Swiss central bank bets big on gold miners

Switzerland’s central bank, the Swiss National Bank (SNB), is betting big on gold miners, according to a quarterly filing it released in America last week. The SNB has built up a large portfolio of stocks in recent years, after a failed effort to stop its currency from rocketing against the euro left it holding vast foreign-currency reserves. In total, the bank has around $41bn invested in US stocks, up sharply from $24bn in 2014.

Most of its portfolio is in passive index positions, giving it small slices of multinationals, from Apple to Walmart. But of the ten companies in which it has the largest percentage stake (reflecting its punchiest bets), eight are gold stocks.

The SNB’s holdings include $67m in gold group Franco-Nevada, $80m in Nevada-based Barrick Gold and $89m in Canada’s Goldcorp (roughly 1% of each company). It has raised its holding in each over the last three months. The SNB is not the only central bank buying shares. Ultra-low rates, set by central banks, have forced many state-owned institutions to dive into higher-risk assets, as bond yields have been forced to the floor.

For example, the Danish central bank is thought to have around $500m in the equity market. The SNB is unique, however, in being visibly bullish on gold miners – as are we at MoneyWeek. Since we tipped them in December, several low-cost gold producers are up by more than 50%. Another we like is Gold Standard Ventures (Toronto: GSV). Read more about it in our online report.