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Swiss people reject the Gold Initiative


On the 30th of November, we, the Swiss people, voted on the popular initiative « Sauvez l’or de la Suisse » of the UDC. It was massively rejected with 77.3% against it. What were the possible consequences of this initiative in case of approval? Were we right to refuse it?

The « Sauvez l’or de la Suisse » initiative included three key points:

  • The BNS (Banque Nationale Suisse) must hold a minimum share of 20% of its assets in gold.
  • It cannot sell gold.
  • Its gold reserves must be exclusively stored in Switzerland.


The role of the BNS is to maintain a certain economic stability in the prices. The BNS has one of the most impressive record of economic stability in the world: over the past 20 years, the average inflation has stood under 1%. There are few, if no other central banks which have the same track record.

This was achieved due to strategic planning, which implies freedom of action: If you want to achieve stability, you must be able to react to the current economic situation and the markets. For example, when facing a crisis, you will try to increase the total of your balance sheet. The Balance Sheet represents the health of a company, a country or any institution that deals with money; increasing its size shows strength or the potential to borrow and increase your activities. Later, we wouldn’t be able to sell this same gold if needed, in order to assure the stability of the prices.

By having a fixed policy on the gold reserves and forbidding its selling, we would seriously hamper the flexibility of the BNS, and in this way, its performance.

What’s more, if these restrictions did pass, the other markets would know about these constraints, and the credibility of the monetary policy of the BNS would be affected. Gold doesn’t generate any interest or dividend. By having an important part of gold in its assets, the BNS would thus make fewer profits. This would also deprive the Confederation or the Cantons of receiving part of these profits.

If these reasons weren’t enough, there is still one more. Why do countries, banks, institutions or even individual have gold? They have gold as reserve money. In case the economy collapses, or the value of the franc goes down. What would be the purpose of having gold, if we couldn’t use it and by use it, I mean sell it, when needed? Gold would lose its primary purpose of being a Safe Haven.

On the matter of storage, 70% of the gold owned by the Confederation is in Switzerland. 20% are stored at the Bank of England and the remaining 10% at the Bank of Canada. Some countries have more than half of their gold reserves abroad. Decentralized storage is essential in order to protect the gold reserves in case of important casualties: environmental hazard, armed conflict, etc. It also permits to place gold reserves in ideal places: near trading areas, in order to have the best disponibilities and prices in case of selling.

It is now clear that this initiave is more stringent than protective. The article 99 of the Federal Constitution states that the BNS, to this day, must have part of its monetary reserves in gold. When this article was passed, the Parliament deliberately chose not to fix an amount of gold. It let the General Direction of the BNS decide upon the issue. As stated before, the BNS is one of the most efficient central banks in the world. So we can easily assume that giving the BNS freedom of action, therefore flexibility is the best solution.

It is also important to note that the BNS still has very important resources of gold. Per inhabitant, the gold reserves of the BNS still are by far the most important of the world. For every inhabitant, the BNS has 4,2 ounces of gold (130,6 grams). For comparison, France has 1,2 and USA 0,8 ounces of gold per inhabitant.

In sum we were right to refuse to initiative, and we can rely on the BNS with confidence.


Marc Zaidan 


image source:  http://www.swissinfo.ch/fre/initiative-or/41140904


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