Volkswacht Bodensee - Swiss central bank profits boosted by gold price surge

The Swiss National Bank's gold holdings were unchanged, but their value skyrocketed as investors rushed to buy the precious metal as economic and geopolitical uncertainties drove prices to record highs.

At the end of September, the price of a kilogramme of gold stood at 98,024 Swiss francs, compared to 76,011 francs at the end of December 2024, representing a valuation gain of 22.9 billion francs for its gold holdings, the SNB said in a statement.

The SNB recorded 23.1 billion Swiss francs in price gains on equity securities and instruments. This gain helped offset exchange rate-related losses totalling 46.3 billion francs.

Like gold, the Swiss franc is considered a major safe-haven asset. Amid the climate of uncertainty, the Swiss currency has appreciated significantly since the start of the year, particularly against the dollar.

In 2024, the SNB's profits reached 62.5 billion Swiss francs after the first nine months and then rose to 80.7 billion francs by the end of the year.

Arturo Bris, a professor of finance at the International Institute for Management Development in Lausanne, has voiced concerns about a potential artificial intelligence technology bubble.

According to his calculations, using figures from the US Securities and Exchange Commission, six tech stocks (Nvidia, Microsoft, Apple, Amazon, Alphabet and Meta) alone account for more than $48 billion in the SNB's portfolio.

To diversify its reserves, the Swiss central bank's equity portfolio uses a passive strategy that reflects stock market indices rather than picking stocks out to generate profits.

These six major stocks alone are responsible for a very large portion of the rise in the US stock market, Bris told AFP.

"As an economist, you cannot speak of a bubble before it happens," only once it has burst, he said.

However, "there is a significant over-valuation of these stocks", and if AI is a bubble that bursts and triggers a crash, "the risk is very high" for the SNB, he warned.

G.Frei--VB