Swiss voters will likely reject a November 30 referendum to push the Swiss National Bank to hold 20% of its reserves in gold, but a gold bug can not beat.
Diehard gold enthusiasts – known as ‘gold bugs’ – are not warned by the imminent rejection of the Swiss people for their favorite alloy.
Their religion in the yellow metal stays rock solid, even as costs are down about 37% from the all-time nominal high of around $1,920 an oz, establish in September 2011 of gold. Proponents say gold is currently plump and a deal for the yellow metal as an insurance plan against economic disasters. Proponents point to the dearth of increase in Europe and Japan and the growth slowdown in China. And proponents do not purchase the development in the US market.
More to the point, the Swiss vote places gold in the international limelight again where gold bugs is liked by it.
“In RonPaul point proponents consistently win if we can get the conversation out,” says former representative Ron Paul, a well-known gold standard proponent.
The “Save Our Swiss Gold” referendum would drive the Swiss National Bank to increase its gold holdings to equal 20% of its financial reserves – plus the state must repatriate all the Swiss gold held in other nations and it must never sell some of its own gold. Based on present holdings, the SNB has 1,040 metric tons of gold.
This is not entirely arbitrary. Gold and Switzerland go as well as chocolate and Switzerland. Jim Steel, the metals analyst at HSBC, said the Swiss franc to be was required by the Swiss constitution.
Steel said in case the referendum passes the SNB would probably have to purchase about 1,500 metric tons of gold, which is nearly half of yearly international mine production. They could purchase it over five years, however he said a “yes” vote by Switzerland could immediately increase the cost of gold everywhere by $50.
“This would reaffirm gold’s status in the international financial system and foster gold market sentiment,” Steel said, but a “no” vote would be improbable to send costs considerably lower since that is anticipated.
Not surprisingly, the important Swiss political parties as well as the SNB are against the measure. On Sunday SNB, president Thomas Jordan said the referendum would limit the flexibility of the bank to react to disasters.
Limiting the ability of banks is the purpose, say the bugs.
“It’s all about time the power of central banks is checked and controlled. The Swiss gold initiative, while not perfect, would be a starting point,” said Marc Faber, editor of the Gloom, Boom, Doom Report, a newsletter.