At the end of November the Swiss people will go to the polls to vote on the Swiss Gold Initiative that would require the Swiss National Bank to hold 20% of assets in Gold. If passed the government would have up to 3 years to write the proposal into law and then the SNB has 5 years to increase its Gold holdings. ( Source: Reuters Oct. 24, 2014)
According an article in Kitco, analysts at UBS said that if the referendum passed the SNB would have to purchase about 1,500 tons of Gold over the next 5 years at a cost of somewhere between 67 and 83 billion.
Recent data from the World Gold Council indicates that Switzerland has approximately 1,040 tons of Gold which represents 7.8% of it’s total reserves. While the time frame is over several years the likely impact on the Gold market would be significant should the referendum pass.
Opinion Polls Show Support
In the Reuters article, a poll conducted by Berne-based research institute gfs.bern in partnership with Swiss broadcaster SRG, found that 44% supported the initiative, while 39% opposed it. 17% were said to be undecided or did not respond.
According to a Kitco article, 20 Minuten, Switzerland’s biggest daily newspaper, conducted an online survey on Oct.15 that produced 13,000 responses. 45% to 39% said they would support the “Save Our Gold” Initiative. They did however indicate a large number of undecided voters.
So the early polls show that the referendum has some support. The public may now be waking up to the value of Gold in a world of fiat money. We saw this happen in Germany when the country asked for its Gold to be returned from New York and was given a 7 year time frame.
A Return to Accountability
The Swiss National Bank will no doubt lobby hard against the passage of the referendum. However, should it pass it would in essence be a return to an informal Gold standard for Switzerland, as a large portion of their assets would be held in Gold, by law.
If a yes vote does come to fruition, it will be interesting to watch how this may impact other countries outside of Switzerland. It could represent the first vote of no confidence for Central Banking and the start of a trend toward sound money.