Advances on the Swiss Gold Front (Video)
Last month we reminded you of the upcoming “Save Our Swiss Gold” initiative in Switzerland. This is a direct democracy vote in Switzerland that, if passed, would force the Swiss government to amend its constitution with respect to the way the Swiss National Bank (SNB) operates. These are the major points:
- SNB will repatriate and store all Swiss gold reserves in Switzerland.
- SNB will purchase gold until it makes up 20% of their reserves (currently 7.6%), and it must maintain this level of gold reserves.
- SNB can no longer sell gold reserves.
Switzerland used to be the first country that came to mind when it came to stable currencies and gold holdings. But things have really gone down hill since the turn of the millennium, as you can see in the chart below. It shows the dramatic amount of gold the SNB has sold off since 2000 – well over half of its holdings.
The vote to “Save Our Swiss Gold” will take place on November 30th, and it has garnered more media attention in the last week. We’ve gathered together some of the highlights from the headlines. At the bottom of this post, watch a speech by Lukas Reimann to the Swiss Parliament. Reimann is a member of the Swiss People’s Party – the party presenting “Save Our Swiss Gold”. His speech is an excellent summary of the effects of monetary manipulation on currencies and why it is so important that currencies be pegged to hard assets like gold and silver. A full English transcript is provided.
The Daily Mail reprinted a Reuters story reporting on the latest poll of public sentiment regarding the Swiss gold initiative. The numbers are still too close to call:
The SVP gold initiative is opposed by the Swiss government, the central bank and several influential parties. The poll showed support at 45 percent, short of the majority needed for passage. Some 39 percent opposed the initiative, while 16 percent of voters were undecided. Support for such initiatives tends to weaken in the run-up to the vote, as opposition campaigners step up their activities.”
The Financial Times reported on the strong opposition from the SNB to the initiative. Of course, it should come as no surprise that the politicians and bankers are terrified of the possibility that their ability to profit from the manipulation of the money supply would be hampered. They’re fighting back with bogus propaganda about the necessity of manipulation to keep the economy stable.
It is rare for the SNB to take such a stance on what is purportedly a political issue, so these comments show how sensitive policy makers are when it comes to the credibility of their policy on the franc. Thomas Jordan, chairman, said in September the SNB had not had to intervene to enforce the policy since 2012. But the Swiss franc is still trading close to SFr1.20 to the euro – with the euro’s weakness and renewed global risk aversion keeping it under upward pressure. There is continued speculation that the SNB may eventually resort to negative deposit rates – as the ECB has done – to keep the currency in check.
The central bank is also deeply concerned about its ability to manage its vast reserves. Mr Danthine pointed out that a ban on gold sales could mean that gold eventually accounted for the bulk of the SNB’s assets – it would be obliged to buy gold every time its balance sheet expanded and to sell euro every time it contracted.”
Here is the video of Lukas Reimann’s speech, which can be found here – one of the main sites promoting the “Save Our Swiss Gold” initiative.
Follow Along with the Full Transcript:
“The gold-initiative gives us a one time opportunity to end and break the delusion of fiat money, thus unsecured paper money. Yes, the biggest fraud of our time happens with our money. Central banks, commercial banks, and governments play with the property of their citizens. While these three parties can use the newly printed money without inflation worry, the majority of citizens, being deceived, will feel the effect of inflation with this newly printed money, and must simply swallow this.
If the purchasing power of money decreases annually by only 2 percent, because more and more unsecured money comes into circulation, the value of your money will be halved in 20 years. Increasing the money supply is easy. We are dealing with an invisible tax that can be increased at will. A simple observation will help you see through this trick. If everyone from one day to the next suddenly had twice as much money, would they be richer, would there be more wealth and more jobs? No, because the price of goods would also double. If, however, the government suddenly had twice as much money from one day to the next, then the citizens would have less money whilst the value of money would also be lower. What happens here is nothing less than a concealed form of confiscation.
Until World War I, paper money was backed by precious metals that cannot and could not be arbitrarily increased. After World War I this backing was diluted – otherwise the wars of the 20th century could not have been funded. Under the gold standard, the United States enjoyed 136 years of price stability. Since 1913, however, purchasing power has dropped by a staggering 95 percent.
In Switzerland, the 40 percent gold backing of the franc as required by the old Federal Constitution was quietly removed at the time of the revision. It was exactly this gold backing made the Swiss Franc stable, secure, and independent. Supply and demand determine not only the price of goods, but also the price of money, or the purchasing power. The more money on offer in relation to the available quantity of goods, the more worthless it becomes. In the last thirty years, the volume of production of goods in the industrialized nations has increased fivefold. The money supply, however, has increased 50 fold.
Roland Baader wrote in a book that I recommend to all here – the title is Money Socialism – ‘The money supply, when issued as gold and silver currencies, was sound money. The state monopoly decreed unsecured paper money, fiat money, is sick money, it is false money.’
USA President Hoover once said, ‘Paper money allows politicians to confiscate the savings of the population by manipulating inflation and deflation. We have gold because we cannot trust the government.’
In our direct democracy in Switzerland, this leads to senseless situations. We let the people decide on small times, 50 million francs, 100 million francs, then there is a huge outcry that it is too expensive. At the same time, the National Bank expands the money supply to 100’s of billions of francs without debate and without asking the people.
The few who have criticized these mechanisms for a long time and who also predicted the current crisis were independent economists influenced by the Austrian school of economics. But they were barely heard. Real, non-partisan liberalism will not just benefit the most powerful and financially independent with government regulations for their own profit, but also benefit the common man and woman. True liberalism is not a movement for big business, but for the middle class, the self-employed, and honest people prepared for service.
The gold initiative simply prevents new money from being printed at will, and it ensures that real money values exist in the balance sheet, besides paper money. Deficit spending is a method for expropriation. Gold stands in the way of this insidious process. It should stand as a protector of property rights. If one understands this, there should be no difficulty in understanding the hostility of the financial planners against a gold standard and [the need] to endorse the gold initiative.”
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