swissalps

Gold & Silver, STAFF NEWS & ANALYSIS
Swiss Move to Back Franc with Gold for Real?
By Staff News & Analysis - October 08, 2014

Swiss Gold Initiative Would Hamper SNB Policy, Government Says … Asking the Swiss National Bank to hold a fixed portion of its assets in gold would hinder monetary policy, the government said today. Switzerland will vote on the initiative "Save Our Swiss Gold" on Nov. 30 that would force the central bank to hold at least twenty percent of its assets in gold. It would also forbid the sale of any such holdings and require all the gold be held in Switzerland. – Bloomberg

Dominant Social Theme: This is ridiculous. Everyone knows central banks are progressive and gold is a barbarous relic.

Free-Market Analysis: So having severed what was left of the link between gold and the Swiss franc around 2000 AD, the Swiss are now having second thoughts. Good luck to them.

We've tried to figure out if there's more to this than meets the eye. We're not sure. Usually when something like this happens, the globalist clique that works hard to maintain and expand its control wants to control both sides of the argument.

We think that's happening with the BRICS, for instance. We need to remind ourselves that the concept of the BRICS was developed by former Goldman Sachs economist Jim O'Neill. And the BRICS don't really offer an alternative money, do they?

In fact, the BRICS radical idea of monetary reform is to create alternative International Monetary Fund and World Bank structures. They can't do better than that? India, China, Brazil and Russia – even South Africa – are fiat-money based with central banks, etc.

That's why we're skeptical about this so-called schism between the BRICS and the Western world. The idea is that the BRICS have had enough of the dollar and want to create an alternative currency. The upshot may be a phony currency war leading to proposed international money of sorts, perhaps a basket of currencies. It could even include gold.

But why wait? If one of the BRICS wanted to create a currency to take over the world, that country would simply have to link its currency to gold.

And now the Swiss seem to be considering that. Here's more:

Opinion polls will be published later this month. The SNB's balance sheet ballooned in the wake of the currency interventions it waged to defend the minimum exchange rate of 1.20 per euro set in 2011. The SNB held foreign-exchange reserves of 462.2 billion francs ($481 billion) at the end of September, with total assets of about 522 billion francs.

Initiatives are a key element of Switzerland's direct democracy. The gold initiative was started by several members of the Swiss People's Party SVP, who collected the requisite 100,000 signatures for the measure. SNB President Thomas Jordan has on several occasions urged its rejection, saying it would make it difficult to fulfill the institution's mandate for price stability.

"The initiative has the potential to limit the central bank's ability to act," he told Frankfurter Allgemeine Zeitung in an Oct. 1 interview. According to Beat Siegenthaler, currency strategist at UBS AG in Zurich, the SNB would be forced to buy about 1,500 tons of gold over five years to meet the required 20 percent threshold.

As of the end of June, the central bank, based in Zurich and Bern, owned 1,040 tons of the precious metal. Its gold holdings have made the SNB dependent on market developments. It was forced to scrap its dividend last year after it suffered a 9.1 billion-franc loss after price of gold experienced its biggest plunge since 1981.

The SNB said in April 2013 that about 20 percent of its gold was with the Bank of England and 10 percent at the Bank of Canada, with the remainder stored in Switzerland.

When we look at reports surrounding the Swiss Franc and its central bank we find considerable skepticism regarding even the gold that the Swiss Bank claims to have. TFMetalsReport.com provided an insightful look into the modern Swiss monetary economy in May in an article entitled, "An Open Letter to the Good People of Switzerland."

Here's a sample:

I hate to be the bearer of bad news, Switzerland, but what you suspected all along is actually true. Your gold is gone. All of it. Leased and sold away by your central bankers and politicians.

As recently as 1996, the Swiss Franc was considered "good as gold". Why was this the case? Since the early 20th century, the Swiss Franc had offered a reserve backing of gold. This uniquely sound currency had given the country of Switzerland considerable financial power and independence, yet, at the urging of their politicians and central bankers, the Swiss willingly forfeited this enviable position.

The demise of the Franc and Swiss sovereignty began in 1992 when the Swiss made the fateful decision to join the International Monetary Fund (IMF). The IMF's Articles of Agreement (Article IV, Sec 2b) clearly state that no member country can have a currency linked to gold and, as such, Switzerland immediately set out on a course to de-link the Franc from gold. Just four short years later, the Swiss National Bank (SNB) and the Swiss government had formed a plan to eliminate the Franc's gold backing and, in March of 1997, a revision of the Nationalbank Act was passed and all links of gold to the Franc were removed. Further, since the Swiss constitution mandated sound money, it had to be amended, too. Thus, in a hastily organized vote, a new Swiss constitution was approved in May of 2000. (http://www.efd.admin.ch/dokumentation/medieninformationen/archiv/00382/index.html?lang=en) This served to finally and permanently sever the Franc's gold backing and initiated the Swiss into the world of global fiat currency.

