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Swiss Gold No - Repatriation, Demand from Russia, India and China More Important

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Swiss Gold No - Repatriation, Demand from Russia, India and China More Important 

By Ronan Manly

Introduction
Switzerland’s ‘Save our Swiss Gold’ referendum was convincingly rejected yesterday by the Swiss electorate following an aggressive anti-gold campaign in recent weeks that had been closely watched both in Switzerland and abroad. 

Unusually, it involved the Swiss National Bank (SNB) very actively, and ultimately successfully, trying to convince the electorate along with the main political parties to return a ‘no’ vote.


The initiative had proposed a series of measures which would have obliged the SNB to hold a minimum of 20% of its reserves in gold, prevent the SNB from selling any gold, and force the SNB to repatriate that portion of its gold reserves that are currently stored abroad and to store gold in Switzerland.

The referendum campaign had evolved out of a popular initiative which had initially collected over 100,000 signatures between 2011 and 2013. Under Swiss law, this allowed the motion to go forward as an official referendum, even though the Swiss government, Swiss parliament and Swiss National Bank had all come out in opposition to the Gold Initiative.

In rejecting the referendum, the Swiss People voted 77.3% against, versus 22.7% for. Voters in all 23 of Switzerland’s cantons rejected the initiative in what was an unfortunate defeat for the initiative’s organisers. In most cantons, the results showed a three to one ratio in opposition to the initiative, and even a four to one ratio in a few cantons.

Opposition parties, and the SNB, are already pitching the referendum outcome as a ring of endorsement for the SNB’s current monetary policy strategy of pegging the Swiss Franc to the Euro at the 1.20 level. This is not necessarily the case and it needs to be remembered that the result also shows a substantial minority of the Swiss electorate who disapproved of the SNB’s gold reserve management strategy.

Anti-Gold Establishment?
The weak showing for the ‘yes’ vote continues a trend that was seen in the series of opinion polls that were conducted during the campaign in October and November. Two official polls had been produced by political pollster gfs.bern on behalf of state broadcaster SRF. In the October poll, the yes vote was 44% versus 39% no, with 17% undecided. The last poll published on 19 November had shown the yes vote slipping to 38%, with the no vote at 47%, and 15% undecided.


The weakening of the ‘yes’ vote in the final two weeks of the campaign was most likely influenced by more effective campaigning by the no side, as well as the continued intervention of the Swiss National Bank through various media appearances. The fact that none of the main political parties in Switzerland had backed the initiative also looks to have made an impact with the electorate.

Another ‘unofficial’ series of on-line polls, run by the ’20 Minuten’ media group, had always put the no side in front, and in a poll published on 18 November, had found the ‘yes’ vote at 28%, versus 65% for no, with 8% undecided.

Cantonal wipe-out
Every canton, except the Italian speaking Ticino canton, rejected the initiative by more than 70%. Turnout for the referendum was 48.7%, with about 581,000 of the electorate voting in favour of the motion, versus approximately 1,974,000 against.

The two cantons with the largest populations, namely Zurich and Bern, only returned yes votes of 20.6% and 21.6% respectively.

The cantons of French speaking Switzerland, aka Swiss Romande, recorded the highest no vote, with one canton, Vaud, rejecting the initiative by a huge 83% to 17% margin. Switzerland’s French speaking region comprises the western cantons of Geneva, Vaud, Neuchatel, Jura, and most of Fribourg, as well as parts of the Bern canton and the western areas of the Valais canton.

In Geneva, for example, the electorate returned a vote of 23.5% yes vs 76.5% no, while the Jura canton voted 19.4% yes vs 80.6% no, and the Neuchatel canton recorded an outcome of only 20.0% yes vs 80% no.

The Italian speaking canton of Ticino, which is in the south-east of the country, recorded the highest yes vote at 33.3% vs a no vote of 66.7%. In the opinion polls in the run-up to the referendum, Ticino had shown the highest yes vote, so the relatively stronger yes vote in Ticino compared to other cantons was expected, albeit, the yes vote still collapsed in Ticino relative to what the earlier polls had indicated. 
Incidentally, Ticino is the canton where three of the four largest gold refineries in Switzerland are located, namely, Pamp, Valcambi and Argor-Heraeus.

Apart from Italian speaking Ticino, the strongest showing for the yes vote was seen in the cantons located in the north-east of the country, such as St. Gallen, Thurgau, and the two half cantons of Appenzell Ausserrhoden, and Appenzell Innerrhoden, and also the more centrally located canton of Schwyz. St. Gallen, for example, returned a 27.4% yes vote vs 72.6%, while Schwyz recorded 29.3% vs 70.7% no.

