James Tyler’s recent comments about the negative Swiss interbank rates reminded me of a discussion I had with a private-client lawyer in London yesterday.
She told me of how wealthy clients are being told they have nowhere to run with assets: property is hideously expensive; stocks are risky; many commodities are seriously overbought (gold at $1,750 an ounce); sovereign debt from Western governments is full of default risk and local currency emerging market debt is no longer great value.
A sign of how desperate some are for any “real assets” of value: every day I get press releases about wine funds, gold, antiques, and timber. (Actually, timber is probably not a bad idea if you want steady, low volatility growth, and timber comes with nice tax breaks in the UK). But for the mainstream investor, there are hardly any places to run.
On the Swiss front, the rise in the value of the Swiss franc (up roughly 30 per cent) in the past two years has hammered the earnings of banks such as UBS, Credit Suisse, Julius Baer and EFG.
No wonder the gnomes of Zurich are getting restless.