Swiss gold initiative tipped to fail


Swiss gold initiative tipped to failClare O’Dea


The Swiss central bank will not be forced to increase its gold reserves, initial projections on the gold initiative show. Swiss voters appear to have roundly rejected the initiative which would have required the Swiss central bank to increase its gold reserves threefold to 20%.

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First projections indicate that just 22% of voters backed the initiative, which has drawn international interest from the gold-backed currency lobby, currency and bullion markets, and monetary policymakers.

Analysts had predicted that a ‘yes’ vote would have a positive impact on falling gold prices, as well as potentially putting a strain on the Swiss National Bank’s policy of maintaining a fixed exchange rate against the euro.

However the latest opinion poll, released on November 19, showed that momentum had been building for a ‘no’ vote, with 47% of respondents saying they would reject the initiative and 15% still undecided.

The initiative proposal sought to ban the Swiss National Bank (SNB) from selling any more of its gold reserves. It also stipulated that Swiss gold would have to be kept entirely in Switzerland, which would have required the repatriation of Swiss gold reserves stored in the Bank of England and Canada.

The repatriation question illustrated the mistrust expressed by the gold initiative supporters, whose campaign literature accused the SNB of carrying out “the largest swindle of our times” by recklessly printing money.


A key criticism of the ‘yes’ campaign was that Switzerland offloaded the bulk of its reserves of gold in the early 2000s when the price of the metal had dropped to historic lows, in hindsight losing the Swiss exchequer tens of billions of francs.

This decision was driven by a general international movement at that time to get rid of gold, economics historian Tobias Straumann told

“It was an expression of self-confident monetary policy – inflation was down and in check and people thought we are in a new era where we don’t need a commodity like gold or silver as a backstop.”

Gold held in London and Canada is also there for historic reasons, Straumann explained.

“In the case of Canada, it was considered a safe country in case of nuclear war or major war in Europe and many Swiss companies set up subsidiaries as potential headquarters in times of war in Canada,” Straumann said.According to Luzi Stamm, Swiss People’s Party parliamentarian who launched the initiative along with party colleagues, gold “will be worth the same in two or three generations. No one knows what will become of the paper money printed by heavily indebted countries.”

But recent volatility in the gold price, which finished the month of November at a four-year low of $1192 per ounce, may have made voters wary of taking such a leap. The price per ounce reached an all-time peak of $1,900 in September 2011.

The initiative required the SNB to spend CHF70 billion on gold over five years to bring its reserves up to the 20% of holdings.

SNB criticism

In recent years, several People’s Party representatives have criticised the monetary policy of the SNB, in particular the massive purchases of euros made to prop up the value of the European currency and keep the exchange rate floor at CHF1.20.

The head of the SNB Thomas Jordan was a staunch critic of the initiative, describing it as “fatal” for Switzerland to put restrictions on its own financial policy in this way, limiting its ability to react to changes in the markets and keep the country financially stable.

Currently, the SNB has around CHF460 billion in foreign reserves with 45% denominated in euros and 29% in US dollars.

The government had recommended voters to reject the initiative and it was rejected by a large majority by both houses of parliament. Both a majority of Swiss voters and a majority of the country’s 26 cantons needed to approve the initiative for it to pass.

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