Swiss Gold Referendum Losing Steam - Hedge Fund Alpha (formerly ValueWalk Premium)

Swiss Gold Referendum Losing Steam

Nomura now says that the upcoming Swiss gold referendum will not be a market moving event.

Writing in a client research report today reviewed by ValueWalk, foreign exchange analysts Jordan Rochester and Yujiro Goto “now assume 30 November’s referendum will virtually be a non-event.”

Swiss gold referendum details

The Swiss gold referendum was putting to a popular vote two concepts: that the country should ask for all its gold held in foreign banks be returned to the country and that would require the Swiss central bank to hold 20 percent of its reserves in gold bullion.

Nomura gold referendum

Polls yesterday indicated that support for the measure was slipping to near 28 percent in favor. 50 percent is required to pass, and the highest the popularity of the measure had achieved was 45 percent, according to the Nomura report,

“Populist initiatives,” as the Nomura report describes the gold referendum, tend to have difficulty gaining steam and in fact typically lose support the day voting occurs.  Polls need to show near 56 percent or more of voters favoring a measure leading up to the election, because anything going against the establishment wishes typically can expect to lose 5 to 6 percent the day of the vote, the report observerd. Central bankers around the world initially were anxious about the vote, but now appear to be breathing a sigh of relief.

Gold price drops

The price of gold initially dropped near 1.5 percent on Tuesday on the news, but has since rebounded on the Fed minutes that discussed how to implement rate hikes, according to a Market Watch report.

The Swiss currency is at an interesting point, trading near the 120 level, a point at which central bankers could intervene and much chatter among currency traders has taken place.

The Nomura report says that such intervention isn’t apparent just yet. “From what we saw in the SNB’s weekly sight deposits data on Monday there was no meaningful shift in the level as in the periods of their frequent interventions prior to September 2012 (See Figure 2), so perhaps at these levels the SNB is not yet intervening. The forthcoming release of weekly sight deposits data, scheduled every Monday, should attract more market attention for the time being though.”

Comments (3)

  • sloth

    I hope the swiss don’t give up the chance to tie their currency to a real asset. Don’t let the central banksters inflate their way out of this bubble or your money will not be worth the ash it leaves behind.

    November 21, 2014 at 9:01 am
  • PatFields

    the ‘surprise’ in this? The Swiss People ought, rather than to
    stipulate government’s definition of ‘money’, declare what is to be
    their own and let government deal with that reality internally.

    genuinely Free People have very little interaction with government when
    it’s kept within its proper functioning, so what should the Swiss
    People care about the government’s ‘franc’ or ‘euro’? Those proprietary
    ‘units’ of government’s creation exist for purposes of transactions
    specifically confined to exchanges it carries out.

    the Swiss instead decide that their private-jurisdiction exchanges are
    to be in metallic Weights and Measures apart from their government’s
    ‘franc’ or ‘euro’ definitions, far more restriction on government would
    be set into it’s ‘working environment’ than this political directive is
    even remotely possible of achieving. In this latter arrangement,
    government would then be forced to conform its ‘money’ definition to
    that of The Peoples.

    November 23, 2014 at 3:27 am
  • geezer321

    ” The real purpose of franc devaluation is to shield the Swiss banks. from euro devaluation,” Keith Weiner said,, 21 November. 2014.. . The Swiss National Bank has a conflict of interest and it is the Swiss people who get robbed as their currency devalues
    and pays savers little or no interest.

    November 25, 2014 at 7:58 pm


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