Wednesday, June 15, 2005
Swiss Central Bank Sells Billions In Gold
Bloomberg reports a disturbing developement for holders of Swiss Francs. "The Zurich-based central bank is engaged in some other highly unusual activities that have made it a sort of profit center for the national and cantonal Swiss governments."
"First, earlier this year it completed the sale of 1,300 tons of gold worth about $16.5 billion at current exchange rates. The proceeds, equal to about 4.7 percent of GDP, are being distributed to the various governments."
"The Swiss economic outlook clouded by weak growth in Germany to the north and recession in Italy to the south."
"After laws were changed to lift restrictions on what assets the bank could hold, the bank 'took the opportunity to enhance its risk/return profile,' it said in its 2004 annual report. 'Its portfolio continued to focus on the most liquid currencies and markets and on borrowers with the highest credit ratings. The investment universe was expanded to include foreign corporate bonds.'"
"This year that universe was expanded again to include foreign equities as well as bonds, to raise the bank's profits further and boost the distributions to governments within the country."
"First, earlier this year it completed the sale of 1,300 tons of gold worth about $16.5 billion at current exchange rates. The proceeds, equal to about 4.7 percent of GDP, are being distributed to the various governments."
"The Swiss economic outlook clouded by weak growth in Germany to the north and recession in Italy to the south."
"After laws were changed to lift restrictions on what assets the bank could hold, the bank 'took the opportunity to enhance its risk/return profile,' it said in its 2004 annual report. 'Its portfolio continued to focus on the most liquid currencies and markets and on borrowers with the highest credit ratings. The investment universe was expanded to include foreign corporate bonds.'"
"This year that universe was expanded again to include foreign equities as well as bonds, to raise the bank's profits further and boost the distributions to governments within the country."
Hedge Fund Closes, Returns Deposits
MarketWatch reports a hedge fund suddenly closed its doors. "Marin Capital Partners, a hedge fund that once oversaw about $2 billion in assets, is shutting down because the firm sees few opportunities in the convertible arbitrage and credit arbitrage strategies it follows."
"'Due to a lack of suitable investment opportunities in the current market environment, and in our view an unfavorable risk/ reward situation in the relative value strategies we trade, Marin has moved the fund's portfolio largely into cash,' Marin said in its letter."
"'Without conviction that there will be near term opportunities to generate sufficient returns on your behalf using appropriately hedged strategies, it is only prudent to make the decision to close the fund,' the firm said."
"'Due to a lack of suitable investment opportunities in the current market environment, and in our view an unfavorable risk/ reward situation in the relative value strategies we trade, Marin has moved the fund's portfolio largely into cash,' Marin said in its letter."
"'Without conviction that there will be near term opportunities to generate sufficient returns on your behalf using appropriately hedged strategies, it is only prudent to make the decision to close the fund,' the firm said."
