Switzerland: Vote Yes On Gold Initiative

Alex Merk   By Alex Merk

(Re-Blogged from Gold-Eagle.com)

As the US FED, the Eurozone Central Bank, the Japanese Central Bank, and others print more and more dollars, euros, yen, etc, in an effort to “stimulate” their local economies, through “Beggar-Thy-Neighbor” tactics, the Swiss people have a grand opportunity to halt such monetary insanity in their country. There is a lesson to be learned for the American people: If you can’t end the FED, maybe you can control it at least. -RLS

On November 30th, the Swiss are voting whether to amend their country’s constitution on an initiative entitled ‘Save our Swiss Gold.’ The Swiss gold initiative appears widely misunderstood, both inside and outside of Switzerland. We discuss implications for gold, the Swiss franc and Switzerland as a whole.

gold comic

The motivation

The initiators of the gold initiative appeal to Swiss citizens desire not to sell out the ‘family silver.’ In the late 90’s, the Swiss National Bank (SNB) owned 2,590 tons of gold; since then 1,550 tons have been sold at prices far lower than today’s prices. While the Swiss might like their gold, they are fiercely independent. That’s relevant because by imposing a ceiling of the Swiss franc versus the euro, the SNB has de facto imposed the euro on Switzerland, a step closer to joining the euro – something many Swiss object to. More importantly, many Swiss may find it inappropriate for what is supposed to be an apolitical body like the SNB to impose policies with major political ramifications.

Not surprisingly, the Swiss government – which opposes the initiative – does not frame the discussion this way, but instead talks about the flexibility the SNB needs to implement its policies. It also points to the ‘losses’ incurred in 2013 when the price of gold fell.

Let’s look at the initiative and arguments in more detail. The initiative would amend Switzerland’s constitution such that:

Gold reserves of the SNB must not be sold;
• Gold reserves of the SNB must be held in Switzerland;
• Gold reserves of the SNB must be ‘significant’ and must not fall below 20%.

As transitional measures:

Switzerland has 2 years to repatriate its gold;
• Switzerland has 5 years to phase in the 20% reserve requirement.

Continue Reading–>

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