SNB Satisfaction
In a press release, the SNB said that it was “pleased to hear of the outcome of the gold initiative vote”, and that the gold initiative would have constrained its ability to maintain price stability. The SNB also reiterated that it will continue to impose its defence of the 1.20 CHF/EUR exchange rate with the ‘utmost determination’ and that it is prepared to buy ‘unlimited’ quantities of Euros for this purpose.


Luzi Stamm, National Councillor for the SVP, and one of the organisers of the gold initiative campaign, believed that the Swiss National Bank’s involvement helped the no campaign, saying that “the credibility of the SNB is obviously very high.”

Yves Nidegger of the SVP, another proponent of the yes campaign, said that the defeat was probably not a surprise given that none of the main parties officially supported the initiative.

Christophe Darbellay, national councillor and president of the Christian Democratic People’s Party (PDC), whose party was also against the initiative dramatically said that “the People have clearly said no to the SVP group (Swiss People’s Party) who wanted to put the SNB and Switzerland on morphine”.

The committee representing the large group of politicians who had opposed the gold initiative said in a statement following the vote that “the result confirms the confidence of the population towards the SNB and its recent monetary policy", and that the Swiss people had “testified to the importance of a National Bank that is free and independent in its capacity to act."

A similar point was made by Eveline Widmer Schlumpf at a press conference of the Swiss Federal Council (the Swiss Government) that was held following the results. Widmer Schlumpf is a member of the Federal Council and head of the Department of Finance, was also a committee member of the no-campaign.

Conclusion
Given that the gold initiative campaign was up against a well organised and well funded coalition of the main political parties and the SNB, the referendum outcome is probably not all that surprising.

The Swiss media and banking sector were also, on balance, more aligned with the SNB’s arguments, and the media failed to really ask any tough questions about the nation’s gold reserves and the SNB’s custodianship of said reserves.  
Although the referendum has produced the desired outcome for the Swiss National Bank, the Bank now has to return to its main problem of dealing with the relative strength of the Swiss Franc versus the Euro. 

With the CHF/EUR rate currently at the 1.20 mark, a line which the SNB has insisted it will defend, the immediate question for the financial markets is whether the Swiss Franc will now weaken slightly or whether the SNB will need to intervene in the short term by expanding its balance yet further via the purchase of large quantities of Euros. 

The gold price has taken a short term hit, no doubt partially due to the Swiss referendum result. However, it is important to remember today’s context - with central banks in Russia and China and other creditor nation’s central banks continuing to diversify into gold and adding to their gold reserves, and with countries such as the Netherlands and Germany beginning to repatriate their existing gold reserves. Thus, there may come a point in the next few years when the Swiss will look back at this referendum and wonder whether it was a lost opportunity to reverse the debasement of the once venerable Swiss Franc.

Importantly, the Swiss gold referendum may be another contributing factor to the people of European countries demanding transparency regarding their gold reserves and to a demand for repatriation of  and audits of national gold reserves. 

There is also the fact that there is a growing level of awareness regarding the importance of gold as a monetary asset and store of value to protect against systemic and monetary crisis. 

Get Breaking News and Updates On Gold Markets Here

MARKET UPDATE
Today’s AM fix was USD 1,178.75, EUR 945.46 and GBP 750.56    per ounce.
Friday’s AM fix was USD 1,184.50, EUR 950.80 and GBP 753.98 per ounce.
On Friday, gold declined over 2% and silver lost nearly 7%. The scale of the losses, particularly for silver, surprised participants as there was no breaking news story and markets had largely priced in a no victory in the Swiss gold referendum. 

Gold in USD - 5 Years (Thomson Reuters)

The Swiss public rejected the proposal to boost central bank gold reserves yesterday and the precious metals weakness continued at the open in Asia when gold fell 2.1% and silver slumped  6.7%, reaching the lowest in five years at $14.42/oz. 

The precious metals then rebounded in the course of the Asian trading day, as there was an increase in physical demand and some traders closed out bearish bets leading to a “short squeeze.” 

Spot gold rebounded to a high of $1,182.70 an ounce, and was up 1% at $1,179.00 an ounce in late morning trading in Europe. Silver was up 2.7%  at $15.83 an ounce, having earlier rallied as much as 6% to a high of $16.34. 