The SNB has spent the 14 years since leasing and re-leasing the country's gold reserves. In 1999, the SNB reported gold reserves of 2,590 metric tonnes. The most current "audit" of SNB reserves showed just 1,040 metric tonnes of gold remaining on the balance sheet and I believe that none of this is actual, physical gold. Instead, what the SNB holds are paper claims and promissory notes. The remaining 1,040 tonnes has been sold and re-sold into the marketplace by greedy bullion banks, intent upon suppressing price through the leverage of paper metal futures contracts and rehypothecation. In other words, the "gold" that the SNB claims to hold/own on behalf of the Swiss people is gone. This makes the Swiss people just another bagholder, certain to be left in line wanting with all of the other holders of unallocated accounts when the fractional reserve bullion banking system inevitably collapses.

Furthermore, I've come to the conclusion that it was this last bit of Swiss gold that was utilized to suppress and manipulate price away from the alltime highs of September 2011.

Now, we can't vouch for the information above, but it does parallel other reports about central bank gold. Germany, for instance, is going to have to wait many years to receive its gold from the US Federal Reserve. That doesn't exactly inspire confidence.

As the excerpt above indicates, those who distrust modern central banking believe that much of the gold that central banks have traditionally been charged with safeguarding has actually been lent out at low prices to "suppress" the gold price. Central banks are under enormous pressure these days, however. As we predicted long ago, the whole paradigm is likely starting to collapse, and it hasn't been helped by this six-year long financial crisis.

Before the Internet era, modern Western citizens were likely baffled by the system of "high finance." But after the pain of the past half-decade, an increasing number still may not understand it, but they are considerably more disenchanted. The belief that the system must work the way it does is not so strong as it used to be. And certainly there are historical precedents that inform people of other kinds of monetary precedents.

When we looked into this upcoming Swiss initiative, we couldn't find any "smoking gun" that allowed us to conclude that it was being stage-managed by a kind of controlled opposition. It does come out of the conservative right wing of the Swiss political system – and one of its proponents claims to be a "radical libertarian" even though he famously campaigned to ban minarets from Switzerland.

Those globalists that have propelled central banks from about five at the beginning of the 20th century to about 150 now have been fairly clear that growing financial globalism is an eternal goal. Whether the apparent basket of currencies that seems to be in the works includes gold or not is unclear at the moment. Perhaps the currency will formally be called the bancor, which is what Keynes wanted to name it.

Is this initiative spontaneous? If not, perhaps it's a way to begin to integrate gold back into a conversation about a more global currency. Best case, this gold initiative is both spontaneous and popular. Emotionally and intellectually, that would be a satisfying result.

After Thoughts

A good one for the Swiss people, too.

Posted in Gold & Silver, STAFF NEWS & ANALYSIS
  • Sam

    There are several of these mysterious power centers on the planet.

    The three, small sovereign territories of the City of London, Vatican and District of Columbia – that constitute what has been called the ‘Ring of Power’ or ‘Empire of the City’.

    Israel is another.

    As is Switzerland – home to the Bank of International Settlements (the central bank to central banks), World Zionist Council and likely where most of the global gold hoard is stashed. All of these power centers have the same controlling, shadowy ‘black hand’ – Rothschild.

    Little, peaceful Switzerland… a wolf in sheep’s clothing.

    • jim

      Sam closes in on the elephant in the room.
      Over the last century, money globally has been captured by bankers operating out of self-declared sovereign postage stamp territories. The money devils have co-opted elected government officials in all developed countries to commit treason by forfeiting control and even the basic identity of governments’ “money”, including of course the countries’ legacy gold monetary reserve..
      Today all so-called “money” is stateless and extra-judicial. The bankers operate in their own sovereign territories, unaccountable to any government for their boundless greed, which the structure of the stateless fiat money system serves.
      All discussion that veers away from this core tragedy is nothing more than deception by design.

