Swiss Referendum : The Meaning of or the Lost Cause Of Gold ?
Some of us may be aware that there will be a referendum in Switzerland on the 30th of November to decide on the fate of gold in their national coffers, making monetary policy history, as far as I know, being the first time the nation is allowed to choose in their future and the future of their currency.
It all started early in March 2013 when some nationalists, of course it is the backward, gay bashing, xenophobic (anti immigration), conservative, etc, nationalists managed to accumulate 100,000 signatures to force a referendum that would curb the Swiss National Bank (SNB) from selling any more of their gold reserves which was previously used to back up to 40% of their currency until a new constitution took off the gold standard back in 2000.
The 3 items to vote on on 30 Nov 2014 (taken conveniently from Citibank).
1. SNB may not sell any gold (in effect immediately);
2. SNB has to store all gold in Switzerland (2 years to implement); and
3. SNB has to hold at least 20% of reserves in gold (5 years to implement).
Switzerland currently holds about 1 ton of gold against their foreign reserves, representing about 8% of the total. That may seem miniscule compared to the US which has about 72% of their reserves in gold amounting to about 8.1 tonnes, until you consider that the US only has a paltry USD 45 bio in foreign reserves compared to Switzerland’s US 505 bio.