Spot platinum was up 0.6% at $1,203.70 an ounce, while spot palladium was down 0.4% at $801.90 an ounce.

Moody's cut Japan's sovereign rating, plummeting the Japanese yen to a seven-year low against the euro, also created a demand for gold, traders told Reuters.

Premiums in China remained steady near $1-$2 and demand in China remains very robust with withdrawals on the Shanghai Gold Exchange (SGE) at 52 tonnes last week. This means that total Chinese demand for gold is headed for 2,000 tonnes in 2014.

SPDR Gold Shares, the world’s largest gold-backed exchange-traded fund, saw holding fall another 1.2 tonnes on Friday to 717.6 tonnes, to 6-year low as weak hands continue to liquidate ETF holdings. 

On Friday, India the second largest importer and buyer of gold bullion, removed its import tax and other restrictions on gold imports which is a bullish development

The Perth Mint's silver sales in November climbed to their highest since January as lower prices attracted retail investors, while gold sales fell to a three-month low. The Perth Mint runs the only gold refinery in Australia, the world's second biggest gold producer after China. Silver coin sales jumped to 851,836 ounces in November from 655,881 ounces in October, data on the mint's website showed 

Sales of gold American Eagle coins from the U.S. Mint reached 60,000 oz in November down 11% month on month but up 25% on November 2013. Silver Eagles sales in November reached 3.426 million oz, down 41% month-on-month but up nearly 50% year-on-year.

Essential Guide to  Storing Gold Bullion In Switzerland

www.GoldCore.com

 

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Tue, 12/02/2014 - 12:54 | 5508847 Quinvarius
Quinvarius's picture

The world will be begging for a gold standard when this is over and it realizes the level to which it has been duped out of its wealth by bankers and politicians.  We will be able to tell our grandchildren about the nation state destroying financial crime that dwarfed every prior bubble in history before it imploded.  Nothing is different this time.  And no one is going to come to their senses until it is too late.

Tue, 12/02/2014 - 07:58 | 5507888 bigusdickus
bigusdickus's picture

You do realize that there used to be 5000 comments on this pump. Now there are 10.

You are alone.....

Tue, 12/02/2014 - 11:39 | 5508522 X-defiler
X-defiler's picture

We read history and we question, "How come people did this stupid thing or how come they let their kings and government do that stupid thing?"

The reason we are able to see the clarity in history is because we saw that the bad situation had a finality. Meaning history tells us everythng finds equalibrium eventually. Like the ever infomous Tulip Bubble or the French Revolution or the fall of every government that debased its currency or moved to a tally stick. Think about the Tally stick. What a bunch of fucking morons to use a broom stick to trade for valuable things. What do you think Crytocurrancy will become? Or any digital currency? in a 100 years or less people will be amazed at the desaster that is our current belief system. The future generations will ask the same question, "Why were they so stupid back in 2014 or 2020 to believe in paypal, credit cards and crytocurrancy". They will ask, "Didn't they see it was all nonsense? 

I am not saying people will be caring around hunks of round metal to do transactions. I am predicting that ultimately, our value will be tied to a real commodity as they are becoming more and more scarce. Crytocurrency and electronic payments will be all backed by some form of real value and gold may very well be a huge portion of that guarrantee. Meaning, it will ultimately go back to some sort of bartering with a fluid transfer system or we will be sent back to the stone ages. 

Tue, 12/02/2014 - 12:59 | 5508877 Quinvarius
Quinvarius's picture

It comes down to "stuff has value".  Everything else is a scheme to get you to trade your stuff or labor for nothing or at the point of a gun.

Tue, 12/02/2014 - 07:54 | 5507878 bigusdickus
bigusdickus's picture

It shows the gold bugs clearly what a bunch of fucking whackjobs they really are.

Now that is is official that you are part of some tinfoil hat fringe cult maybe you could start thinking that maybe, just maybe, you are wrong.

E - money will make your door stops worthless. You do realize that? Young people use their smartphones for transactions. If they see it as lunacy maybe you should ocnsider that the world is leaving you behind.....

In the near future cash and gold will be useless. Do the right thing sell your stash take the cash and put it in the bank.

Some of you will retort saying that they can take form your cold dead hands.

So be it but what will your kids do when you are gone and they have this doorstop to deal with....

c'mon it's time to come out of the cave into the light. There you go, doesn't that feel better?

