Switzerland Gold referendum how it will affect gold?

S

SovereignBuyerMelbourne

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Taken directly from Wikipedia (because it explains it concisely)

The 30 November referendum will see voters asked about the country's gold reserves. The proposal would require the Swiss National Bank to have gold reserves of at least 20% of the value of the currency in circulation, prohibit the bank from selling gold, and see all Swiss gold currently held in the Federal Reserve Bank of New York returned to Switzerland. The popular initiative was started by Swiss People's Party MP Luzi Stamm and two other MPs, with the 100,000 signatures required for a referendum obtained by early 2013.

The proposal is opposed by the Swiss National Bank and the Swiss government, as it would limit the SNB's ability to print money.


How will this affect the gold price?

If this is successful will this become a trend with other European nations to reduce the risk associated with having the euro or being in the euro zone?
 
Hmmm .... might be out by a factor of one thousand.

Depends what you reckon a billion is. The US call it a thousand million.
 
Twelve billion is :

12,000,000,000

If spot is 1400 aud. per troy ounce, then :

32.15 x 1400 = $45,010 per kilo

1 metric ton is 1,000kg, so :

$45,010,000. (45.01 million) per ton. :

Therefore, twelve billion divide 45.01 million, is :

266.607 metric tons.

Good luck Switzerland !
:)
 
Remember, they currently have (or, are supposed to have - who knows, if it's in the FRBNY?) 7.7% backing. So they don't need 20%, they need 12.3%.

Using your valuations, that's 164 tonnes that needs buying.

That's still a lot of gold, but the nature of buying it - in fact, the intention to buy it, or even the outcome of the vote itself - would drive up the value of gold and reduce the numbers of tonnes needed. Particularly so while ChF remains pegged to the euro.
 
JB3 said:
Remember, they currently have (or, are supposed to have - who knows, if it's in the FRBNY?) 7.7% backing. So they don't need 20%, they need 12.3%.
Click to expand...


They would get the first-mover advantage - especially if they set a trend.....
 
They would, but much of that would be lost on the publication of the outcome of the vote, then the first ounce bought - everyone would know they are buyers in the market, how much they need, and how much they need it.

But I agree, that amount would raise the price of gold while not causing a supply-side crisis. If more countries decided to do the same thing? Well, that'd be the price discovery of gold. It'd be a bumpy ride though, and I suspect some currencies wouldn't survive it.
 
they have been buying juros with "unlimited" resources to keep the 1.2 exchange rate, no effect to gold price.
 
dozerz said:
they have been buying juros with "unlimited" resources to keep the 1.2 exchange rate, no effect to gold price.
Click to expand...

Juros is Porto for interest?
 
House said:
dozerz said:
they have been buying juros with "unlimited" resources to keep the 1.2 exchange rate, no effect to gold price.
Click to expand...

Juros is Porto for interest?
Click to expand...


sorry slang for euros.

http://www.businessinsider.com/wow-...ervention-to-a-new-level-franc-plunges-2011-9

note the sentence "The SNB will enforce this minimum rate with the utmost determination and is prepared to buy foreign currency in unlimited quantities."

while the snb probably doesn't want to buy that much gold, they have plenty of euros to swap it for.
 
True. But if other central banks did the same thing (I know, they won't) then we could have a supply problem.

Also, in theory, mobilisation of all those euros held in reserve will raise the ChF (as would it's new improved gold backing) and the price of gold, relative to euros.


Edited for iPad 'helpfulness'
 
JB3 said:
True. But if other central banks did the same thing (I know, they won't) then we could have a supply problem.

Also, in theory, mobilisation of all those euros held in reserve will raise the ChF (as would it's new improved gold backing) and the price of gold, relative to euros.


Edited for iPad 'helpfulness'
Click to expand...

no other country is going to have a referendum to force their government to buy gold :)

only the snb knows how many euros they have, this is just my assumption on how they would acquire the gold if the referendum is successful. i would suggest that if successful they would buy in such a way as to not affect the gold price at all.
 
