Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

Swiss voters are gearing up to vote on the country’s gold referendum tomorrow (November 30), which could have significant ramifications across the world’s precious metal markets.

A ‘yes’ vote would require the nation to retain at least 20 per cent of its balance sheet in gold bullion at all times. But what does this actually mean for Switzerland and other countries worldwide?

The Perth Mint has highlighted five potential impacts of the referendum passing, which requires at least 50 per cent of the vote.

1. From seller to buyer

Switzerland currently only possesses 7.7 per cent of its assets in gold bullion. Therefore, the country would need to go from being one of the biggest sellers of the commodity in recent years to buying large quantities in order to reach 20 per cent status.

Once it does, the Swiss would break into the top three nations in terms of gold reserves, with 2,540 tonnes. Only Germany (3,384 tonnes) and the US (8,133 tonnes) would have more gold in their bullion vaults.

2. De-facto gold standard

Switzerland was one of the last countries to move away from the gold standard, with the Swiss franc pegged to the yellow metal until 2000. Currently, the currency is linked to the euro, but a ‘yes’ vote would return the nation to a de-facto gold standard.

“This would be a new precedent for central banks to deal with,” the Perth Mint stated.

3. Gold rush

To meet a 20 per cent limit, Switzerland would need to purchase approximately 1,500 tonnes of gold. This is roughly half the world’s total annual production.

There is currently 522 billion Swiss francs’ worth of assets in the country, so the central bank would need to buy more than $56 billion of gold bullion before 2019.

Furthermore, Bank of America’s Michael Widmer believes a ‘yes’ vote in the referendum could see the price of gold rocket as much as 18 per cent.

4. Repatriation

The Swiss referendum will also require the country to repatriate all of its gold held abroad, which currently accounts for approximately 30 per cent of the nation’s total reserves. Canada has 10 per cent of Swiss gold, while the UK has the remaining 20 per cent. However, not all attempts at repatriation are successful.

In 2012, Germany tried to repatriate $141 billion worth of bullion back from the US Federal Reserve Bank. Deutsche Bank was told the process would take seven years and Germany only received five tonnes in 2013.

5. No more gold selling

As part of the new regulations for gold, a ‘yes’ vote would mean Switzerland is forbidden from selling any of its yellow metal assets.

The country’s central bank has complained that this would require them to purchase bullion whenever they extend the balance sheet, but would prevent them from offloading any excess should the situation reverse.

Commenting on a potential ‘yes’ vote, Swiss National Bank Vice-President Jean-Pierre Danthine said it “would severely restrict our room to manoeuvre”.

Storage Technology

From Guardian Vaults

5 Potential Effects of a Swiss ‘Yes’ Vote

December 2, 2014 by Guardian Vaults

Swiss voters are gearing up to vote on the country’s gold referendum tomorrow (November 30), which could have significant ramifications across the world’s precious metal markets.

A ‘yes’ vote would require the nation to retain at least 20 per cent of its balance sheet in gold bullion at all times. But what does this actually mean for Switzerland and other countries worldwide?

The Perth Mint has highlighted five potential impacts of the referendum passing, which requires at least 50 per cent of the vote.

1. From seller to buyer

Switzerland currently only possesses 7.7 per cent of its assets in gold bullion. Therefore, the country would need to go from being one of the biggest sellers of the commodity in recent years to buying large quantities in order to reach 20 per cent status.

Once it does, the Swiss would break into the top three nations in terms of gold reserves, with 2,540 tonnes. Only Germany (3,384 tonnes) and the US (8,133 tonnes) would have more gold in their bullion vaults.

2. De-facto gold standard

Switzerland was one of the last countries to move away from the gold standard, with the Swiss franc pegged to the yellow metal until 2000. Currently, the currency is linked to the euro, but a ‘yes’ vote would return the nation to a de-facto gold standard.

“This would be a new precedent for central banks to deal with,” the Perth Mint stated.

3. Gold rush

To meet a 20 per cent limit, Switzerland would need to purchase approximately 1,500 tonnes of gold. This is roughly half the world’s total annual production.

There is currently 522 billion Swiss francs’ worth of assets in the country, so the central bank would need to buy more than $56 billion of gold bullion before 2019.

Furthermore, Bank of America’s Michael Widmer believes a ‘yes’ vote in the referendum could see the price of gold rocket as much as 18 per cent.

4. Repatriation

The Swiss referendum will also require the country to repatriate all of its gold held abroad, which currently accounts for approximately 30 per cent of the nation’s total reserves. Canada has 10 per cent of Swiss gold, while the UK has the remaining 20 per cent. However, not all attempts at repatriation are successful.

In 2012, Germany tried to repatriate $141 billion worth of bullion back from the US Federal Reserve Bank. Deutsche Bank was told the process would take seven years and Germany only received five tonnes in 2013.

5. No more gold selling

As part of the new regulations for gold, a ‘yes’ vote would mean Switzerland is forbidden from selling any of its yellow metal assets.

The country’s central bank has complained that this would require them to purchase bullion whenever they extend the balance sheet, but would prevent them from offloading any excess should the situation reverse.

Commenting on a potential ‘yes’ vote, Swiss National Bank Vice-President Jean-Pierre Danthine said it “would severely restrict our room to manoeuvre”.

Posted in Storage Technology

Disclaimers: Guardian Vaults Holdings Pty Ltd, Registered Office, Scottish House, 100 William Street, Melbourne, Victoria, 3000. ACN 138618176 (“Guardian Vaults”) All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher and/or the author. Information contained herein is believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal situation. Guardian Vaults, its officers, agents, representatives and employees do not hold an Australian Financial Services License (AFSL), are not an authorised representative of an AFSL and otherwise are not qualified to provide you with advice of any kind in relation to financial products. If you require advice about a financial product, you should contact a properly licensed or authorised financial advisor. The information is indicative and general in nature only and is prepared for information purposes only and does not purport to contain all matters relevant to any particular investment. Subject to any terms implied by law and which cannot be excluded, Guardian Vaults, shall not be liable for any errors, omissions, defects or misrepresentations (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (direct or indirect) suffered by persons who use or rely on such information. The opinions expressed herein are those of the publisher and/or the author and may not be representative of the opinions of Guardian Vaults, its officers, agents, representatives and employees. Such information does not take into account the particular circumstances, investment objectives and needs for investment of any person, or purport to be comprehensive or constitute investment or financial product advice and should not be relied upon as such. Past performance is not indicative of future results. Due to various factors, including changing market conditions and/or laws the content may no longer be reflective of current opinions or positions. You should seek professional advice before you decide to invest or consider any action based on the information provided. If you do not agree with any of the above disclaimers, you should immediately cease viewing or making use of any of the information provided.