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Two Swiss gold referendum initiatives: “Save our Swiss Gold” and “The Gold Franc”

July 8, 2012 6:09 am

by George Dorgan

July 8, 2012 6:09 am

Two Swiss initiatives to save the money and the gold of ordinary people against the establishment

1) Save our Swiss Gold and 2) The Gold Franc.

In Switzerland there are currently two initiatives for a referendum concerning gold coming.

1) Referendum initiative: “Save our Swiss Gold”

Objectives

The SNB should stop selling its gold
The gold has to be stored in Switzerland
Gold should represent at least 20% of the SNB assets

Did you know that

that the SNB has sold one ton of gold per day during five years ?

that 1550 tons of the people’s assets in form of gold had been sold for cheapest prices (between 300 and 500 US$)

when the concerned minister was asked where the SNB gold currently is stored, he answered in parliament: “Where this gold exactly is stored, I cannot say, because I do not know, because I do not need to know and because I do not want to know”

(Source)

2) Referendum initiative: “The Gold Franc”

After the Swiss economic commission rejected the idea of a gold franc, the gold franc association took the way of the referendum initiative. The initiative will be started after the “Save our Swiss Gold” initiative.

Here the presentation of what a gold franc is from http://www.goldfranc.org/

GOLD COIN CURRENCY

Non-partisan project for the creation of a commodity based supplementary currency to the Swiss franc on a constitutional basis

The Proposal

Under the proposed parliamentary initiative 11.407 “Establishing a Gold Franc” ¹ the federal government establishes a second official currency in the form of a set of coins with a fixed gold content. The federal government regulates the naming and grants concessions for the minting of coins to suitable institutions and oversees the concession holders.

Benefits and Advantages

Simple: Buying and selling of gold becomes easier and cheaper. The Gold Coin Currency enables everybody, professionals and individuals, at all times to purchase or sell varying amounts of pure gold at a significantly lower cost. Coins of different size will be available, with the smallest containing as little as 0.1g gold in the form of a “Gold Core Coin”.

Practical: Gold coins are a practical and universal means for payment. Gold coins can be changed into any currency desired at the current value of gold. Further they can always be used worldwide as a means of payment for goods and services.

Safe: The gold content of each coin guarantees its value². As an additional official currency the Gold Coin Currency is subject to the same trade and tax laws as the Swiss Franc – both currencies are protected from fiscal levy’s and forgery.

Production, distribution and protection

The production of the gold coins is conducted by private companies with a concession from the federal government. The federal government maintains oversight of production in order to protect and safeguard the integrity of the coins.

The distribution of the gold coins by the licensed institutions is conducted through their branches, vending machines or ATM’s.

The legal protection of the gold coins from fraud and forgery is guaranteed by its constitutional basis.

Other important aspects

The Swiss Franc remains the primary currency while the Gold Coin Currency helps to stabilize the Swiss Franc exchange rate. The current Swiss Franc remains the main means for everyday payments, loans and investments. The Gold Coin Currency is an optimal addition to the Swiss Franc by offering a liquid and crisis resistent investment opportunity. It can also serve as alternative for foreign currency investments and help to stabilize the exchange rate of the Swiss Franc.

The duties and functions of the Swiss Central Bank are not affected. The constitutional mandate of the SNB regarding the issuing and the securing of the long-term value of the Swiss Franc, as well as, the management of the national gold reserves remains unchanged.

The Gold Coin Currency will give Switzerland new prestige. The Gold Coin Currency has the potential to become an attractive, secure and globally popular alternative currency thereby filling a significant gap in the world’s financial system. Its success could prompt other nations to imitate it which would help to restore Switzerland’s past reputation as a first-class and innovative financial centre and thus strengthen Switzerland’s global prestige3.

Promote the idea and realization of their political

To promote and realize the “Swiss Gold Coin Currency“, a politically independent, nonpartisan organization based in Zurich was set up in July 2011 . It consists of members from all over Switzerland, including senior figures from business, politics, media and science.

Footnotes:

1 Parliamentary initiative: “The Swiss constitution shall be amended as follows: Art. 99, section 2, the Federal Government creates an official Swiss Gold franc with a set of coins with a fixed content of gold. It regulates the licensing of the institutions which may issue gold francs, tax-free.”

2 Gold is also subject to fluctuations in value. Compared to any other goods, however, gold has over a long time period and in many cultures been very stable in value, because it is a) limited in the available quantity (even while taking into account the known and suspected reserves); b) highly durable; and c) because of its unique usefulness constantly in demand (in the form of bullion, works of art, or parts of it – as well as for many handicraft and industrial products and in parts of production facilities etc. ).

3 Examples for concrete business opportunities: Gold Coin depots, Gold Coin accounts, transaction services, savings plans, investments, retirement plans (tax-exempt, new 3rd pillar C), annuities, life insurance plans, etc. Further: The licensed companies will be allowed to present themselves on the flip side of the coins with the name (symbol, logo). The corresponding worldwide marketing potential will cover a good part of the production costs of the coins.

The gold franc association recently organized a presentation of the Austrian economist Detlev Schlichter. Here the equivalent presentation at the Adam Smith Association:

Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and we encourage you to complete your own due diligence when making an investment decision. Even if we often write about Forex trading, our advices aren't written for day traders who follow technical channels, but rather for mid- and long-term investors. Our aim is to show discrepancies between fundamental data and current asset valuations, which can lead in mid-term to an inversion to technical channels.
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Andrew B.

Can you please explain how “resistant” it will be to forgery?

I understand the pure gold is in the middle of the coin.

How is a person which is supposed to accept the coin as payment able to tell whether the gold is there in the middle of the coin?
George Dorgan

Here the answer from Mr Jacob from the gold franc association:
“Forgery is a issue and a challenge in almost any economic venture and therefore in no way unique for gold coins. The market can and will decide on an optimal cost/benefit balance. There are already very efficient ways to prevent forgery, even today, as gold coins are not traded very extensively, we can expect much more efficient means once the demand for them grows.
Two more points: firstly, as Prof. Bernholz has pointed out, to begin with it is harder to forge coins than paper and even paper has been made reasonably forgery-resisten.
Secondly we want the producer and / or seller of the coins to identify and present themselves visibly on the coins. This will give them the best possible incentive for, and interest in, maintaining a good, forgery-proof reputation for their coins. I presume this answers the last part in your question as well.

Thank you for your interest in the issue”

Thomas Jacob
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Claudiu M.

But does this initiative really have a snowball’s chance in hell of passing the referendum? The last two countries that wanted to go on a gold standard (Iraq and Libia) weren’t too popular with TPTB. And also the naysayers may argue that the swiss economy cannot withstand the inflow of capital if all the rest of the currencies are fiat and this is gold backed. I mean just look at the silly eur peg…
Andrew B.

@Claudiu: This is just an alternative currency. No one’s going on the gold standard for now. (By the way, I’m from Romania as well).
- Claudiu M
  
  I see the Romanian community is steadily growing here (at least within the EPFL). I still don’t get the “alternative currency” idea. We all know bad money drives good money away, so we have two scenarios if a gold franc really comes into existence:
  1. People realize this thing won’t last so it’s just a nice coin and will hoard them. No gold coins at the supermarket, the overall effect is similar to a numismatic issue (just with a lower value because of the sheer numbers).
  2. People genuinely believe this thing will stick and the country is effectively on a gold standard.
  I think the whole shebang is to go to scenario 2, which means gold standard, which means pissing the Americans off, which means it’s not going to happen soon.
  I hope there is a flaw in the above argument, i just can’t find it.