Hopes for Swiss gold price boost dented
Switzerland produces no gold itself but it's the world's gold refining hub, a major global center for bullion vaults and boasts the world's 8th largest official hoard of gold.
The country was also late coming off the gold standard and as recently as 1999 its constitution required the franc to be 40% backed by gold.
The Swiss go to the polls on November 30 in a referendum that will lay down new rules for the country's central bank concerning its gold reserves.
A recent survey found support for the "Save Our Gold" camp that would force the Swiss National Bank to hold 20% of its reserves in gold, bring back any bullion held outside its borders and halt all sales, appears to be falling.
MarketPulse reports at the end of last week, a poll released by the Swiss newspaper 20 Minuten showed that 38% – down from 45% – of the respondents were in favour of placing restrictions on the SNB, while 47% were opposed and 15% undecided:
"The measure has fared better in another poll by Berne-based research and polling institute gfs.bern, which showed the gold initiative had the support of 44% of the Swiss public. Most news organizations said this poll is more reliable, although it is also older, being released on Oct. 24."
Should the pro-gold campaign triumph (the SNB and the country's parliament are fiercely opposed) it could provide a huge boost to the gold price, currently trading at July 2010 levels below $1,200 an ounce.
To meet the 20% requirement the SNB will have to buy roughly 1,500 tonnes on the open market, which at today's ruling price would set the fiscus back nearly $60 billion.
Currently, the bank has 1,040 tons of gold, with roughly 70% stored in Switzerland, 20% at the Bank of England and 10% at the Canadian central bank.