in the second half of the year the us current account deficit climbed higher still – to over 6 % of gdp – and thus reaching an all - time high, the global imbalances did not appear to destabilise the greenback. on the whole, however, the real exchange rates are trending very close to their long - term averages ( cf. graph 2 ). against the background of a robust global economy, commodity prices rose yet further, with oil and gold being in particularly strong demand. however, if energy resources and gold are excluded from the equation, raw material prices in dollar terms are at a similar level to the beginning of 2004. while the price of oil receded from its high - water mark in the wake of hurricane katrina to back within the region of usd 60 a barrel, the gold price is trading at a 24 - year high of over usd 500 an ounce. a number of factors have contributed to this increase in price. the physical demand for gold has intensified significantly, rising by about 40 % this year alone in india, which is the largest market. increased demand at the central banks of emerging countries and in oil - producing countries is also being reported. moreover, the currently low real interest rates push down the opportunity costs of interestfree investments, such as gold. given, too, that the gold market is largely illiquid, even small shifts in demand can trigger serious price effects. in view of the fact that implicit inflation expectations are still firmly anchored – according to inflation - protected bonds and surveys – inflation fears can hardly be considered to be the main driver behind this gold price increase. snb ’ s performance taking into consideration the development of the gold price, the snb yielded an average annual return of just below 1 % on its assets between 1980 and 2005 ( end of september ). while interest - bearing assets posted a higher average yield during this period, the snb had to settle for overall losses in gold. the annual yield – including the gold price movements – fluctuated very strongly between minus 25 % and plus 20 %. for the assessment of future developments in earnings, these figures are only of limited significance, however. the level and spread of our earnings are determined by the balance sheet total, the structure of the assets and the achievable financial market yields. since these measures change over time, it is rather difficult to estimate the long - term earnings potential of the snb. at the end of 2004, the national bank ’ s assets

to be somewhere in this region in the foreseeable future. once the existing distribution reserve has been depleted, we will most likely have to reduce our profit distributions significantly. cosa initiative the people ’ s initiative “ national bank profits for the old age and survivors'insurance fund ( ahv / avs ) ” – better known as the cosa initiative – proposes allocating the snb ’ s profits which remain after deducting the chf 1 billion for the cantons to the old age and survivors ’ insurance fund ( ahv / avs ). an obligation of this kind would impact on the national bank ’ s independence, putting it under political pressure to distribute higher profits, which in turn would only be possible were the snb to expand the money supply, reduce the currency reserves or take greater risks. this would undermine the snb ’ s credibility and freedom of action as well as compromise the stability of the swiss franc. the national bank ’ s most important task is to conduct monetary policy geared towards price stability. in order to do this, we have to be able to take monetary policy decisions – even in difficult situations – without political pressure or the obligation to generate a return.