Tue, 12/02/2014 - 13:07 | 5508917 Quinvarius
Quinvarius's picture

How come you can't buy food with World of Warcraft e-money?  Maybe just because it is on a computer it is not valuable.  Maybe it needs something more.  I don't think you understand what money is.

Tue, 12/02/2014 - 12:31 | 5508724 neuronius
neuronius's picture

I'll purchase your doorstop, if it's so worthless to you.

Tue, 12/02/2014 - 12:09 | 5508654 falconflight
falconflight's picture

I don't live in a cave, my children will ultimately have to deal with their existence, and you post like a HuffPuff, Yahoo/DNC miscrent.  The world isn't leaving me behind.  Like John Lennon sang on his last album, I'm just watching the wheel go round and round, I just had to let it go...

Tue, 12/02/2014 - 08:55 | 5507970 hendrik1730
hendrik1730's picture

Please do, I'll talk to you again after the big reset.

Tue, 12/02/2014 - 06:47 | 5507812 cobra1650
cobra1650's picture

So gold jumps $50 on Monday well over $1200 and no headline on BLOOMturd.

Tue, 12/02/2014 - 05:30 | 5507774 Kina
Kina's picture

The purpose of gold is to keep governments financially bound and in control and thus lessen the risk of financial collapse....or at least increase the meantime between failures as it takes them longer to bastardise their systems.

 

Fractional reserve banking is another form of a fabled perpetual motion machine. Printing/debt  outside of wealth creation is itself financial friction that slows the system...and thus requires greater printing to overcome the friction  to keep the machine going....however creating more friction...ad infi nitum...

Tue, 12/02/2014 - 07:55 | 5507884 bigusdickus
bigusdickus's picture

Gold is to protect you form government period.

It is not a financial instrument. Stop spouting hte pumper's crap and think for yourself..

 

wake up - you've been scammed

Tue, 12/02/2014 - 12:11 | 5508660 falconflight
falconflight's picture

I'm not being scammed, I'm being screwed and tatooed.  

Tue, 12/02/2014 - 05:25 | 5507771 Kina
Kina's picture

Swiss people will be hoarding gold, they know their govt has  been  bi-sexual a geopolitical tool for generations.

Tue, 12/02/2014 - 03:05 | 5507667 OhNo
OhNo's picture

Just another nail in the coffin for these arsholes.What i like is that its so close to home to THE Bank of intenational shitheads.The masters of the banking universe.

Tue, 12/02/2014 - 01:08 | 5507532 Dame Ednas Possum
Dame Ednas Possum's picture

Just keep stacking.

Tue, 12/02/2014 - 07:56 | 5507886 bigusdickus
bigusdickus's picture

Why? The pumpers are gone, you are left alone, and now that stack you mention is useless.....

The pump is over...

Tue, 12/02/2014 - 13:12 | 5508944 Quinvarius
Quinvarius's picture

What pump is that?  The people taking the gold are not planning to sell it into this financial system, ever.  You are just going to have to deal with the smart wealth constantly hoparding more wealth.  The only pumper fools are pumping fiat paper.  Not interested.

Mon, 12/01/2014 - 23:14 | 5507277 buyingsterling
buyingsterling's picture

GOOD PIECE

Tue, 12/02/2014 - 00:27 | 5507452 JamesBond
JamesBond's picture

Putin isn't cursing an artifically low gold price, he is laughing his ass off 

Mon, 12/01/2014 - 22:07 | 5507041 Agstacker
Agstacker's picture

I believe the U.S. has that much gold like I believe 'fire' made WTC 7 collapse.

Tue, 12/02/2014 - 12:34 | 5508741 neuronius
neuronius's picture

I think when the gold dust settles (see what I did there?) we'll find that the chart is wrong.  US is probably somewhere on the chart where China is, and China is somewhere off the chart.

Mon, 12/01/2014 - 21:09 | 5506789 pitterrier
pitterrier's picture

The Swiss are cunning smart.  Do not under estimate them and their Central Bank.  Do you think they don't know what is really going on.  This is a perfect opportunity to quietly add to their gold inventory.  Believe me the Swiss did not get this stupid overnight.

Mon, 12/01/2014 - 22:13 | 5507074 cheech_wizard
cheech_wizard's picture

Actually, judging by the American metric, one generation, two at the most.

 

Mon, 12/01/2014 - 20:58 | 5506729 KuriousKat
KuriousKat's picture

 Thus, there may come a point in the next few years when the Swiss will look back at this referendum and wonder whether it was a lost opportunity to reverse the debasement of the once venerable Swiss Franc.