No, quite right.

But... If the ChF becomes partially gold-backed, it will strengthen as a 'hard' currency. This will make it rise relative to other currencies and, while this might be bad for the Swiss, it might also be bad for everyone else.

Yes, other currencies might drop a bit and become inflationary, all good (as things are right now). But, if they drop a lot and become hyper-inflationary?...

Then other central banks might need to buy gold too.

With what, I don't know.



(I accept this is all wishful thinking, no central bank nor any government actually wants a commodity-backed currency.)
 
JB3 said:
Remember, they currently have (or, are supposed to have - who knows, if it's in the FRBNY?) 7.7% backing. So they don't need 20%, they need 12.3%.

Using your valuations, that's 164 tonnes that needs buying.

That's still a lot of gold, but the nature of buying it - in fact, the intention to buy it, or even the outcome of the vote itself - would drive up the value of gold and reduce the numbers of tonnes needed. Particularly so while ChF remains pegged to the euro.
Click to expand...

Its actually 1500 tonnes, they are proposing an increase to 20% of their capital reserves of the yellow stuff.

http://www.kitco.com/news/2014-09-3...cting-Attention-Two-Months-Ahead-Of-Vote.html
 
Whoops. Sorry - you are right,my was out by a factor of ten.

And that makes sense: I was looking at my numbers, thinking, "I'm sure I read they needed 500 tonnes per year, for a few years".

1500 tonnes is *a lot* of gold... Probably about half as much as the Chinese have bought in the last few years... It would push up the price, although would, in theory mean fewer tonnes would be needed. Particularly if the euro fell in response to arising gold price, as that would reduce the outstanding value of ChF (assuming they acted to keep the peg).
 
Heh JB3, first you called 164 tonnes a lot, then you call 1500 tonnes a lot. To arrive to a same price-conclusion. Shouldn't the order be data > conclusion rather than conclusion > data?
1500 tonnes is less than the 1727 tonnes that central banks bought over the period 2010-2014Q2
Over the period 1997-2009, central banks sold 5592 tonnes.
Over the period 2010-2014Q2, central banks bought 1727 tonnes.
So central banks can now sell 1727 tonnes gold, to just reestablish the same situation, as 4 years ago.
So that 1500 tonnes, is not... that... special.
It's quite likely that such sale also restablishes that price from 4 years ago too. What would the gold price trend have been, without central banks buying those 1727 tonnes? Of course, this same applies to the earlier past too: what would the gold price trend have been, without central banks selling those 5592 tonnes?
My opinion, based on their past behaviour, is that central banks just try to make golds price trend to not appear too sissy compared to silver, meaning that it will depend on people on the silver market, what they will do with their gold stock, and the price. Generally, all central banks want is to inflict speculators less ounces gold when buying, and less fiat when selling. That's the conclusion, based on some decades data. But their actions are in that degree tied to the actions of those on the silver market.
Remember the Cyprus blabla last year? About 40 tonnes gold *possibly* sold? The same price effect related question was asked. As made clear afterwards (read: post speculators mortem) it wasn't even sold, let alone that its eventual price effect would affect the gold price in a special drastic way. :P

There is alot hype talk, and often it origins from the vested interest corner. Think twice before buying, or selling, based on it.
 
No... I said 164 probably wouldn't raise prices, but 1500 tonnes would.

And, if I thought 164 tonnes a lot, it's not illogical to think the same, but more so, about 1500.


Sometimes, Pirocco, it seems you pick arguments just to do so. It's a shame, because while I find your posts often very insightful, your argumentative style is tiresome; it detracts and distracts from your rhetoric.
 
I'm still hurting as a result of the Cyprus blabla, as Pirocco puts it so lightly.

I believe the Swiss move will be a positive in respect to aligning currencies to a base standard. However, the negative impact on currencies other than the Swiss will be enormous, and I wonder what the West will do over the next six weeks in order to abort the process.

I don't say this glibly, I see the Swiss in the line of fire!
 
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