This article first appeared at The McAlvany Intelligence Advisor on Friday, December 5, 2014:

Rarely do the precious markets receive such an unequivocal, unblemished, unalloyed buy signal as the one issued by the Swiss when they voted down, 3-to-1, a referendum that would have modestly restricted the activities of its central bank.

Months earlier, polls showed that the “Save Our Swiss Gold” initiative was likely to pass, but massive publicity campaigns and moves by Citigroup to cash in on it caused a huge shift in public sentiment, with the final vote on Sunday, November 30 defeating it by a 78-22% margin.

The Swiss, being a direct democracy, are known for referendums, voting on an average of five of them every year, with most of them failing. But this one caused rejoicing among observers and Swiss National Bank (SNB) officials that likely put in a bottom in the market. Had it passed, the referendum would have required the SNB to raise its holdings from 8% of its balance sheet currently to 20% over the next five years. In addition, it would have forced the bankers to repatriate its gold reserves from abroad, mostly the UK and Canada, and prohibit them from selling them at any time in the future.

The vote spelled “relief,” according to Janwillem Acket at Julius Baer: “The key word is relief … the SNB [now] has more options and fewer constraints on monetary policy.” Beat Siegenthaler of UBS said it was a vote of confidence: “The result may be interpreted as a vote of confidence for the SNB and thereby strengthens [its] credibility….”

Martin Gueth, an economist for the German financial services giant LBBW, added:

The SNB can feel confirmed in its policy. By rejecting the measure, voters have come out in favor of its current stance.

And of course Switzerland’s Finance Minister Eveline Widmer-Schlumpf joined in the chorus:

The central bank is [now] free to pursue its policy of a minimum exchange rate….


doesn’t have the same meaning as it had 50 or 60 years ago.

In the digital printing press world of central bankers, paper is king and is a useless relic. The $100 billion of euros that the SNB holds as a result of supporting its self-imposed pegging of 1.2 Swiss francs to one euro is of little concern. It’s all about maintaining “parity” in the world of depreciating currencies so that the export sector can compete on equal footing across the eurozone. It’s the plausible excuse for expanding its balance sheet by a full third just since September 2011 when it announced the peg.

Back in October, Ron Paul was hopeful as early polls showed common sense reigning in Switzerland. Those favoring the initiative were slightly ahead at the time, and Paul knew why:

The Swiss referendum is driven by an undercurrent of dissatisfaction with the conduct not only of Swiss monetary policy but also of Swiss banking policy.

Paul explained that many in Switzerland and elsewhere are tired of being bullied by the United States in its quest to extract tax revenues from those seeking safe havens – “tax havens” – for their money. Paul noted:

Remember that “tax haven” is just a term for a country that allows people to keep more of their own money than the US or the EU does, and doesn’t attempt to plunder either its citizens or its foreign account holders.


But the past several years have seen a concerted attempt by the US and the EU to crack down on these smaller countries, using their enormous financial to compel them to hand over account details so that they can extract more tax revenue.

Paul knew, as most Austrian economists know, that a policy dedicated to being “the cleanest dirty shirt hanging on the line” would eventually lead to inflationary bubbles, and he was hopeful that a favorable vote in November would reflect that understanding among Swiss voters:

The results of the November referendum may be a bellwether, indicating just how strong popular movements can be in establishing central bank accountability and returning to a monetary role.

He hoped that the underlying distrust of central banking in the once fiercely independent and fiscally conservative country would be enough to carry the day. But it was not to be, at least yet.

With the voters’ perceived sanction of supporting the ultimately unsupportable, the debauching of the franc will continue apace. Already the policy is importing inflation into the country, which is igniting a nascent and accelerating real estate bubble.

Those who have read their history know full well how such a policy eventually ends: badly. Only the holders of assets that cannot be inflated away in the exigencies of the moment will benefit. With confirming the bottom it put in earlier in November, the Swiss vote is one of the clearest bells to ring heard in the precious metals markets in many years.

A graduate of an Ivy League school and a former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at, primarily on economics and politics. He can be reached at



Forbes: The Truth Behind The Swiss Gold Referendum Escapes Most Of The Mainstream Media

Ron Paul: All Eyes on the Swiss Gold Referendum

Bloomberg: Swiss Voters Reject Measure Forcing SNB to Acquire More Gold

ZeroHedge: Swiss Gold Referendum Fails: 78% Vote Against “Protecting The Country’s Wealth”

Background on Julius Baer Group

Wall Street Journal: Swiss Franc Rises Ahead of Gold Vote

Swiss franc chart dated 12/4/2014


Price chart for gold

Opt In Image
Soak Up More Light from the Right
with a free copy of Bob's most popular eBook!

Sign up to to receive Bob's explosive articles in your inbox every week, and as a thank you we'll send a copy of his most popular eBook - completely free of charge!

How can you help stop the Democrat's latest gun grab? How is the Federal Reserve deceiving America today? What is the latest administration coverup? Sign up for the Light from the Right email newsletter and help stop the progressives' takeover of America!