    • dante ferno

      Switzerland is just the pathetic bullied kid whoring itself to do whatever “big business” wants it to do

      I would also like someone to explain clearly WHY any currency HAS to be gold based? its BS

      • jim

        The more appropriate question is WHY any currency regime should be allowed to be owned and managed by stateless bankers, solely for the benefit of stateless bankers. The so-called Swiss National Bank is not Swiss; it has its own sovereignty. Same with the US Federal Reserve, the Bank of England, etc.
        That was Sam’s point.
        The bankers have played an Orwellian name game on citizens around the world, and unfortunately it’s worked beyond belief.
        WHY would any country knowingly hand control of its currency over to monsters like that?
        The answer is that 99% of the citizenry doesn’t even realize what happened. Politicians of those countries were (surprise, surprise) co-opted by banksters into committing treason and allowing control of the currency to be politicized and ultimately lost.
        More directly to your question, gold also is stateless, which given its characteristics is a good thing, as it can not be co-opted by political ambition or manipulated by criminal bankers. Gold is chemically and thus behaviorally infinitely less corruptible than politicians and bankers, which has made it an ideal form of money for thousands of years.

        • Don Duncan

          And the ultimate questions is: Why do people allow rulers? Without rulers, a free banking system would be chosen by market forces. No one would “own” money or people. No one could consistently defraud under cover of law, i.e., by force granted by the masses. The masses enslave themselves.

      • davidnrobyn

        This is a good question, dante. Why can’t people just accept anything the gov. declares to be money in payment of debts? I think the answer hinges on the definition of the currency unit. It used to be that the currency unit names were just a nation’s “trademark” brand name for a certain weight of metal. It was the metal that was important. Remember, we’re talking about TRADE here. Exchange of things of value. I have these five “dollars”, each one just over three-quarters of an ounce of silver (by Constitutional definition–look it up), and want to trade them for something–say, a nice pair of shoes. The shoemaker decides that it’s a good trade, because he’d rather have the silver than the shoes, and you think it’s a good idea too, because the shoes are what you want.
        But as time went on, people started to think in terms of the government’s trademark, more than what it represented. In other words, they thought in terms of “tale” rather than weight. When the public was thoroughly indoctrinated, it became safe for the government to remove the metal the trademark stood for, and let the brand name stand on its own. After all, they can produce unlimited numbers of these can and jar labels (to use another analogy), if they don’t have to produce the cans and jars, with their contents, to put the labels on! Why not just swap labels with each other? Some labels will say “peaches”, others “caviar” (whoo-hoo!), and others, “beans” (oh, well). But they’re all just labels. Paper. Labels for caviar tins are no more expensive to produce than labels for cans of beans. BUT–here’s the catch–nothing is produced of value, and you won’t get any nourishment from any of them, no matter how appetizing the pictures are.
        Some people may prefer to simply swap labels. But most people want to swap things for things. Or services for things. They only want pieces of paper when those pieces of paper give them a claim to something. Such as title to a car, or deed to a property. Or a ticket to a movie, or a game. One document, one item or service. The worth of the document is the worth of the item or service backing it.
        Now it just so happens that the most convenient “things” for all kinds of trade are the precious metals, gold and silver. That’s just the way it is.
        If you’ve read this far, let me thank you for allowing me to go through this exercise. It’s helped me think the issue through! :-)

  • Danny B

    “The bankers pushed us out of gold convertibility to make a massive
    killing with inflation but, “Keynes recognized that once the reserve
    currency was no longer constrained by gold convertibility, the world
    needed an alternative way to prevent destabilizing imbalances from
    developing.”

    “The Journal of Post Keynesian Economics (“Systemic equilibrium in a
    Bretton Woods II-type international monetary system”) which explains why
    currency war is really a battle over where to assign excess savings,
    and must lead to unemployment in the country whose assets are most
    assiduously collected by central banks. ”

    “”The mechanics of the reserve currency system preempt these funds’ ready
    availability for “the maintenance of industry.” The mechanics of the
    dollar as a reserve asset, therefore, finance bigger government while
    insidiously preempting productivity, jobs, and equitable prosperity.”

    “Once the world went off gold, it cannot be a surprise that it lost the
    discipline imposed by gold. Keynes tried but failed to create an
    alternative form of discipline, but one way or the other it must be
    re-established.”

    The whole system is severely destabilized. Only gold can bring a return of discipline.

    http://www.financialsense.com/contributors/michael-pettis/are-we-starting-see-why-exorbitant-burden

    • dante ferno

      why GOLD? it just seems a knee jerk reaction

      • Danny B

        Dante, you are correct. BUT, the world has been down this road before. The base problem is that there is just too much wealth to spend. It must be stored in some form. Imagine of all the billionaires spent all their money. This can’t be allowed to happen or the majority of people would be unable to survive. The wealth must be stored in some form. Every time that it is stored in paper, this scheme collapses. Remember that it can’t go into commodities or many people will starve.
        Stocks, bonds, commodities all depend on the consumptive of the little people to keep things rolling. Gold, on the other hand does NOT depend on the little people to hold it’s value. It depends on the valuation assigned by the giants.

