This page has been archived and commenting is disabled.
What The Swiss Gold Referendum Means For Gold Demand
The referendum for the Swiss Gold Initiative is scheduled for November 30th and the propaganda war - between the Swiss National Bank (SNB) and the Swiss Parliament on one side and the Swiss People's Party (SVP) on the other - has begun and we expect it to escalate as the day draws ever nearer. Having already questioned the 'location, location, location' of Switzerland's current gold stash, and examined the initiative in great depth here, JPMorgan notes that not only might the forthcoming Swiss gold referendum stabilize gold prices at a time when Gold ETF demand continues to decline, but warns, it also appears that markets under-appreciate this event.
As JPMorgan explains,
Gold ETF flows continued to bleed losing $4bn or 6% of AUM cumulatively since the end of August.
Gold Miners ETFs, which have held up relative well up until recently also suffered over the past two weeks (Figure 7).
The downtrend in Gold ETF flows represents a headwind for gold in the face of subdued physical demand recently.
The latest data from China Gold Association, reported physical gold demand by Chinese investors of only 185 tonnes in Q3, down from 246 in Q2 and 322 in Q1.
While Chinese physical demand remains subdued...
[ZH - a point we note is very much in the eye of the newspaper holder]
Who do you choose to believe?
h/t @sobata416
* * *
The forthcoming Swiss gold referendum could stabilize gold prices at a time when Gold ETF demand continues to decline.
It also appears that markets under appreciate this event.
If the referendum is passed, the Swiss National Bank (SNB) will be forced to increase reserves by around 1,500 tonnes over five years, i.e. 300 tonnes per year.
This 300 tonnes per year accounts for 7.5% of annual gold demand of 4,000 tonnes per year.
* * *
As Grant Williams noted previously, with the establishment being unable to actively campaign AGAINST the Initiative, all has been quiet for many months; but with the dawning awareness that this little campaign might actually grow some legs, a few members of that establishment have been getting a little antsy...
(Centralbanking.com): ...Now, with less than two months until the vote, the central bank is intensifying its communication. It opened a “dossier” on its website yesterday where it will post materials outlining why it “reject[s] the initiative”.
“Monetary policy transactions directly change our balance sheet. Restrictions on the composition of the balance sheet therefore restrict our monetary policy options,” [SNB Vice-chairman Jean-Pierre] Danthine explained.
“A telling example is our decision to implement the exchange rate floor vis-à-vis the euro... 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.”
Sometimes I think these people are completely delusional.
So, let me get this straight: gold is a relic which restricts your ability to do such vital things as... oh, I dunno, promise to print unlimited amounts of your currency in order to peg it to another, failing currency and thereby debase it by 9% in 15 minutes? Or it might mean the market doesn’t have complete faith that you might be completely relied upon to do really smart things like that?
Disaster!
Somebody. Please? Make it stop.
The Swiss establishment has been reliant upon the public’s ignorance in these matters, but now they are up against a formidable opponent in Egon von Greyerz. Not only that, but they can clearly see that, as elsewhere around the world, the public is fast becoming disenchanted with the status quo; and that is potentially very dangerous for these people.
What is important to understand here is that if the initiative passes it will be part of the Swiss constitution IMMEDIATELY — not in two years, as many blogs and websites are suggesting. This means that the government and parliament cannot touch it. Only another referendum can change it. This is proper democracy for you.
The closer we get to the vote on November 30, the bigger this story is going to become, and the bigger it becomes, the higher the chance that the yes vote wins.
Should that happen, it will undoubtedly set off alarm bells throughout the gold market, as yet more physical gold will need to be repatriated and another sizeable, price-insensitive buyer will enter the marketplace.
»
- 20516 reads
- Printer-friendly version
- Send to friend
- advertisements -
You may not have gold based currency. It is too expensive.
Signed
THe banksters.
PS Jon Corizine still free as a mother fucking bird.
Declining gold ETF holdings indicate gold shortage as does ascending gold lease rate:
http://www.kitco.com/lease.chart.html
ETFs are being drained as one of last liquid sources of bars.
