Save Our Swiss Gold Update
Support for the Save Our Swiss Gold Initiative Falters
Swiss National Bank Now Calls Save our Swiss Gold “Dangerous”
Most recent poll shows the “NO” vote ahead
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Support for Save Our Swiss Gold Falls
In October, we first covered the Save Our Swiss Gold referendum to be held on November 30 that would require the Swiss National Bank (SNB) to:
– hold at least 20% of its reserves in gold;
– repatriate of all of its gold currently held outside its borders; and
– ban selling any of its gold.
The initial polls showed support for the initiative to be leading.
In “Save our Swiss Gold – The Battle Ahead” we predicted that the referendum would come under extreme fire from the Swiss National Bank and the media as they would attack its sponsors and supporters as “right-wing,” “far right” and perhaps even “financial terrorists”, gently mock the Swiss people as quirky and attack gold itself.
All these predictions have come true, other than the terrorist charge. (last week in an unrelated story it was reported that ISIS is planning on backing its currency with gold and silver).
In “Save Our Swiss Gold – The Battle Heats Up” we gave examples of some of the attacks on the Save Our Swiss Gold initiative, its supporters and the Swiss people.
Dutch Economist Ivor Arnold Weighs in Against Save Our Swiss Gold
If the Swiss embrace some type of gold standard, it may be because they are just ‘weird’.
The Media Assists the No Vote
While the Swiss National Bank is not allowed to campaign against Save our Swiss Gold – they don’t have to. They only have to give interviews with the major media outlets who are more than happy to disseminate the SNB’s views opposing the Save our Swiss Gold initiative.
The SNB’s inital complaints against the Save our Swiss Gold referendum reported in the media:
– It will make it harder for them to “do their job”;
– it would be a “disaster”;
– they couldn’t sell their gold reserves in case of an emergency; and
– gold doesn’t pay interest, so the Swiss cantons would get less money from the SNB.
Recently, additional arguments have been made against Save Our Swiss Gold including:
– it would hinder the SNB’s ability to fight deflation;
– it would cause a recession and unemployment;
– it would hurt Switzerland’s business-friendly image; and
– it is “dangerous”.
With the help of the major media outlets, their message seems to be getting through. Recent polls show a reversal in public support for Save Our Swiss Gold.
Save Our Swiss Gold Supported by the International Gold Community
Precious metals commentators Andy Hoffman of U.S. based precious metals dealer Miles Franklin and Ronan Manly of Ireland’s Gold Core, are following the polls and have written of their skepticism of recent polls showing the “Yes” vote for the Save Our Swiss Gold referendum behind.
United States gold and currency fund managers Peter Schiff of Euro Pacific Capital and Schiff Gold and Axel Merk of Merk Investments have provided their views in favor of the Save Our Swiss Gold initiative.
Dutch Gold researcher Koos Jansen of Bullion Star was recenty intereviewed on Dutch national television (along with Ivor Arnold – see above) regarding his positive views on the Save Our Swiss Gold initiative. You can read Mr. Jansen thoughts and watch a subtitled video of the Dutch television show by clicking here.
Egon von Greyerz of Swiss Matterhorn Asset Management AG & GoldSwitzerland has helped organize in favor of the Save our Swiss Gold initiative.
The Save Our Swiss Gold Initiative is a Real and Present Danger To Central Banking
The arguments put forth by the SNB against Save our Swiss Gold are hollow. The Swiss did not have high unemployment and deflation in the 1990’s when their currency was backed by gold. There is no reason to expect that having a currency backed 20% by gold will create unemployment. The worry about deflation is also misplaced as price inflation lowers demand while lower prices stimulate demand – it’s why companies have sales; to sell more products.
The real concern of the SNB is if the Save Our Swiss Gold referendum passes it would mean the end of interventionist central banking in Switzerland.
If the Swiss voters pass the Save Our Swiss Gold referendum, they will have achieved what the faltering “Audit the Fed” and “End the Fed” movements in the United States have failed to do – end central banking as we know it by handcuffing the SNB’s ability to act recklessly by preventing endless rounds of currency printing and debasement.
In “Save Our Swiss Gold – The Battle Ahead” we warned that if the initiative passed:
…it doesn’t mean that the SNB will immediately set out to purchase gold, make gold repatriation requests to Canada and London and that there will be a subsequent spike in the price of gold.
Indeed, the SNB will most likely drag its feet in implementing the referendum and central banks, thick as thieves, may arrange to short sell gold in the aftermath of the referendum passing and “lease” Switerland the gold they need so as to keep the price of gold under control.
Reuters reported last week citing Deutsche Bank that central banks would stand ready to aid their fellow central bank in distress:
While the SNB would have to lift its gold holdings by 1,500 tonnes over five years, purchases would amount to 1.2 tonnes per day, Deutsche said, a “small fraction” of daily turnover.
