According to an article in Swiss newspaper NZZ (Neue Zuercher Zeitung) the SVP party (Swiss People’s Party) launched a referendum to “protect” the 1,000 tonnes of gold owned by the Swiss National Bank (SNB). Their aim is to:

• make it unconstitutional to sell gold
• force the SNB to hold 20% of its assets in gold (currently 16%)

The SVP said the sale of 1,500 of the SNB’s 2,500 tonnes of gold was regrettable, especially given the Swiss population had no say in this.

For the referendum to be launched the action committee needs to collect 100,000 signatures from supporters of the measure. They have until March 20, 2013 to do so.

In Switzerland, a referendum is serious business. Direct democracy. Memorable votes include the 1992 decision to stay out of the EU, or the (defeated) referendum to abolish the Swiss Army (1989, 2001).

The initiative could complicate the SNB’s dream to manipulate the EUR/CHF exchange rate. As FX interventions blow up its balance sheet the SNB could be forced to purchase large quantities of gold to adhere to the above mentioned 20% gold ratio.

The 100,000 signatures should be achievable. Having lived in Switzerland for 8 years I could imagine for this referendum to pass.

Alexander Gloy is founder and CIO at Lighthouse Investment Management