One of the main tenants of Freegold is that gold is for saving only and cannot be used to create loans or used as collateral. Central banks would hold gold as a reserve asset to help balance liabilities outstanding in fiat currency. This gold would be marked to market and its value in currency would float. The SVP would do well to include a restriction that prohibits gold leasing or gold swaps which creates paper gold that does not exist in physical form. This would essentially establish the architecture for Freegold. At any rate, the central banks of the world are buyers of gold and they are buying for a reason. Freegold is coming.
From Alex Gloy of Lighthouse Investment Management
Save The Swiss Gold
According to an article in Swiss newspaper NZZ (Neue Zuercher Zeitung) the SVP party (Swiss People’s Party) launched a referendum to “protect” the 1,000 tonnes of gold owned by the Swiss National Bank (SNB). Their aim is to:
- make it unconstitutional to sell gold
- force the SNB to hold 20% of its assets in gold (currently 16%)
The SVP said the sale of 1,500 of the SNB’s 2,500 tonnes of gold was regrettable, especially given the Swiss population had no say in this.
For the referendum to be launched the action committee needs to collect 100,000 signatures from supporters of the measure. They have until March 20, 2013 to do so.
In Switzerland, a referendum is serious business. Direct democracy. Memorable votes include the 1992 decision to stay out of the EU, or the (defeated) referendum to abolish the Swiss Army (1989, 2001).
The initiative could complicate the SNB’s dream to manipulate the EUR/CHF exchange rate. As FX interventions blow up its balance sheet the SNB could be forced to purchase large quantities of gold to adhere to the above mentioned 20% gold ratio.
The 100,000 signatures should be achievable. Having lived in Switzerland for 8 years I could imagine for this referendum to pass.