Why, exactly, is Switzerland such a haven for investors?

It's a land-locked country with few natural resources besides water and scenery. And, as they say, you can't eat scenery.

More crucially, Switzerland is a small, open economy heavily dependent on its neighbors for trade and the resources it lacks at a time when one of the biggest of these, Italy, faces a looming crisis. Huge capital inflows and consequent currency appreciation have made the Swiss franc increasingly noncompetitive.

So why do investors keep flocking?

To be sure, Switzerland benefits from a reputation as the world's safe-deposit vault. Swiss banking secrecy may be less secure than it once was, but it still offers a haven for foreigners wishing to keep their money secure from their own governments. Swiss private banking has cachet.

And there are some good economic reasons, too. Switzerland consistently runs large current-account surpluses. This year's is expected to be above 13% of gross domestic product and the IMF forecasts that it will remain in double digits over the coming five years, the strength of the Swiss franc notwithstanding. Large surpluses help to immunize an economy from speculative attack because the country isn't dependent on foreign-capital inflows to finance itself.

Most appealing for investors is the Swiss National Bank's reputation as an inflation hawk in a world where central banks everywhere seem keen on pursuing easy monetary policies. Swiss inflation has tended to be 1% or less during the past two decades and is forecast to remain at or below that level over the coming years.

What better hedge, then, than gold and the Swiss franc against the fear that the likes of the Bank of England and the U.S. Federal Reserve will look to inflate their way out of their huge national-debt burdens?

David Fuller's view People have poured money into the Swiss franc for the same reason they buy gold. The have learned to trust it as a store of wealth over time. However there is a big difference between gold and the Swiss franc.

Gold is no one's liability. The same cannot be said for the Swiss franc, although it remains a hard currency for reasons mentioned in the article above. Its rate of appreciation is a stiff headwind for Switzerland's export and tourist industries.

The US dollar has been a serially weak currency, thanks to US Federal Reserve Policy. That is unlikely to change anytime soon, although the US dollar's rate of depreciation against the Swiss franc is beginning to run ahead of itself (historic monthly, weekly & daily).

You can see this in the downward overextension relative to the medium-term trend mean approximated by the 200-day moving average. While this move has been very consistent this year, it is now beginning to accelerate in a climactic fashion. Any further near-term weakness is likely to be followed by a technical rebound. However, that will need to be larger than any of this year's earlier rallies if it is to signal that more than a short-term low has been reached.