|11-30-2014, 11:09 PM||#1|
Swiss voters reject initiative to increase SNB`s gold holdings
Swiss citizens resoundingly rejected plans that would have forced the Swiss National Bank (SNB) to invest in gold, which would have deeply hurt the bank’s ability to oversee monetary policy.
Voters also decided against a proposal that would have placed drastic limitations on immigration to the country.
Switzerland television said nearly 78% of voter citizens opposed the “Save Our Swiss Gold” initiative.
An approval would have forced the central bank to expand its gold holdings to 20% from 7.7% through the purchase of 1500 tons of gold over the next five years.
The initiative would have made the purchases permanent and banned the SNB from selling gold in the future. The referendum was initiated after a petition by the Swiss People’s Party garnered 100,000 signatures after the Swiss Parliament voted against it.
The proposal has been broadly criticized by the business and political communities due to the possible disruption in central bank’s monetary policy.
The uncertainty around the referendum was a major factor of steadying the gold market after gold prices hit their lowest in four and a half years following the break of key chart support.
The other proposal, which aimed to decrease annual immigration by three quarters from the current levels also failed to achieve cantonal majority, with around 74% of voters rejecting.
In 2011, the SNB introduced a cap to keep the euro steady at 1.20 Swiss francs in order to help and protect exports, which initially triggered the backlash against the SNB for accumulating a massive sum of depreciating euros, which has been decreasing in value due to the eurozone’s economic slowdown.
If the initiative had gone through, which was highly unlikely, the central bank would have been forced to buy gold each time it will decide to intervene in the foreign exchange market.
Since gold markets are closed on Sunday, we expect a reaction as soon as markets open, but not that much of a reaction, as gold prices has been on the decline when polls started emerging that showed support for the initiative has been falling.
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