Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
« Legend Warns Gold To See Massive Surge Above $2,000 | Main | Setting the Stage for the Collapse in Metals – Gold Stocks »
Sunday
Nov162014

Forecasting the Outcome of the Swiss Gold Initiative - Urban Jermann

In this morning’s mail bag we received a very interesting article on the Swiss Gold Initiative which we think you will find both informative and enjoyable.


The author is Urban J. Jermann PhD,

Safra Professor of International Finance and Capital Markets

Professor of Finance

Finance Department

Wharton School of the University of Pennsylvania

 

On November 30th 2014, Swiss voters decide whether to require the central bank, the SNB, to hold 20% of its assets in gold. Before the vote on this initiative, financial markets' views about the likelihood of an acceptance are reflected in securities' prices. In particular, given the likely impact an acceptance would have on the SNB's exchange rate policy, options on exchange rates are informative about the likelihood of an acceptance of the gold initiative.

Based on my estimates, as of November 14, financial markets do not find it likely that the gold initiative will be accepted. The probability of acceptance is higher than 20%. Specifically, if markets believe that a yes vote implies a zero probability that the SNB can continue its CHF 1.20 cap for the euro, then the probability of an acceptance of the initiative is 20%. If the SNB is not necessarily expected to abandon its current policy upon an acceptance of the initiative, the probability of a yes vote is higher than 20%. For instance, to justify a 50% probability of a yes vote, one has to attach a 60% probability to the SNB maintaining the cap at CHF 1.20 despite a yes vote.

To read this paper in full please click here...

.............................................................................................................................

Is this the real deal or is this rally another head fake? Is the bottom really in? Could there be a final capitulation just ahead of us? Are you now long or short in this market?

If you would like to know which stocks we are buying and selling please join us atStock Trader our premium investment service.

 

Winners of the GoldDrivers Stock Picking Competition 2007 


Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

If you are new to investment in the precious metals sector then you can subscribe of our FREE newsletters regarding gold stockssilver stocks and uranium stocks, just click on the links and enter your email address and we will email you our articles along with other interesting posts.

Please remember to check your spam folder once you have subscribed to ensure that our verification email has not gone astray and you are getting our emails.

PrintView Printer Friendly Version

EmailEmail Article to Friend

Reader Comments (2)

That was unbelievably obtuse. Did I mention that my bachelor’s degree was in mathematics? I question the author’s use of the pi symbol to represent something other than the value 3.14. My professors would have been outraged if I had tried that. – Steve

November 17, 2014 | Unregistered CommenterSteve

Steve,

Its been a long time since I was at school, although I did do an M.Sc in Project Management later on, but if asked I would have said that the answer was 3.14.

I'll see if we get any further comments, if not I might put the question to the author as its a tad beyond me at the moment.

Many thanks for taking the time to comment, Bob K

November 17, 2014 | Registered CommenterGold Prices

PostPost a New Comment

Enter your information below to add a new comment.

My response is on my own website »
Author Email (optional):
Author URL (optional):
Post:
 
Some HTML allowed: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>