In what shouldn’t be a big surprise to anyone, Switzerland’s pension fund has chosen physical gold over paper gold denominated in US Dollars. This gold news marks yet another step by big players away from the US Dollar; two weeks ago we reported Russian and Chinese choices to reduce their dollar holdings.
Despite the recent strength in the dollar, many large players continue to reduce their dollar-based weighting, which makes sense from an asset allocation point of view. In asset allocation, you spread your resources among several pots, both to increase the chances that you are in a something that turns out to be a big winner, as well as to avoid losing as much if one something turns out to be a big loser.
Yet despite all this fleeing-from-the-almighty-dollar, the Dollar had a very strong month, indicating that while its standing in the eyes of the world may be reduced, Uncle Sam still swings a mighty strong currency.
Remember that when the chips fall, investors flee toward strength, so it’s unlikely the dollar will crash any time soon. Today’s featured article talks about the Swiss pension fund’s choice to move into physical gold, and the geopolitical shift this choice is trying to get in front of.