There are a number of ways the whole Initiative could go however. The referendum has to pass OTHER parts of the Swiss .gov (at the canton level, for example), and could be obstructed (easily).
Or the Swiss could reduce Euro holdings to get the gold they already have to 20%. Or some combination, probably other little tricks as well. Or someone could lie...
There is also a real chance the referendum will fail.
This is nowhere near a done deal.
* * *
On the other hand, if they do have to buy 1500 tonnes (48,000,000 oz +) of physical gold...
The Swiss economy is too small and has almost zero liquidity.
They did have an national airline at one time and probably still do. They lost one aircraft over Nova Scotia however.
Strange Things Happening at the Gold ETFs:
http://seekingalpha.com/article/2661365-there-are-strange-things-happening-with-the-gold-held-at-the-gold-etfs
Who would be mining it at $900/oz level?
No one.
Someone who wants to convert US$ into gold. Buy mine. Pump fiat into it. Stack the damned gold.
And it has now been confirmed, largely as a result of pioneering work by Koos Janssen, that:
Domestic mining production + Scrap + imports = SGE Sales = Chinese Wholesale demand.
This has now been officially confirmed by Official Chinese sources. SGE sales in 2013 were 2,200 Tonnes and 2014, at the rate of sales over the past few weeks, will not be far behind. This does NOT include purchases by PBOC for reserves which are made offshore so as to re-cycle Dollars, whereas SGE operates in RMB.
So why is it that "Reputable" sources such as the FT and even The World Gold Council (Which should be acting to promote the interests of Gold and Gold producers?) still significantly understate Chinese demand, irrespective of official data? World production of Gold (Ex-China and Russia, which never leaves these countries) is estimated at about 2,200 tonnes:
https://en.wikipedia.org/wiki/List_of_countries_by_gold_production
If official Chinese demand is, say 500 Tonnes (And it could easily be much more), then China alone is absorbing more than total world production, which is now declining with Gold at below sustainable production cost. With purchases by Russia, India and other SE Asian markets added in the imbalance becomes obvious.
This explains why GLD is being raided as a last source of physical Gold and also why TPTB are so determined to depress Western demand by manipulating the price down using naked paper shorts and 100:1 leverage in the paper markets, mostly Comex. If Western demand for Gold were to pick up, there would be no way that the Gold could be sourced and the price would increase exponentially. In turn, this would finally expose the paper fiat markets as the crooked game that they really are and would probably end them once and for all. There would be a dead canary in the mine. The Swiss Gold initiative should also be seen in this same light.
As an overview of the Swiss issue and an entertaining refutation of the SNB arguments against the Yes vote, I highly recommend Grant Williams' review in the last "Things that make you go Hmmmm..." (Mentioned in the subject piece) Indeed, I think that the Yes campaign could do a lot worse than to use Grant's analysis as the basis for it's media campaign because it is simple, direct and highly relevant. As follows:
http://www.mauldineconomics.com/ttmygh/pdf/this-little-piggy-bent-the-ma...
Worst case, they might have to drop the CHF - Euro peg.
Both gold and CHF would do a moon shot in that case.
But the 'main street' economy might grind to a halt.
Main street economy there runs not on CSF but on WIR!
Nonsense
There's no reason CHF has to appreciate.
If they print CHF in vast quantities to depress its value, they'd only need to use 20% of the new currency to buy gold. the rest of it could go towards debasing CHF value.
And what when the currency shoots up anyway? Since a gold-backed currency cannot print money like toilet paper - at least that's what we are all supposed to believe - the Swiss economy will be fucked and the next logical step will be to join the EU.
I have to give it to the bankers (and the banker sponsored SVP): devide and conquer. Game well played. No matter what the outcome of the vote is, they will have their way.
Heard anybody holding their money in Switzerland?
The repatriation is going to be the much bigger problem than the buying. Another consequence from a yes vote is contagion. Could a yes vote cause other nation´s populations to demand their gold back? I would not doubt for a second that the issue comes up again in Germany. "The Swiss can have their gold back, but we can´t?" is almost a guarenteed BILD headline if it passes.