      • Bruce C

        Look at the flip-side of that question: Why was gold backing dropped? Was that a knee jerk reaction?

        No, it was a politically “necessary” one because governments could not fund its projects under the “tyranny of gold.” Rather than having to make budgetary choices and have the cost of government spending immediately evident within international financial markets, having “money” backed by future productivity (i.e., taxation of the citizenry) allowed for theoretically unlimited borrowing and spending (masked by financial engineering to hide the long term effects.)

        That’s where we are today.

        You may think gold is an arbitrary asset but it is not. It is actually uniquely suited for fulfilling the roles that money must provide.

      • martae

        “tradition”: so says the Bernank

  • Danny B

    I found another good observation about gold convertibility.
    “The flaw in this argument is rehearsed above. The best gold-standard
    currency issuers need not bother with having any gold at all. In fact,
    having gold is probably an indicator that you think you can get away
    with some overprinting before convertibility becomes impossible.

    A currency that maintains its value against the private price of gold
    has the most essential aspect of convertibility. It is de facto
    convertible. De jure convertibility is merely the promise on the part of
    the issuer to make the trade itself, on demand, of its currency for
    gold.”

    http://www.forbes.com/sites/briandomitrovic/2014/10/06/greenspan-lets-his-hair-down-talks-up-gold/
    China is going to lengths to have gold held by private hands. The P.O.G. would therefore be a daily indicator of currency health. This is obviously the case in India. About 20,000 tons of gold are on private hands,,, and arms. Any change in price is instantly indicated as a change in the value of the fiat. The CB in India has 643 tons at last read. Good luck to the Indian CB at trying to inflate markets.

  • B.

    I find it interesting that the forecasted timeline for Switzerland to ‘get’ its gold is aligned with the changes set out in the new BIS Basel 3 ‘playbook’. RWAs for capital adequacy and liquidity standards have all been reassessed – including gold. This can be no accident. Realization for these new standards is scheduled for 2019. 5 years is conservatively, as the author predicts, a safe amount of time for Switzerland to meet, and exceed, the minimum standards. Given that 40% of the world’s gold is refined in Switzerland, (40% of that at Valcambi), it would be easy for them to ‘tax’ a percentage of all refining as a means for accumulation. I believe, Switzerland will get its gold… one way or another.

  • dante ferno

    in what way is this good for the Swiss people?

    This is a BS article written by someone clueless

    So am i right in saying that the Swiss want to link their Franc to imaginary holdings in gold? In what way is that sensible

    • lulu

      Maybe it is as sensible as deriving value from “government regulation or law” since we know who government and law serve.

  • Hugo

    I sure wonder what comes from this initiative. This initiative by China is a curious one (cough)

    ”China is maneurvering to get its currency included in IMF’s super currency”

    Protests over democracy in Hong Kong may be preoccupying the Chinese leadership, but a subject of still greater international importance is being played out this week behind closed doors in Washington.

    China is bidding to enter the heart of global finance by establishing its currency, the renminbi, as part of an ubiquitous monetary unit used in official transactions around the world.

    The issue of whether the Chinese should be part of the International Monetary Fund’s Special Drawing Right, the composite reserve currency used in official financing, is highly technocratic, but the political questions at stake go to the core of world money and power — and will be discussed, in the background, at the annual meetings of the IMF and World Bank in Washington this week.

    The decision on a new SDR structure, to be made in the next 15 months, will influence how China and its currency can play a bigger part in driving world trade, investment, and capital flows. The renminbi eventually could challenge the dollar and its pivotal position in world money — which is why the U.S. government and Federal Reserve are examining this with intense interest.

    ….

    Next year’s planned review will touch, too, on the opportunity for the SDR to play a greater role on financial markets, for example in denominating bond issues. The SDR has lost ground as a financial vehicle in the past two decades, reflecting the surging importance of international private sector capital markets. But with the addition of the renminbi, it may be about to make a comeback.”
    http://www.usatoday.com/story/money/business/2014/10/07/china-currency-push/16852193/

    • JAB

      well said brother!

  • Bill Ross

    so, the Swiss will be allowed to flirt with the same “crime” (against counterfeiters) that led to Ghadaffi’s demise (African gold backed dinar)?

    not without a serious fight to assert this “right”.

  • http://twitter.com/EUbrainwashing EUbrainwashing MMXVI

    I suspect this is a bargaining chip placed on the gaming table of international banking regulation.

