Hopes for Swiss gold price boost dented

The Swiss go to the polls on November 30 in a referendum that will lay down new rules for the country’s central bank concerning its gold reserves.

A recent survey found support for the “Save Our Gold” camp that would force the Swiss National Bank to hold 20% of its reserves in gold, bring back any bullion held outside its borders and halt all sales, appears to be falling.

MarketPulse reports at the end of last week, a poll released by the Swiss newspaper 20 Minuten showed that 38% – down from 45% – of the respondents were in favour of placing restrictions on the SNB, while 47% were opposed and 15% undecided:

“The measure has fared better in another poll by Berne-based research and polling institute gfs.bern, which showed the gold initiative had the support of 44% of the Swiss public. Most news organizations said this poll is more reliable, although it is also older, being released on Oct. 24.”

Should the pro-gold campaign triumph (the SNB and the country’s parliament are fiercely opposed) it could provide a huge boost to the gold price, currently trading at July 2010 levels below $1,200 an ounce.

To meet the 20% requirement the SNB will have to buy roughly 1,500 tonnes on the open market, which at today’s ruling price would set the fiscus back nearly $60 billion.

Currently, the bank has 1,040 tons of gold, with roughly 70% stored in Switzerland, 20% at the Bank of England and 10% at the Canadian central bank.