Zurich, Switzerland

The world’s strongest currency since the advent of the global financial crisis in late 2007 has failed to dent exports. Switzerland is on a roll…

Exports are strong, real estate is booming and large-cap earnings are buoyant.

Despite a surging Swiss franc over the past 12 months against the dollar and the EUR, the Swiss economy has remained incredibly resilient. The economy grew 2.4% in Q1 compared to 12 months earlier while exports climbed 5.7% — largely benefiting from a resurgent Germany.

Bankers and investors in the Swiss financial capital of Zurich are dumbfounded by the economy’s resilience; textbook economics would argue that a slowdown is inevitable as export margins should be crippled by a powerful currency making its exports less competitive. But that’s not the case so far in 2011.

Against the EUR, saddled once again by an impending default of Greek sovereign debt and other troubles across its deflation-plagued periphery, the Swiss franc hit an all-time high last Thursday. There’s no stopping investors as they run for cover to the relative safety of the Swiss franc this spring; the currency is bordering 1.20 the EUR; in 2011, the Swissie is up 2.3%.

The franc has also climbed sharply versus the dollar – up more than 25% year-over-year. The franc now commanded a 13% premium against the American dollar and is also running circles against the British pound and even the Japanese yen.

The only currency keeping pace with the almighty Swissie is gold, flat versus the franc over the last 12 months measured in francs.

In Zurich, prime residential real estate has climbed 8% over the last 12 months, through March 31, according to Knight Frank. Geneva, however, has seen prices rise just 1.6%. Indeed, speculating in Swiss property isn’t easy; banks aren’t dolling out free cash or easy credit. Qualification standards are tough, despite mortgage rates remaining under 2%.

The only enigma for investors is the Swiss SMI Index in Zurich.

Representing 50 of the largest Swiss stocks (Novartis is the biggest weighting), the SMI has gained 1% year-over-year and is down 6% over the last three years; since 2006, the benchmark is flat. That’s a major disconnect for a country whose asset prices have largely appreciated historically.

For local currency investors, the SMI has been a disappointment. But once you convert those returns into dollars, the returns are strikingly different; year-over-year, the SMI has surged more than 26% in dollar terms.

There’s barely anything the Swiss National Bank can do to stem the franc’s rapid appreciation at this point. It was chastised last year for spending billions of francs buying back EUR. Whether she likes it or not, Switzerland is stuck with a strong franc for the foreseeable future, or at least until the eurozone gets its debt-infested house back in order. And that won’t happen for a long time.