The Swiss National Bank would be forced to buy the equivalent of around 70 per cent of total global gold production for the next three years if the referendum being held in Switzerland next Monday is passed. Gold prices could easily double within a matter of weeks.
Recent polls have suggested an early surge in the ‘yes’ vote to 42 per cent has declined in recent days. But the large number of voters declaring themselves undecided will make the result on Monday a cliffhanger for gold and silver investors.
Gold Standard
Switzerland was the last country in the world to leave the gold standard in 1999 and may be the first to take a major step to becoming a gold-backed currency next week. Many Swiss citizens are scared by the rise of paper money and money printing around the world and now regret having ditched the gold standard.Experts say that if the Swiss vote ‘yes’ on Monday, the SNB will have to buy 1,500 tonnes of gold over the next five years, the equivalent of almost 70 per cent of the annual global output from gold mines.
Five million Swiss citizens are able to vote on a proposal that would force the central bank to triple its gold reserves from seven to 20 per cent of total foreign currency reserves. The vote is being keenly observed by financial markets and governments all over the world.
Under the ‘Save Our Swiss Gold’ initiative the SNB will have to hold at least a fifth of its assets in gold within five years. The bank will also be required to repatriate all Swiss gold held abroad and be banned from selling any of its holdings in future. A fifth of Switzerland’s 1,040 tonnes of gold reserves are in the vaults of The Bank of England while a third are deposited in the Canadian Central Bank.
Gold-Backed Swisse
Opponents see this as fatally tying the hands of the SNB. The Swiss franc is already at a two-year high thanks to the referendum. The SNB has been forced to track the euro lower in recent years to avoid making Swiss industry hopelessly uncompetitive against the eurozone countries. This will be far more difficult to achieve with a gold-backed Swisse.Still securing the position of the Swiss franc buy buying gold is far from being as mad as trying to do so by printing paper money as other central banks around the world are doing with their currencies. Somebody has to be the first to move towards sound money.
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Courtesy of http://www.arabianmoney.net
