Gold should benefit if Swiss voters surprised market participants and voted in favor of a Nov. 30 gold referendum, says Jeffrey Nichols, managing director of American Precious Metals Advisors and senior economic advisor to Rosland Capital. The main focus of the gold market is a provision that would require 20% of the country’s central bank reserves to be in gold, which Nichols says would require purchases of 1,500 metric tons likely spread out over five years. He says this is “an amount that could be fulfilled by the world gold market without any difficulty but would nevertheless provide considerable support to the price.” The central bank and Swiss Finance Ministry have opposed the referendum. Recent polls show the referendum likely will not pass, therefore the market is not expecting any change in Swiss central bank gold policies, Nichols says. “However, major bullion dealers and a number of leading analysts are of a mixed mind,” Nichols says. “A ‘no’ vote against raising Swiss gold reserves would likely have no lasting influence on the metal’s price…but a surprise ‘yes’ vote would likely prompt a short-term rally followed by a higher long-term average gold price.”
