Today the story hit, Swiss Investment Bank, UBS, has raised its gold forecast for 2012 to $2075 an ounce. This represents a 50% increase over its prior prediction of $1380. Wow! They really went out on a limb on that one. Given the Gold price passed the $1380 mark about 9 months ago and has since topped $1923 an ounce.

Talk about doing a 180. It was just this last July when managing director Peter Hickson, at least according to China Business News, said gold had peaked and was set to plunge to $1000 an ounce. My question is, what happened in the last 2 months to so drastically revise these claims?

If I were to speculate, which is all I can do since my crystal ball cracked, I would say, either UBS had an awakening and actually sees the price headed much higher. Or, that the earlier comments were some kind of effort to suppress the gold price and create a buying opportunity. Why create a buying opportunity?

Just two days ago the Swiss National Bank announced it intends to make moves to devalue the Swiss Franc. I think I get it. It's more expensive to buy gold after you devalue your currency than before. That's what happens here when we print more money - gold goes up in dollar terms.

This recent Swiss move adds more evidence to the theory that there is an international race to debase in order to inflate away debt. A strong currency hinders exports and the ability to repay debts, public or private. I think we all look forward to being able to repay today's debt with tomorrow's cheaper dollar.

Once you come to the realization that a weak currency is preferable to everyone, it's easy to see how and why gold could keep rising well beyond this recent UBS prediction.

The Swiss are very shrewd business people and I can't help but think there exists an ulterior motive to such a ridiculous about face. In September '02, the SNB announced plans to sell 283 tonnes of gold by September '03 as part of a plan to rid itself of 1,300 tonnes of unneeded reserves by 2005. Wonder what they think about that move today? And, why make the announcement ahead of time when you know such news could inhibit a trend of rising gold prices?

Today, the World Gold Council reports that indeed Switzerland has reduced its physical gold holdings from 2590 tonnes in 1999 to 1040 tonnes by August 2011. However, I came across a curious report that indicates the SNB, may have, once the planned sale of physical gold was complete, embarked on a plan to acquire paper gold.

Check out this report on SNB reserves. The entry found at Gold (including gold deposits and if appropriate, gold swaps) and you see that purchases of gold via vehicles that carry maturity dates, has skyrocketed since 2005. At the same time, the entry shown as Gold (including gold deposits and if appropriate, gold swaps): Weight in thousand fine ounces appears reflective of the SNBs 60% reduction of physical gold holdings since 1999.

Keep in mind, paper gold could be shares of an ETF that holds physical gold. Has the SNB cleverly disguised its accumulation of gold? If this is true, another UBS Gold Price Prediction could fall well short of its recent public announcement. Stay tuned here and if you don't yet own gold you getter get some before the Swiss corner the market.