The initiative garnered worldwide attention in the markets and the media, as investors and analysts grappled with its potential implications. After news broke that it had not passed, gold fell 2%, touching below $1,150 an ounce, and then rebounded strongly on Monday to above $1,200. But what about the bigger picture?
How the Swiss gold referendum shook the gold market
Perhaps the most common conclusion drawn from the Swiss gold referendum, even before the vote took place, was that it represents increased awareness in the public sphere of gold and the role of central banks. Hebba Investments stated in Seeking Alpha that the referendum “has already changed the gold market as it has put gold in the public domain for citizens and politicians.” Former U.S. congressman Ron Paul called it a “healthy conversation.” In his words:
“People are starting to talk about gold more and they should. [The referendum] is one more step in the direction of proving that paper money, fiat money, money created by politicians out of thin air to subsidize big government and monetize debt is going to end.”
Many central banks joined the conversation. Russia, for instance, recently made its largest gold purchase in over 15 years and continues to accumulate more each month. The Netherlands repatriated 122.5 tons of gold held at the Federal Bank of New York to its vaults in Amsterdam, according to a November 21 press release from the Dutch central bank. The European Central Bank also spoke last month of possibly adding gold to its assets.
It is clear that although the initiative did not pass, it sent ripples through the gold market and attracted attention to the issue of gold’s place in government monetary policy. At the very least, it demonstrates that the belief in gold as wealth protection still holds strong among both the government and the public.
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