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Swiss National Bank Explains Why It Is Against Repatriating Gold
The Swiss National Bank has lashed out at the so-called "gold initiative" efforts to "Save Our Swiss Gold" unsurprisingly proclaiming it as a bad idea. As Ron Paul previously noted, "The gold referendum, if it is successful, will be a slap in the face to those elites," and so the full-court press ahead of the Nov 30th vote has begun (a la Scotland fearmongery) as SNB Vice Chairman Jean-Pierre Danthine explains how a 'yes' vote for the initiative "would severely constrain the SNB’s room for manoeuvre in a future crisis," as it "poses danger to the conduct of a successful monetary policy." His reasoning (below) is stunning...
Via Jean-Pierre Danthine, Vice Chair Swiss National Bank
On 30 November, the Swiss electorate will vote on the so-called “gold initiative” (“Save our Swiss gold”, in full), which, paradoxically, would severely constrain the SNB’s room for manoeuvre in a future crisis. Let me digress for a few minutes to explain why the SNB is opposed to this initiative.
The initiative is calling for three things:
first, the SNB should hold at least 20% of its assets in gold;
second, it should no longer be allowed to sell any gold at any time; and
third, all of its gold reserves should be stored in Switzerland.
Let me address the last point first. Today, 70% of our gold reserves are stored in Switzerland, 20% are held at the Bank of England and 10% at the Bank of Canada. As you know, a country’s gold reserves usually have the function of an asset to be used only in emergencies.
For that reason, it makes sense to diversify the storage locations. In addition, it makes sense to choose locations where gold is traded, so that it can be sold faster and at lower transaction costs. The UK and Canada both meet that criterion. In addition, they both have a strong and reliable legal system and we have every assurance that our gold is safe there.
The initiative’s demand to hold at least 20% of our assets in gold would severely restrict the conduct of monetary policy. Monetary policy transactions directly change our balance sheet.
Restrictions on the composition of the balance sheet therefore restrict our monetary policy options. A telling example is our decision to implement the exchange rate floor vis-à-vis the euro that I mentioned above: with the initiative’s legal limitation in place, we would have been forced during our defence of the minimum exchange rate not only to buy euros, but also to buy gold in large quantities. Our defence of the minimum exchange rate would thus have involved huge costs, which would almost certainly have caused foreign exchange markets to doubt our resolve to enforce the rate by all means.
Even worse consequences would result from the initiative’s proposal to prohibit the sale of gold at any time. An increase in gold holdings could not be reversed, even if necessary from a monetary policy perspective. In combination with the obligation to hold at least 20% of total assets in gold, this could gradually lead the SNB into a situation where its assets would mainly consist of gold: each extension of the balance sheet for monetary policy reasons would necessitate gold purchases, but whenever the balance sheet needed to be reduced again for the same reasons, we would not be able to resell our gold holdings. This would severely restrict our room for manoeuvre.
Furthermore, because gold pays no interest or dividends, the SNB’s ability to generate profits and distribute them to the Confederation and the Cantons would be impaired.
As a final point, note that currency reserves which cannot be sold are not truly reserves. It does not make sense to call for an increase in emergency reserves – gold holdings – and simultaneously prohibit the use of these reserves even in emergencies.
The SNB’s overriding objection to the gold initiative stems from the danger it poses to the conduct of a successful monetary policy. It would severely impair the SNB’s ability to fulfil its constitutional and legal mandate to ensure price stability while taking due account of economic developments, in the interests of the country as a whole.
* * *
We will hazard a guess that the voting will go exactly as Scotland's independence vote went - young vote for it, old against it... as fearmongering status quo managers step up the propaganda with no regard for what happens next.
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It's a bogus argument anyway. Every year the gold price rose in CHF, the SNB revalued its reserves to market and distributed the "profits" to it's shareholders by printing money.
Yeah, negative interest is a far better deal.
In case of an emergency, I want 100% of my shit with ME...not spread around the globe.
switzerland turned into a libya or syria
cia
operation gladio style op's
involving
isis
and other beards
cia,mi6 and mossad
in country low level bang bang operations kaos and regime change.
hey yo swiss your gold it's gone
ok
just fuckin forget about it already
Just FU, Jean-PeeAir....
"I have come to realize that the vast majority of decent, wonderful people have no idea how they are being hoodwinked, day in and day out, by the scum of this world. We are lied to, misled, bamboozled, suckered, cheated, misrepresented, conned, manipulated and royally screwed!
They take us to the cleaners day in and day out in every way possible. We, the people, pay the price of their cheating, their folly, their lying and their sheer stupidity."
Pierre Rinfret
"Jean-PeeAir"
So, a cock fart?
Ouch!
Thanks for the laugh, Danthine, what a whiner. Lulz..
It's easy to get your gold back, just ask Germany..
hahahaha - all the charade and then be told by the FED, SORRY BOYZ & GIRLS BUT ALL YOUR GOLD HAS BEEN rehypothecated.