Mining companies are trading at 2008 levels. Premiums on the rise. Gold bears going into hibernation?
Unless you are "an active trader", I would buy the metals, not the miners.
Never fear! Premier Election Solutions has new voting machines en route to Switzerland! The yes vote has already been neutralized.
gold is a barbaric relic /sacr
Listen.
Here we go.
lure/loor/
verb
1. tempt (a person or an animal) to do something or to go somewhere, especially by offering some form of reward.
noun
1. something that tempts or is used to tempt a person or animal to do something.
Fuck you and your "listen" bullshit.
It's his coice for communications. You don't have to listen. You are free to ignore him.
We are also free to ridicule him. That is our choice of communication.
Bring on the refernedum already before they can be kiboshed by the elites. Hurry! Counting on you, Swiss people, to pour cold water on the wicked Bitches of the West.
This is why I really doubt Friday's rebound was an invalidation of the breakdown through 1180. I don't think TPTB will let gold price (and corresponding demand from momentum chasers) start rising going into this referendum.
Premiums may take care of that.
Precisely. You can't fix gold below market forever without shortages in the physical market, and those are becoming painfully obvious. Consider the possibility of a leg up in the gold price for now only to be blown away by a renewed paper deluge in the week ahead of the referendum. If that plays out I'll be buying the F out of that dip.
The problem with this hype is that if/when the referendum fails to pass, it'll provide a great cover story for yet another sale of tons of futures contracts at 03:00 a.m.
Agree. What a stupid political move. On Dec 1st, after the establishment wins as usual, gold dives to $900/oz because not even the Swiss see it as a reserve for currency.
Armstrong has forecast gold must decline to 900-1000 (c. 2015) before it consolidates and then rises into a new bull market move.
If you aren't selling, it isn't a problem. If you are buying, it isn't a problem.
Do us all a favor and, in future, refrain from reporting Martin "2015.75" Armstrong's forecasts.
OK.
It will be 2015.7463257. Down to the millisecond, or whatever.
It's amazing what you can do with a TRS-80 if you're really good with TANDY BASIC.
Switzerland. The last hope for a civilized world. Vote your conscience. Monetizing government debt without the brakes of gold is simply stealing from the masses. Cool idea, Bansters, if you can get away with it but seems like the game is up. Hope all you fucking manipulators get what is coming to you.
Switzerland? Not a chance. It has been the cheesepope's forward operating base into the West since way before they took over the USA.
I have Swiss family and from my business trips and social trips to Switzerland over the years would say that the Swiss people believe what ever the authorities advice them and the Swiss people, in general, are the most boring, conservative and complying people I have ever met.
If the government and SNB are telling the Swiss people to vote against the gold referendum, then the Swiss people will unfortunately vote against it for sure.
On that basis I would guess it will be 62% against to 38% for gold reserves.
As a result of this result, I would expect the Gold price to fall on the 1st December on the basis that a banking nation has rejected the value of Gold. This will be a great outcome for the Chinese and Asians that can buy a load more on the market cheap.
See why they are still going :
http://andreswhy.blogspot.com/2012/06/swiss-and-afghan.html
They can't believe their own central bank, ergo the referendum in the first place.
Barbarous relic. Nobody wants it.
If you have some you'd like to get rid of, lemme know, and I'll try to help dispose of it for you. ;-)
Would using more than one type of metal serve as basis for evaluation of paper currency? Maybe silver, copper, platinum could all be used (might take some of the wind out of china sails).
edit the reason I bring this up is the argument put forth that there is not enough gold - but we have to find a way to cut the bankers off at the knees.
As a true reserve currency, gold may have to be valued at more than 10 thousand dollars ( just a guess) - not very good as market currecy except for the very rich.
Even in its physical form, Gold is almost infinitely divisible.
But in an electronic banking system with vaulted gold, even if the price rose to $100,000 a gram, there's no reason why ownership in units of a microgram isn't possible.
