The Swiss financial establishment must be in a state of shock after an early poll put 45 per cent in favor of raising gold to 20 per cent of national currency reserves and just 39 per cent against. After ArabianMoney broke this story we had several posts suggesting that it was most unlikely to be passed (click here).

Switzerland has run its gold reserves down since 2000 and presently holds a little over 1,000 tonnes of gold. To raise gold from the current 7.7 per cent of total currency reserves to 20 per cent would mean buying some 1,700 tonnes.

Gold price hike

Even if phased over several years this volume of official gold buying would send prices to the moon. It would also set a precedent for other central banks to follow. Switzerland would then have the third highest gold holdings in the world, and all that for a relatively small country.

The referendum also demands repatriation of foreign held Swiss gold and a moratorium on selling future gold holdings. It was initiated by the Swiss People’s Party MP Luzi Stamm and two other MPs who obtained the necessary 100,000 signatures to hold the referendum. This is the largest party in the Federal Assembly, with 54 members of the National Council and five of the Council of States.

Of course the campaigning has yet to really start and the ‘no’ camp will no doubt be all the more vociferous after this early polling setback. However, it suggests the public mode is far more pro-gold than anticipated by observers.

Oh no!

Switzerland has always been a conservative country with a strong currency and low inflation. But in recent years it has been forced to track the weakening euro or risk making its industrial base hopelessly uncompetitive in Europe.

Voters are savers who have seen the value of their money falling and low interest rates, and this could be the beginning of a rebellion, albeit a conservative one. Could this be the chance to strike back against the money printers for the Swiss general public? It would not be the first time that a referendum did not go as expected.

…more from Arabian Money:

Nelson Hunt the man who took silver to $50 an ounce in 1980 dies aged 88