So the drama with the Swiss Franc and the Euro is upon us.
What I would really like to highlight, is that the way things went down, isn't the way the Swiss or the currencey markets thought they would.
The referendum (about gold) that wasn't passed, was an attempt to enforce a 20% gold position on the SNB. The current position is about 8%.
The reason the vote wasn't implemented, was that pegging the Swiss Franc to gold, would make it impossible for the SNB to remain competitive in the current currency war, and it was argued that the ability to issue more money, would give the SNB the flexibility to absorb fluctuations in the currency markets and to stabilise the Swiss economy, which is largely dependant on the Euro-zone by implementing a fixed rate (1.20).
The fact that the vote was rejected, hasn't meant that the SNB was unable to follow what the referendum initially tried to achieve. Which is the point of this post.
By removing the 1.20 peg, the SNB in effect moved the Swiss Franc vs. Dollar price up by 25-30%, and the price of gold surged as well, due to sentiment.
Basically, the SNB not only pushed the price of gold up, but the purchasing power of the Franc means that more gold can be bought, for the same amount of Swiss Francs.
My point is basically that it didn't need a referendum about gold to ensure that the Swiss Franc's position as a reliable/valuable world currency would be maintained.
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