From Swiss yes vote won’t really boost gold price

They report:

  • The “Save Our Gold” camp that would force the Swiss National Bank to hold 20% of its reserves in gold, repatriate bullion held outside its borders and halt all sales
  • To meet the 20% requirement the SNB will have to buy between 1,500 – 1,800 tonnes on the open market over five years and some analysts have suggest the price of gold could gain 18% under such a program as the SNB “would have effectively a constant bid in the market.”
  • But a new research note by Deutsche Bank points out these purchases would amount to 1.2 tonnes per day which is a “small fraction” of daily turnover
  • Some may also be carried out via private transactions with other central banks, minimising market disruption, it added
  • “Another option for the SNB would be using gold swaps to ‘window dress’ its balance sheet rather than holding physical gold or futures contracts”
  • The SNB could borrow gold from counterparties prior to monthly balance sheet reporting dates, re-exchanging it for currency the next day

More at the link

While 1.2 tonnes a day may only be a fraction of turnover, if 1.2 tonnes is bought and taken out of the market each day it would have some impact on lifting prices. There are other reasons the price of gold may not go up, but the removal of 1.2 tonnes a day from current available supply (IF the yes vote is successful and if the SNB chooses to go and buy the gold in this way) isn’t one of them.