Central Bank strikes gold in first half of year

The SNB has reversed past losses into a profit. Keystone

Recovering gold prices helped the Swiss National Bank (SNB) record a substantial CHF16.1 billion ($17.7 billion) profitExternal link for the first six months of 2014, a significant improvement from the CHF7.6 billion loss posted in the same period last year.

The first half of 2014 saw gains of CHF3.5 billion on the central bank’s gold holding compared to a CHF13.7 billion loss in the first six months of 2013 when prices plunged for the precious metal. The size of the SNB’s gold reserves was unchanged.

The biggest gains this year, however, came from the SNB’s forays into foreign exchange markets, a pivotal part of its strategy to prevent the Swiss franc-euro exchange rate from sinking below CHF1.20.

Its vast holdings of foreign currencies realised a profit of CHF12.6 billion in the first six months of the year, mainly in interest and dividends. The central bank’s Swiss franc positions also saw gains to the tune of CHF137 million.

The SNB said it would make a decision on distributing profit reserves at the end of the year. Last year’s CHF9.1 billion full year loss meant that Switzerland’s 26 cantons were denied a slice of the SNB’s surplus profits this year.