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Latest Poll Shows Swiss Gold Referendum Doesn't Have Enough Support To Pass

By Kitco News
Wednesday November 19, 2014 11:47 AM

(Kitco News) - According to the latest poll numbers, Switzerland’s “Save Our Gold” initiative doesn’t have enough support to pass on Nov. 30, helping to push gold prices below $1,190 an ounce.

According to the results released by gfs.bern Wednesday, only 38% of the Swiss population supports the gold referendum. The referendum, if passed, would force the Swiss National Bank to boost its gold holding to 20% of its official reserves, repatriate all of its gold and not sell any of its holdings. According to the results, 47% oppose the initiative and 15% are undecided.

Julian Jessop, head of commodity research at Capital Economics, said the results of the latest poll results could be part of the reason behind gold’s sudden drop below initial resistance at $1,190 an ounce. As of noon a.m. EST, December gold was at 1179.60 an ounce, down $17.50 or 1.46% on the day.

In an interview ahead of Wednesday’s results Ole Hansen, head of commodity strategy at Saxo Bank, said the latest poll result will set the momentum heading to official vote on Nov. 30. He said he suspected this initiative would have a difficult time passing the 50% majority threshold.

Analysts have said from the beginning that the vote faced some difficult hurdles. The referendum, which was initiative by the Swiss People’s Party, must garner 50% of the popular vote and also pass in the majority of cantons, which represent the different regions in the country.

Jessop  said although the initiative is likely to fail, it will be by a narrow margin, which could be positive for the overall gold market.

“A slim defeat would still underline the enduring appeal of gold and ensure that pressure to add to official holdings elsewhere remains strong,” he said.

Both the Swiss government and the SNB have strongly opposed this initiative, saying that fixed gold reserves would limit the central bank’s ability to achieve price stability and support the economy.

Currently the SNB holds 1,040 metric tons of gold, representing about 7.5% of its official reserves. Analysts said if the referendum passes the central bank would have five years to purchase about 1,500 metric tons of gold; however, Jessop estimated the bank could have to buy as much as 1,730 tons of gold.

“What’s more, if the balance sheet of the SNB continues intervention, the required gold purchases could be much larger,” he said.

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By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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