...if the “Save Our Swiss Gold” ballot does pass, there are already plans for a second referendum initiative: the creation of a gold franc as a second official currency by the federal government.
The Swiss have spoken and the results are in...sort of. The survey results, that is. Let me back up. On November 30th the Swiss will head to the polls to exercise that characteristically Swiss democratic institution, the referendum initiative.
There are three offerings on the plate for the Swiss this time around: The first is a call to further tighten the country's already notoriously strict immigration policies to allow just 0.2% of the resident population (about 16,000 people) to enter the country each year. (Interestingly, this initiative is being done under the title “Stop overpopulation – safeguard our natural resources.”) The second initiative would abolish the flat tax system and require wealthy ex-pats in the country to be taxed only on income and assets. But the third initiative, the “Save Our Swiss Gold” initiative, may prove the most sensational.
If passed, the Swiss National Bank would be required to hold the equivalent of 20% of its assets in gold. It would also require the SNB to stop selling its gold (it has sold an average of one ton per day for the past five years) and require that the gold be stored in Switzerland itself, not at the Bank of Canada or Bank of England where 30% of the SNB's gold reserves are currently held. The initiative has garnered popular support, easily raising the required 100,000 signatures to put it on the ballot and force the referendum. Although (obviously) bitterly opposed by the SNB, the pressure of the impending vote did force the bank to reveal the location that the nation's gold is being stored, revealing that the BoC is holding 10% and the BoE 20% of Switzerland's gold reserves.
Last week the results of the first scientific poll of the Swiss population on the initiative were released and they are very promising for the “Yes” side. According to the survey, 45% approve of the initiative and 39% are against, with 16% undecided. There is obviously still plenty of room and plenty of time for the vote to go either way at this point, but it is interesting to see that the yes side is in a clear lead.
Perhaps even more exciting, if the “Save Our Swiss Gold” ballot does pass, there are already plans for a second referendum initiative: the creation of a gold franc as a second official currency by the federal government. This measure would compel the Swiss government to form a commodity-based supplementary currency, specifically a set of coins with a fixed gold content. The government would grant concessions for the minting of the coins. Although the initiative would not aim to supplant or replace the Swiss Franc as the country's primary currency, it would make gold selling and buying cheaper, increase the use of gold for everyday transactions, and stabilize the Franc on the Forex markets to boot. Win win win.
There's a long road between here and the first ballot on November 30th, and we should expect the SNB to kick up a mighty fuss. But if there's any country on the planet that can direct their banking system through the ballot box it's Switzerland, and the Swiss are aware of this. Look for the measure to squeak by at the end of November...before the inevitable bureaucratic dance slows down its implementation.