Gold… A New currency
Starting in October, Six Securities Services, a subsidiary of Six Group which runs the main stock exchange and clearing functions in Switzerland, will introduce the listing and trading of products in so-called XAU gold units.
The value of one XAU gold unit is set at one troy ounce of gold, valued in US dollars, and will be treated exactly the same way as any other paper currency such as the US dollar or the Euro.
Investors who want to settle transactions in the new gold currency will need to have an XAU account with Six Securities Services. The value of the deposits will be stored in physical gold at Six’ gold warehouse facilities in Olten, Switzerland.
Six spokesman Alain Bichsel said that the XAU gold unit is a world first and is being introduced because of the current economic climate which sees gold as a safe haven. He said the service is open to anybody with permission to trade on the stock exchange, regardless of the size of the account.
Manuel Ammann, Professor of finance at St Gallen University and director of the Swiss Institute of Banking, said that trust in traditional currencies is eroding because economic conditions force more central banks, including the Swiss National Bank, to pursue policies of weakening their currencies. Mr. Ammann added that although there’s a potential niche in the use of gold as a settlement currency, it was difficult for him to see consumers paying food and clothes with gold units in the near future.
Will this be a another fling of the moment, or a step in gold’s long journey of once again being recognized as an actual currency? One thing is certain, investors on the Swiss stock market can now buy and sell certain securities not using Swiss Francs but gold.