On Nov. 20, the Swiss voted down a referendum requiring the Swiss National Bank to boost its gold reserves from 8 percent to 20 percent of their assets. It would have also required the repatriation of gold reserves held outside of Switzerland and prohibit the selling of gold reserves in the future.
While the referendum failed, it represents a growing worldwide trend among concerned citizens over their central bank’s printing presses gone wild. More and more citizens are demanding audits of their central banks and gold reserves, repatriating their gold reserves and adding to their gold reserves.
Commentators described supporters as few and belonging to far right fringe groups, but that is an unfair characterization of how broad this movement is: 25 percent of the Swiss voted for the referendum. A quarter of the population is hardly an insignificant fringe.
Further, the momentum is increasing for audits to be done in the Netherlands, Switzerland and the United States. Gold demand from centrals banks is up with China, Russia and even some European central banks.
Demands for repatriation of gold reserves have been made by Azerbaijan, Ecuador, Germany, Iran, Libya, Mexico, Romania and Venezuela. Gold watchers were surprised recently to find out that the Netherlands secretly succeeded in repatriating 122.47 metric tons their gold from the Federal Reserve in New York to the Dutch Central Bank in Amsterdam. The 4.3 million ounces of Dutch gold is worth $5.3 billion at today’s prices.
Increasing gold reserves strengthens a central bank’s balance sheet. That results in a currency with more stability and strength. Citizens also have more confidence in their central bank when they know that it contains a healthy amount of gold.
While helpful, it does not address a federal government’s ability to print money without limits or accountability. To solve that problem, a better referendum would have been to propose converting the Swiss franc from fiat currency to having exchangeability with gold. Overnight, the Swiss franc would have become the most coveted currency in the world.
The no vote was not the end of the movement. Far from it. Instead, it showed that the concern over monetary mismanagement is becoming mainstream. Over time, citizen supporters and the countries impacted will continue to expand and grow in depth of support.
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