SWITZERLAND: About To Purchase 1500 Tonnes of Gold ?

Zurich-Switzerland (Oct 12)   On 30th of November 2014, Switzerland will be holding a referendum of its citizens which might require the Swiss National Bank (SNB) to more than double its reserves in gold to 20%. The Swiss citizens will also vote for whether the central bank should stop selling its precious metals and if all gold should be held domestically.

 According to Beat Siegenthaler at UBS, the gold initiative would comprise a purchase of 1,500t of gold over five years in order to reach the levels of 20%. Latest data provided by the WGC shows that the central bank holds 1,040t of gold, which constitutes 7.7% of its reserves.

 The “Yes” vote could have a dramatic influence on the overall gold market. Ole Hansen at Saxo Bank (10/02/2014) explains that the Swiss gold referendum could usher in significant levels of gold buying, which in turn will have an effect on the price of gold. Hansen also mentions in Kitco News (09/30/2014) that the uncertain geopolitical outlook and European growth can act as a motivation for citizens to vote for SNB holding more gold. The drivers behind this initiative were introduced by several members of the Swiss People's Party SVP who managed to collect 100,000 signatures by April 2013 which indicates the appeal for the referendum.

 Important to note is the attention around the “No" vote as both the government and parliament prompts voters to reject the gold initiative. The initiative, they argue, would make it difficult for them to fulfil the institutions mandate for price stability and would contribute to a halt in economic development. SNB President Thomas Jordan further adds in Bloomberg (10/07/2014) that: “The initiative has the potential to limit the central bank’s ability to act."

Source: SahrpsPixley