On Sunday the Swiss Gold Referendum resulted in a clear “NO” vote. You probably didn’t hear about it in the media, in fact, even the Swiss media didn’t seem particularly interested either. The vote, amongst other things, was whether the Swiss National Bank (SNB) should be forced to increase its gold reserves from 8% to 20% and also repatriate its physical gold from overseas. Such an increase would have required the Swiss Central Bank to purchase 1,500 tons of gold which at today’s prices would be worth around $56 billion.
A yes vote in the Swiss Gold Referendum would have also required the Bank to commit to never sell any of its physical gold in the future.
Germany’s failure to get their gold returned from the US may have been an influencing factor but in the event, only 23% of Swiss voters who took part felt that the Central Bank should be held to account.
Gold price drops briefly following the Swiss Gold Referendum
Gold dropped in price to $1,150 soon after the announcement but rose quickly again to $1,200 soon after. Copper, silver and oil prices are also at four and five year lows. Regular readers will know that I have officially defined silver as “the trade of the decade” and continue to build a physical silver stock pile month on month while prices are so low.
Why the Swiss Gold vote received so little media attention is uncertain, not least in Switzerland itself. From my experience, for the average person on the street, gold remains a complete mystery and something that little understood in a world of credit, debit and oyster cards.
Swiss Gold Referendum – the rise of Euro-scepticism?
Referendums are a key part of the Swiss system of democracy and unlike here in the UK, are held several times a year. This latest vote on whether the Swiss National Bank should reverse it policy on physical gold was introduced by members of the Euro-Skeptic, Swiss People’s Party who are, not surprisingly nervous about the 100 billion Euros the SNB currently holds.
As Europe struggles to recover from recession, Euro-skepticism is becoming more apparent in many forms and in many countries. My view is if Central Banks cannot be forced back on to the gold standard then concerned individuals should put themselves back on the gold standard by slowly acquiring physical gold (and silver) coins.
No doubt the Swiss Gold Referendum is not the last we will hear about the role physical gold will play in 2015 as Central Banks continue their policy of creating money out of thin air through endless bouts of quantitative easing.