Enough signatures have been collected for an initiative to force a vote to ensure that the Swiss National Bank:
1. Stops selling gold reserves.
2. Keeps 20% of its assets in gold (currently 10%).
3. Repatriates gold held abroad (including in the US).
Gold Initiative Website (German)
The Swiss People’s Party (UDC/SVP), the Christian Democrats (PDC), and the Liberal-Radical Party (PLR) are in the process of writing an initiative to anchor bank secrecy in the Constitution, with some exceptions for criminal investigations.
Hah! They think the US is going to actually return the gold. That’s just precious.
IF the USA does return the gold to Switzerland then I hope the Swiss have the sense to check for tungsten cores. The Chinese got stung with that fraud. It has never made any sense to me that any country would entrust another country with its gold storage. Switzerland has all the expertise needed to keep its gold secure on its own soil. Why did it ever think it was a good idea to let the USA take care of it?
Anyway, here’s hoping the bank secrecy initiative is successful at least.
Aren’t these the same guys that signed an IGA with the US? I don’t see how they’re going to get back their gold, either.
@Em, it goes back to the gold standard days. Here’s the way it all works (worked).
If you are doing business/trade with a foreign country you have to be able to actually pay them, on demand as well as be paid, on demand. If you were doing lots of trade with the US, it just made sense to keep a stash of gold IN the US. Gold assets would be transferred as needed from one pile to another and corresponding paper money sent to whoever is supposed to get it. It was a way of having a solid line of credit in the country.
Say I am buying a widget from ABC corp. ABC needs to be paid, they don’t want forex. Gold is used as the base currency. My forex transfer hits the US, is converted to gold and the gold is converted to USD. Furthermore, it was seen as safe at the time to keep it stashed in the US. Deep underground vaults, no storage fees. If war breaks out, odds are pretty high that the US is gonna be on your side and you need the gold there anyways for instant lines of credit.
This is the same reason why countries buy US debt now. Paper money effectively replaced gold, and the standard became the USD. If you’re doing trade, you need the paper to back it. It’s all “on account” at the fed, and loans can be taken out against it. No storage required really, and hell, they’ll maybe even give you some interest in return for it. The difference of course, is that with gold, international trade was more fluid. It all had the same backing in the end and if I am switzerland doing business with germany, all it takes is a phone call to the fed to have them shift some bars from one pile to another. There, done deal and at least theoretically, a corresponding amount of my own currency will be cancelled out, or the value of all the currency in circulation will drop some as gold is limited. USD? ffff, fed’s always happy to just print more as it sees fit. For quite a few currencies, when they are converted, they are first converted to USD and then into the target. As say, I don’t think there’s a big market for Malaysian money, but using USD as a go-between adds liquidity. To do this, you actually have to HAVE the USD available to make it happen. Previously, it was just gold.
So now, in this day and age, gold only really serves as a last-resort line of credit and non-USD transactions. But that gold sitting in the US has long long long since been utilized. They don’t just let it sit there for nothing. It’s loaned out and who it’s loaned out to is not exactly public information. When you are buying paper gold, they don’t have a stockpile of gold all to themselves. They just leased the rights to gold from some central bank and then capture a vig on the trading of those rights. How many times is the same bar leased out? Who knows. But what is fundamentally true is that if that bar is withdrawn, it CANNOT be leased out anymore and transactions using it have to be closed out. However, if you start replacing bars with fake bars and refuse an actual audit of purity…. then it works out just great… until it’s discovered that is.
As there is ample incentive and opportunity for the US to fake bars now, and most nations are fully capable of protecting their own assets, it’s kinda stupid to leave gold sitting overseas, and in this time of debt crisis, it is a liability as they are assets which can be attacked by creditors, frozen and transferred against their will.
Having $17+ trillion in debt is certainly plenty of motive for a nation to be stealing the gold that they’re entrusted to protect. So is the currently high value of gold. Very tempting to make paper gold out of thin air, and very easy to imagine the value of paper gold vanish as a result just like it can happen with paper dollars.
Where does the real gold go? Well, I can certainly tell you where it’s not going.
On a related note…..
I used to wonder why, once the price of gold went up so much, that all sorts of TV ads in the States were talking about wanting to buy your gold for dollars. It would always intrigue me at the time why people would want to buy it at such a high price, and just practically goad people into parting with it. If the normal course of capitalism, and ‘supply and demand’ would be to buy low and sell high, then why in the hell would people need to be actively encouraged to part with their gold when the price is high?
Unless of course, this is an active effort to siphon off all the real wealth from the masses and leave them with worthless paper. ;^)
@mjh49783 It’s because all of those tv ads are complete and total scams. They undervalue everything they receive, no returns and the best you can do is complain and maybe get a little bit more. You get nothing even close to market rate for the gold, while they just flip it for spot all day long. It’s free money. Also, you tend to get stuff that’s actually worth something, without the sender actually knowing it.