by Keith Weiner, Sprott Money:
Sometimes, one just needs to look in the right place. And often in those cases, it just takes a conversation to alert one where to look. We had a call with a Swiss company this week, to discuss gold financing for their business. They reminded us that there is a negative interest rate on Swiss francs. And then they said that a swap of francs for gold has a cost. That is, the CHF GOFO rate is negative (the dollar based 12-month MM GOFO ™ is +2.4%).
Let’s review what GOFO means. The London Bullion Market Association described it:
“The rate at which contributors were prepared to lend gold to each other on a swap basis against US dollars.”