Buying Shares Hand Over Fist

The Swiss National Bank (SNB) has further increased its holding of American shares. In order to keep the Swiss Frank from going up in value, SNB has printed Frank and used this to buy Dollars, which in turn have been used to buy American shares.

A consequence of this is that the price of American shares have gone up in response to a desire by Swiss central bankers to suppress the value of their currency.

This is presumably seen as well and good by the political elite and central bankers in America, since it gives the appearance of a healthy American economy. But the day will come when the Swiss central bankers find themselves in a position where they have to strengthen the Frank, and we will see the complete opposite of what we have seen lately. The SNB will start to sell American shares in order to get dollars for which they can buy Swiss Franks.

The flip side of today's artificially high stock prices is tomorrows artificially low stock prices. But exactly when tomorrow comes is anybody's guess. All we can say for sure is that prices are at the moment artificially elevated due to central banks interfering in the stock market, and that this will have to correct at some point in the future.