The prices of gold fell to its lowest since 2009, after Swiss voters say ‘No’ to a proposal in a referendum that aims to boost central bank gold reserves. The latest report also reveals that the Swiss franc dropped slightly as expected by many.
The vote is a big blow to the “Save our Swiss gold” initiative, which requires the central bank to hold a portion of its assets in gold. It is a movement President Thomson Jordan considers an “invitation to speculators.”
The initiative, had it been approved, carries the hope of moving Switzerland back to a gold standard. The referendum results, however, are not quite surprising given earlier polls that predicted the rejection from the public.
Ahead of the much-awaited vote, Swiss National Bank (SNB) President Thomas Jordan released a statement, claiming that the poll on requiring the central bank to handle 20 per cent of its assets in gold would hinder the monetary policy.
“The initiative is both unnecessary and dangerous,” he says. “It is unnecessary because, under the current monetary order, there is no link between price stability and the share of gold in the SNB balance sheet.”
Spot gold, as many reports reveal, dropped as far as $1, 142.91 per ounce. It is way lower than early November when it hit a low of $1, 131.85 an ounce.
The Swiss franc, on the other hand, tumbled to 1.2042 from 1.2018 last week.
“The result should of course temporarily relieve the pressure on the SNB’s currency floor, albeit whilst doing little or nothing in our opinion to reverse the fundamental downward trajectory of EUR/CHF,” explained JPMorgan analyst Paul Meggyesi.
The closely-watched referendum, according to industry watchers, would allow the central bank to buy huge amounts of gold and implement new restrictions on immigration. The result could have been an improvement in the country’s economic ties with the European Union.