Switzerland is primarily known for three things — its fine watches, its rich chocolate, and its gold. And the last of these is about to receive an even more prominent position in Swiss society if a landmark referendum taking place in late November passes.
The upcoming gold vote will decide the future of gold in the small European country by determining whether or not the Swiss National Bank (SNB) has to buy lots and lots of gold in the coming years. Some analysts predict this vote could have an instantaneous and dramatic effect on the global gold market.
In case you’ve missed out on what’s been happening with the Swiss gold vote up until now, here’s a quick rundown:
• The idea to increase the nation’s gold reserves was initially rejected by the Swiss government and central bank; however, the ultra-conservative Swiss People’s party was able to collect over 100,000 signatures back in April 2013, thereby forcing the government to hold a referendum.
• The referendum aims to restrict the Swiss National Bank from selling any more gold, repatriate all Swiss gold from overseas (particularly the United Kingdom, Canada and the U.S.), and mandate that at least 20% of the central bank’s assets be physical gold bullion.
• If the “yes” votes take it, the SNB would have five years to raise the 7% of gold assets the bank currently holds and up to the required 20%—meaning the SNB would have to buy at least 1,500 metric tons over a three year period (half of the world’s annual production), according to UBS analysts.
• Voting for the gold referendum takes place on November 30th
Should Investors Be Alarmed?
If the Swiss electorate vote “yes” on the gold referendum, it doesn’t take a genius to figure out that it would likely ramp up the price of gold immediately afterwards as the market is swelled on demand. According to a poll by Switzerland’s biggest daily newspaper, which was conducted on October 15, out of more than 13,000 respondents, 45% to 39% said they would support the “Save Our Gold” initiative.
The survey also showed a high number of undecided voters, suggesting that the “yes” side may have the upper hand for now as far as popular opinion.
However, analysts are being cautious by saying this preliminary opinion poll does not guarantee a win come November 30th. And even if the referendum does win the popular vote, the initiative still has to be passed by the majority of Swiss Cantons – the 26 different regions in Switzerland.
“I would not overestimate these numbers. It was a positive surprise but it is still early,” said Ronald-Peter Stoeferle, fund manager at Liechtenstein-based Incrementum AG and author of the In Gold We Trust report.
Our advice to precious metals investors: keep an eye on what’s going on over in Switzerland and be ready to lock in cheap spot prices ahead of the Swiss vote if it looks to pass. And remember to visit Provident Metals when you’re ready to order your gold coins and other precious metals online.
Which way do you think the Swiss gold vote fall?
Tell us your predictions in the comments below or on Facebook, Twitter and Google+.
If they don’t get their gold to par now they might regret it. I agree with Duke that what’s the use of having a referendum when they leave the last word to Government officials.
Can you elaborate on how this referendum must be passed by the majority of Swiss Cantons also? Does that mean the majority of government officials must pass it? If that’s the case, why have the referendum because it won’t pass the Swiss Cantons.