NEW YORK (The Street) -- Get gold. Now.
That's the only message you need to take away from the Swiss National Bank's surprise, overnight action to abandon the three-year-old cap it maintained in the franc/euro trade.
The Swiss had vowed to not allow the franc to rise beyond 1.20 francs per euro. With the removal of that cap, the franc soared as much as 30% against the euro on Thursday, an unheard-of move in the currency markets.
It tells the world loudly that a global currency crisis - albeit unstated - is underway ... that Western economies and Western sovereign debt is so out of whack that the only ammo left in the arsenal is currency.
Currencies are now being sacrificed in an effort to save economies. And the only winner in that environment is gold.
Switzerland and its currency has always been an island of safety in times of European turmoil. Most recently, European investors began flooding into the franc in 2011 to escape the fallout of the European debt crisis on the euro.
That rising demand for the franc pushed the value of the franc up against the euro, making Switzerland, a country dependent on exports, increasingly uncompetitive in a global world.
So, the Swiss National Bank intervened in 2011. It regularly and routinely waded into the currency markets with baskets of money it printed out of thin air to keep the franc from breaching 1.20 francs per euro.
That was a very expensive proposition - costing the bank billions of francs -- and it promised to get increasingly more expensive in coming weeks because of pending actions by the European Central Bank.
The ECB is soon to unleash a round of quantitative easing, or QE, that will weaken the euro because of all the currency units the ECB will print ... which means even more flooding into Switzerland, which would have forced the Swiss bank to print more and more francs to maintain the cap.
Looking at the tidal wave of cash likely headed toward Switzerland in an ECB QE program, "We came to conclusion that [intervening to maintain the cap] is not a sustainable policy," Swiss bank president Thomas Jordan said in announcing the bank was scrapping the cap.
"Not a sustainable policy" says it all. The Swiss have explicitly stated what other central banks fear to utter ... that interventionist policies are doomed to ultimately fail.