404574575761660481996.html

This excerpt is particularly poignant:

Section 19 of this country's founding monetary legislation, the Coinage Act of 1792, prescribed the death penalty for any official who fraudulently debased the people's money.