Will Swiss Politics Cause Gold Price to Rally?

A political initiative in Switzerland is calling for the country to repatriate all its gold, and hold at least 20% of its assets in the precious metal. Will this cause prices to rally?

Barclays Wealth and Investment Management 25 November, 2014 | 4:34PM

Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Hans F. Olsen,Global Head of Investment Strategy at Barclays Wealth discusses the fate of the gold price.

Referendums are a way for democracies to put an issue directly to the electorate to decide. The issue might be a constitutional amendment; a vote on independence; the legalisation of marijuana; or the legality of bear baiting. In the rarified world of central banking, a Swiss referendum on November 30 mandating the country’s central bank to hold a large portion of its assets in gold captured my attention. In the post-Great Crisis age, central banks are the apex player in economic and financial matters. Consequently, an effort to materially limit a central bank’s degree of freedom is a noteworthy event.

The initiative, called Save our Swiss Gold, is the product of the Swiss People’s Party, a centre-right political party that seeks to create a stable currency for the country by requiring the central bank to repatriate the gold it holds outside Switzerland, prohibiting it from selling any of its gold, and finally, mandating it to hold at least 20% of its assets in the precious metal.

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Barclays Wealth and Investment Management  Services include wealth and investment management, financial planning, and brokerage.

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