SNB ' Someone has accidentally super glued the pages of our double entry journal which means we cannot open our books to Jah Public '. ' Further, a team of our top 20 scientists are working on a thinner as this parchment dates back to 1944, just before the explosion of booty in and out neutral SwizzeOnMyDickLand '. YODALADY WHOO.
sorry you don't know how to yodel - you can't have your gold
The banks expect you to sing their song and dance to their beat
Swiss Gold Referendum Cheat Sheet:
If it fails, gold gets crushed.
If it passes, gold gets obliterated.
Tick tock tick tock
Oh boy. They are bringing back gold. They must be using high fusion lasers to manufacture it or have gained access to huge deposits on the ocean floors.
Or just steal it
They have CERN. They can assemble particles into any sort of configuration at will.
Of course, one-atom-at-a-time is a really slow way to make gold.
Okay, the tinfoil-wearing conspiracy theorist in me thinks that perhaps the-powers-that-be are purposely manipulating the price of gold/silver lower while at the same time debasing currency blatantly so that everyone and their mother will lose faith in fiat currency and pickup precious metals at basement bargain prices....then the greedy elite will turn around and confiscate everyone's gold/silver in the name of saving the system!
http://olduvai.ca
After they dig up your back yard you can plant a garden which might be more useful - also when they drain the lake you will have lots of fish to eat - someone here says that where he keeps the gold.
But the referendum........ results unrigged?
Lol
"Should ,,, Would..."
Nice qualifying words but I trust the Swiss about as much as I trust the Scots, to carry this through.
PROVE me wrong, William Tells. I will be overjoyed to be wrong.
Good post Tyler. Glad you brought this matter up. Some of us have a lot riding on it one way or the other.
Gorgonzola BrownShirt is a twisted sick fuck who learned his sick ways from his sick low-life preacher father.
Fred the SHREDDER RBS and Gordo BrownStain are 2 of Scotland's finest exports and we wish they'd stayed the fuck away.
Screw ETFs. The SGE is losing about 50 tons a week. Now the Swiss (if they vote yes) will buy 1500 tons in 5 years or 6 tons a week. In comparison to Chinese and Indian demand this makes very little difference. The Swiss vote is a nice gesture though and we applaud their efforts to rehydrate water.
Saying the Swiss will buy 1500 tons of gold is like Gordon Brown saying the BOE was going to make a fortune selling its gold reserves.
Discounting (ignoring) the market reaction and the masses' ability to front run a known buyer or seller isn't usually a profitable strategy.
question is, have the masses anything to say in the gold market? honest question, I sincerely doubt that "the masses" are those who buy, hold or sometimes even sell gold in serious volumes
and no, the odd coin does not count, as well as the small amounts in ETFs or similar things
if you are talking about Eastern masses, then perhaps. but they seem to me to be very price-conscious
In this cases the "masses" could simply be a handful of guys at JPM/HSBC/UBS/GS/Barclays. If one is an active market maker and their annual bonus needs to be secured - it's low hanging fruit. Perhaps I could have come up with a clearer word choice- since I don't think it was the "end user" masses who made bank off Gordon Brown's foolery, but rather just about every industry insider with an IQ at or above room temperature (°C).
what do they need more gold for ? thought they had lots of gold teeth stored there from WW2 ?
Perhaps the Swiss are about to learn that gold has more purposes than "money" and "savings" and "trade". Perhaps they will learn that gold bricks are great for pounding the heads of banksters and politicians. Of course steel and stone do just about as well... except metaphorically.
I believe the swiss people will seeit as a vote for their independence. And give the banksters that pounding. As usual, your comment is honest ann can't be argued.
Just the fact that there is a referendum and is drawing attension to the metals sector, pass or fail, business as usual will be difficult going forward. They cant un-ring the bell.
Has anybody considered that the cabalists are already loaded to the hilt with gold and may just allow this Referendum to pass without interference?
http://winteractionables.com/?p=16287
It will be of historical significance whether the people of Switzerland vote for a paper thing or the real thing.