 

Excuse me Isn't this the same place the BIS is located? 

Centralbahnplatz 2
4051 Basel
Switzerland   View map Postal Address: Postfach
CH-4002 Basel Telephone: (+41 61) 280 8080 Fax: (+41 61) 280 9100 and
(+41 61) 280 8100 SWIFT address: BISBCHBB Website: www.bis.org 

Did anyone REALLY expect anything different?

I hope when they turn around and look they turn to pillars of salt ! 


Tue, 12/02/2014 - 03:24 | 5507680 Oliver Jones
Oliver Jones's picture

You got the country wrong: The BIS is not located in Switzerland, because it is its own country. It is surrounded by Switzerland (much like Basel Bad Bf - the only German railway station outside of Germany), but it is not in Switzerland.

Tue, 12/02/2014 - 10:37 | 5508215 fleur de lis
fleur de lis's picture

That is very interesting--please elaborate on Basel's autonomy inside Switzerland, or link info, thanks. Before WW1 Lenin and his band of Communists hived in Basel and issued "The Basel Manifesto 1912" which closely outlined the battle lines of the war, and  the goals of the various Marxist subversives all over the Continent.  So Basel must have been a real central banker hidey hole. 

https://www.marxists.org/history/international/social-democracy/1912/bas...

Mon, 12/01/2014 - 20:52 | 5506720 Bemused Observer
Bemused Observer's picture

I think much of the rejection was because of the unfortunate wording. Making it "impossible" for the SNB to sell the gold made it a useless asset in the minds of the Swiss, no doubt. What GOOD is an asset that cannot ever be sold?
Of course, that isn't quite the truth...of course the gold could have been sold, it would just have required another vote...much like this one. That's how the Swiss DO things. It would have made it more difficult, not impossible, to sell that gold. And the Swiss people would have the final say. But that isn't the way it was presented. And the SNB, like all other CB's, does NOT want any of the great unwashed class interfering with their plans.
It isn't that the SNB is afraid of not being able to sell gold if needed. They know they CAN, as long as they have the agreement of their people. It's just that they don't want to have to GET the peoples agreement in the first place. It offends them to have to be answerable to their inferiors...

Mon, 12/01/2014 - 23:21 | 5507299 MalteseFalcon
MalteseFalcon's picture

"What GOOD is an asset that cannot ever be sold?"

It can still be collateral.

Mon, 12/01/2014 - 20:51 | 5506717 alexcojones
alexcojones's picture

I said it once and will say it again:

PISS ON THE SWISS

They are as sheepish and complacent as most Muricans.

Mon, 12/01/2014 - 20:43 | 5506683 Bohm Squad
Bohm Squad's picture

Let's see if the SNB will have to create a EURCHF ceiling as they have the 1.20 floor...

Mon, 12/01/2014 - 20:34 | 5506651 lordbyroniv
lordbyroniv's picture

The Swiss used to be a smart people.  Now they are idiots.  Fuck them.  Wont feel bad at all when they are ruined.

Tue, 12/02/2014 - 09:34 | 5508051 Brazen Heist
Brazen Heist's picture

I know its disappointing, but the Swiss are not as dumb as your think. They are outside of the Eurozone, have their own currency that is a safe haven asset, maintain bilateral relations with the EU (in other words hedging their bets by not going balls deep with this failed project). They also have 70% of their gold in Switzerland, only 30% I believe is abroad, much lower proportion to most other nations. They have frequent referendums, own plenty of guns responsibly and are neutral in most foreign affairs. Plus the secrecy and privacy laws. Give them some slack. At least they don't store their gold at the Fed (JPM), only Canada and UK. 

Mon, 12/01/2014 - 23:29 | 5507330 Buck Johnson
Buck Johnson's picture

Europe is being taken for a major ride aka the smart countries are.   And once it is done those countries will look like fools.

 

Mon, 12/01/2014 - 23:18 | 5507281 MalteseFalcon
MalteseFalcon's picture

The Swiss will regret this vote.

When the Euro falls apart, what then?

Tue, 12/02/2014 - 12:34 | 5508744 lordkoos
lordkoos's picture

Switzerland is not in the EU.

Wed, 12/03/2014 - 10:43 | 5512337 MalteseFalcon
MalteseFalcon's picture

I wonder if the Swiss do any banking business with the EU.  My guess is that you would say 'no'.

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