One of the things I look forward to each week is the newsletter I receive on Saturday from John Mauldin.  I would describe John as an analyst of analysts. I was one of his early subscribers and have been reading his weekly emails since 2001 and have found that over time he is usually right, even if I have thought differently at the time. You can sign up for his weekly newsletter at www.frontlinethoughts.com

Part of this weeks news letter is explaining why European banks and countries are in such trouble.  It seems that in the time of easy credit many loans and mortgages were originated in Swiss francs as the interest rate was low.  Lets say you live in Poland and borrowed in Swiss francs from and Austrian Bank, all is well as long as the exchange rate between the Polish zloty and the Swiss franc remain stable.  However if your currency depreciated against the Swiss franc it is like an interest rate increase. Could be a huge increase that make it impossible to meet the payments and live.  (The Polish zloty has basically halved against the Swiss franc so the mortgage payments has doubled!).

The other news from Friday was that gold hit US$1,000 per oz again. In AU$ per oz it hit its highest ever price of UA$1,549 or AU$49.82 per gram

There was a time when banks held their reserve in gold.  But gold did not earn any interest and could not be leveraged, so banks sold most of their gold for cash to make greater profits through leverage.  Now those extra profits have vaporised, and the gold they sold for $250 -350 per oz is now worth $1,000 per oz.  There must be a lesson there somewhere.