Its probably sold to CHINA/RUSSIA or BRICS & associate nations. Sorry, but your farked. We can give you more of that monopoly money we print 24/7 if you like!
If the Swiss people can't see through the lies of this corrupt class of financier/banker usurper thieves and send them packing what hope is there?
Asian physical demand
I agree with the third part of the initiative: to hold all Swiss Gold reserves in Switzerland. But I completely disagree with the second part: the forbiddance of the sale of gold at all times.The first part of thei intiative is purely arbitrary. It is of no significance if the second and third parts are enforced.
If you are forbidden from selling gold at any time, there is no incentive to buy it. If it cannot be exchanged for something else of perceived value or to pay a debt, it is worse than an illiquid asset. It becomes an imprisoned/impounded asset and therefore becomes worthless as a store of value.
Oh, and by the way, fuck "monetary policy" and the apocalyptic horse it rode in on!
They will vote it down. Why? Because votes are easier to manipulate than gold.
I have talked to quite a few Swiss. They do not seem any more informed about the gold market than Americans.
"We will hazard a guess that the voting will go exactly as Scotland's independence vote went - young vote for it, old against it... as fearmongering status quo managers step up the propaganda AND VOTE MANIPULATION with no regard for what happens next."
the gold in reality belongs to israel as compensation fot nazi crimes of hair adoff hilter and swiss banker lootings of the ww2.
many children in tel aviv go hungry sitting hiding in loft attic hiding from the nazi isis and palestine arabs.
why must the children of the talmud suffer for saturn time forever because of the anti semnticks crimes of the evil scheming swiss nazi nation.
no this swiss gold is sacred it is written in the tora bora that it belongs to the wondering yahudi.
no ifs no butt holes
Move along, WWII was grampas war we have our own now and its bigger widescreen and digital.
It's funny to see these bankers go into a frenzy about gold on the one hand, and yet on the other hand they say "it's worthless...not money," and pooh pooh it.
Ha ha ha...then why do they fight so fiercely for it and to manipulate the price ?!
Oh sure - having gold limits your options when responding to a crisis - but the point of 'having' gold is to AVOID getting into a crisis in the first place!
the Swiss have sold out to the NSA/CIA. wonder what secrets we got on 'em?????
So they basically explained that they would no longer be able to fix prices and continue their central planning efforts with wanton abandon.
Be careful Switzerland. The more gold you have, the more the yarmulke-wearing tribe will demand in restitution.
"We don't want our gold back, as we know that it is already in China."
An American, not US subject.
It's all irrelevant anyway. If the initiative fails, gold will get paper shorted into oblivion. If it passes, gold will get paper shorted into oblivion.
Eventually oblivion, like the internet, ends
Those who understand Switzerland will recognize that every citizen gets a vote on these matters. Unlike certain other banana republics these votes count and will be counted. Look for this to pass. CS and UBS have rehypothicated most of their physical and are quietly being sued. They need to get their hands on physical.
"We feel a vote or move to remove TNT from the arsenal of banking policies would unnecessarily constrain the bank's ability to control risk by adjusting fuse-lengths attached to the TNT"
last time I saw the gold it was in Rothschilds basement...
:O
One suspects that the provision to forbid he sale of any official gold in the Swiss referendum was intended as a poison pill to ensure defeat of the measure. This is the only provision in the referendum that merits valid criticism by the Vice-Chairman. The rest of his criticism is nonsense.
I note the Swiss are storing gold only in northern hemisphere locations.
The Swiss National Bank's arguement that the gold cannot be sold means that it can't be used to monkey hammer down the gold price as central banks are currently doing.
The SNB official implies that the gold serves no purpose ignoring the fact that it serves as insurance against counterfeiting by central banks. The elderly having diminished mental capacity may vote against the measure not realizing that gold is their best insurance against inflation ravaging their fixed pension income.
Gold is Krytonite to central banker power to counterfeit. That's why as Russia, China and hopefully Switzerland amass large gold reserves, the central bankers have far less influence. In fact Russia kicked out of their country the Rothschild central bankers bankers who formerly had a death grip on Russian banks.
In the competitive, hard-nosed, knock-down, drag-out currency war between fiat and gold there won't be any trophies handed out just for participating . . . there really will be winners and losers.
Talk about fear mongering by the SNB. This policy would only apply to 20% of its holdings. Not 100%. So the notion that they would not retain any ability to maneuver in a financial crisis is just a typical scare tactic. The real truth here is that they will be constrained by a full 20% in the corrupt machinations they engage in (i.e Gold manipulation). This in effect would make the Swiss Franc backed by gold at 20%; as far as I know it would be the first currency to do so. Since the Swiss Franc was the last currency to leave the gold standard. I think it fitting. This will hurt the elites in the Euro as well as the banking financial service industry, the US dollar as the Swiss franc is pegged to the dollar and constrain corrupt politicians ability to spend beyond their means. For that reason I don’t see this passing. Elites will keep their status quo whatever the cost…. Interesting though, a Gold backed Swiss franc (even at only 20%) would make that currency far more attractive than any other fiat on the planet....