Some may also be carried out via private transactions with other central banks, minimising market disruption, it added.
“Another option for the SNB would be using gold swaps to ‘window dress’ its balance sheet rather than holding physical gold or futures contracts,” it said. The SNB could borrow gold from counterparties prior to monthly balance sheet reporting dates, re-exchanging it for currency the next day, it said.
Right now the SNB and media are working hard to ensure “Plan B” doesn’t have to be implemented.
Here are some of the recent headlines and media stories putting forth the SNB’s complaints against the Save Our Swiss Gold initiative:
November 10, 2014
Reuters: A Gold Standard Red Herring:
“The initiative has been polling poorly, and Thomas Jordan, the chairman of the Swiss National Bank, has called the plan “disastrous,” Fortunately, Swiss voters seems wise to the plan, which many analysts see as part of a thinly disguised nationalist agenda, one of many currently in play in Europe.”
Bloomberg/Businessweek: Swiss Franc Cap Tested as Gold Bugs Push Referendum
Wall Street Journal: Swissie Close to Crunch Point in Runup to Gold Referendum
“Last week, SNB President Thomas Jordan said the initiative would interfere with the bank’s policy.”
November 12, 2014
Wall Street Journal: Swiss Bank Speaks Out Against Gold Initiative
“The head of Switzerland’s central bank has warned that maintaining stable prices would be harder to achieve if the Alpine country votes to require the bank to keep a minimum amount of gold in its vaults.
The adoption of the so-called “Save Our Swiss Gold” initiative would be a “fatal error of judgment,” Thomas Jordan, president of the Swiss National Bank, told Swiss newspaper 20 Minuten in an interview published Wednesday.”
November 13, 2014
Financial Times: Anxious Gold Bugs Swarm Switzerland’s Central Bank
….that is the name of a radical initiative that the Swiss public will vote on November 30 that would drastically change how the central bank functions.
Even if the initiative is rejected, it risks hurting Switzerland’s business-friendly image – especially when taken in conjunction with other recent popular votes, such as a surprise decision in February to limit EU immigration, says Stéphane Garelli, a professor at Lausanne’s IMD business school.”
November 15, 2014
Reuters: SNB says Swiss Gold Vote Will Hurt Efforts To Cap Franc – Paper
SNB board member Fritz Zurbruegg said in a newspaper interview that the right-wing Swiss People’s Party (SVP) attempts to impose requirements on Swiss gold holdings would complicate efforts to keep the franc down, and ultimately hurt the economy.
November 16, 2014
Reuters: SNB Head Says No Sovereign Fund For Gold if Referendum Passes – Paper
“The “Save our Swiss gold” proposal, spearheaded by the right-wing Swiss People’s Party (SVP),
Jordan also renewed the SNB’s criticism of the proposal, which he said would fuel unemployment, increase the risk of recession and threaten the bank’s efforts to keep the Swiss franc capped against the euro.”
CNBC and Reuters:Euro Zone’s Troubles, Gold Vote Test Swiss Central Bank
“SNB Chairman Thomas Jordan has gone out of his way to warn of the risks attached to the proposal.”
November 17, 2014
Reuters: ‘Yes’ Vote in Swiss Referendum Not Certain to Lift Gold Prices-Deutsche Bank
“A vote in favour of boosting Switzerland’s gold holdings at a Nov. 30 referendum won’t necessarily lift bullion prices, Deutsche Bank said in a note, adding there was a “considerable” chance the motion would pass.”
November 19, 2014
CNBC: UPDATE 1-Support For Swiss Gold Referendum Proposal Weakens as Campaign Heats Up
“SNB WARNS AGAINST YES-VOTE”
“Supporters of the proposal say it would secure a stable franc but the SNB and government have said a “yes” vote would raise unemployment and the risk of recession“.
AFP France: Financial Markets Brace For Swiss ‘Gold’ Referendum
“… economists warn a ‘Yes’ vote could wreak havoc in financial markets.” “Industry organisations have also warned that the move would tie the central bank’s hands and damage its credibility.”
November 23, 2014
Wall Street Journal: Swiss Central Bank Chief Warns on Impact of Gold Vote:Thomas Jordan Reiterates Concerns That Initiative Would Hinder Bank’s Monetary Policy Moves
“The initiative is both unnecessary and dangerous,” Mr. Jordan said
Reuters: SNB chairman warns of ‘dangerous’ Swiss gold initiative ahead of vote
“The initiative is dangerous because it would weaken the SNB,” Thomas Jordan said in remarks prepared.
Break Down of Most Recent Save Our Swiss Gold Results