  • Don Duncan

    The Swiss Gold Initiative is only meaningful if it helps inform the world about the folly of fiat money by comparing it to gold money. Better yet would be a de politicalization of money brought about by a realization that money is too important to be trusted to gangs of thugs called governments.

    • Bruce C

      How about a gang who is independent of any government and unaccountable?

      “Asking the Swiss National Bank [Switzerland’s central bank] to hold a fixed portion of its assets in gold would hinder [its] monetary policy.”

      • Impending Sky

        In that case, the gang would not have the backing of government and I would be free to choose an alternative.

        • Bruce C

          But “the gang” DOES have the backing of government because the gang is what enables the government to spend without political backlash from the citizenry. And, once the government sanctions them it becomes their slave.

          ‘Give me control of a nation’s currency and I care not who makes the laws.’

          • Don Duncan

            Perhaps there are many powerful gangs in the world with common modus operandi, and sometimes they work together because it benefits them. Washington benefits from its support of the international banking cartel. The cartel’s power is dependent on the law, which could/would change if their relationship changes. It does no good to argue who is more evil, the bankers/businesspersons/corporations or the institution of govt. which makes them possible. Neither would exist without the self enslaving masses who support their own destruction by worshiping authority. “The Divine Right of Kings” has been replaced by “The Leaders” who command unquestioning obedience by virtue of promises they don’t/can’t keep. The masses have been blind to the folly of supporting so-called representatives, nationally and locally. Why haven’t Detroit residents stop paying taxes when most public services, such as fire, police, water, street repair, stopped? They are not giving up on the idea of govt. Those that do give up, move, blaming specific politicians, but still having faith in city govt. as necessary. Their experience did not inform them. Fifty years of slow destruction did not awaken them. They want to keep govt. and hope it will work. The question is: Would they rather die than abandon their faith in govt.?

  • acudoc1949

    So many of the world’s heart aches are due to the dishonesty of bankers and politicians, and their disregard for archetypes.

  • http://sfschoolofeconomics.com/ Ingo Bischoff

    Ferdinand Lips, where are you……??? We need you to try and talk a little sense into your countrymen, again.

  • Praetor

    The Swiss PEOPLE are taking a stand, its like Scots secession initiative. The PEOPLE are fed-up with the globalist, the federalization of the planet and the institution of world governance. The powerful houses don’t want to go back to a gold standard, at least not yet. To do so would eliminate the CB’s, an end to charging interest on their worthless fiat and the never ending debt the countries find they owe to the CB’s. Before 2001 the countries with no CB’s, Libya, Afghanistan, Iran, Iraq, Cuba, Sudan and North Korea, do these names sound familiar. Rumor has it North Korea has lost its little leader, only a rumor at this point. The little creep may just be laid up with the sniffles. Why is the United States going through heck in a hand basket, because the PEOPLE were out of the control (“gun control”) of the powerful houses and a hindrance to their ultimate goal of WORLD GOVERNMENT. The good people will continue to fight back against this threat to their Liberty and individual right to choose their own way.

  • Danny B

    I found a couple of interesting quotes; “And to put
    this in perspective with silver, in 2007 the equivalent of the entire
    aboveground stock of gold was exchanged every 269 trading days while the
    equivalent of the entire aboveground stock of silver is exchanged every 9 trading days.” http://news.goldseek.com/GoldSeek/1247554800.php
    “NEW YORK — The world’s biggest banks have agreed to tear up the
    rulebook on derivatives to make it easier to resolve a futurefailing
    institution like Lehman Brothers.
    http://www.gata.org/node/14549
    Geee, I wonder who they have in mind? B of A shares slid 89.4% between Sept 22, 2008 and March 2, 2009.
    In the same time period, Citigroup shares fell 94.0 %
    Morgan Stanley got more that B of A or Citi.
    Wells Fargo shares slid 69.2 % in 6 months
    Deutsches bank, GS and HSBC all fell more than 60%

  • Lindsay Alexander

    Interesting that the IMF require a disconnect from gold to join. The answer is right there about manipulation to remove gold from having a currency relationship. We know who controls the IMF and World bank so little wonder that the BRICS seek an alternative, Go Switzerland, start the ball rolling, we need some honesty in the system instead of paper manipulation.

  • http://www.electricsitar.com/ Gregg Fosse

    Your skepticism about the BRICS is justified. The safe assumption with any initiative, conflict, war, or “terrorist” act that makes the mainstream media is that those who live in shadow have already co-opted both sides. The Swiss Gold initiative is inspiring but like the Scottish Independence initiative I expect it will fail. If it succeeds good for the Swiss, they will still have their hands full dealing with the aftermath and in attempting to get their Gold back.

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