Swiss To Vote On Gold Repatriation - "Gold Is The Only Valuable Asset On The SNB"s Balance Sheet"

A few weeks ago, we wrote of the Swiss People’s Party’s efforts to gain enough signatures to force the Swiss National Bank (SNB), who ‘supposedly’ guarantees the price stability in Switzerland, to stop selling its gold reserves. This last week, as the FT reports, they reached the required 100,000 signature mark and on Thursday the federal chancellery confirmed Switzerland is to hold a referendum that would ban the central bank from selling its gold reserves, force it to keep at least 20% of its assets in the metal, and  repatriate gold reserves held abroad and keep them at home. Following Cyprus’ forced sales and discussions of the net wealth in other European peripheral nations, proponents of the Swiss measure flatly reject the idea of sales, arguing that disposals of gold reserves at low prices between 2001 and 2006, as well as more recently, have cost Switzerland billions of Swiss francs. The “Save Our Swiss Franc” initiative proclaims, “today gold is almost the only really valuable asset left on the SNB’s balance sheet.” The SNB, however, is concerned at, “the monetary policy implications of the demands in the initiative.” A date for the referendum has not yet been set – but the FT notes that previous ‘referenda’ have taken up to several years from acceptance to actual vote.

Via The FT,

Switzerland is to hold a referendum on a popular measure that would ban the central bank from selling its gold reserves and force it to keep at least 20 per cent of its assets in the metal.

 

Under the terms of “Save our Swiss Gold”, which is led by members of the ultra-conservative Swiss People’s party, the Swiss National Bank would have to repatriate gold reserves held abroad and keep them at home.

 

…

 

Governments in the eurozone’s beleaguered southern periphery tend to hold a large part of their total foreign reserves in gold – the Italian central bank holds 2,451 tonnes, more than 70 per cent of its total reserves, while Portugal’s holding of 383 tonnes accounts for 90 per cent.

 

…

 

They insist that the SNB’s gold reserves, which stood at SFr49.5bn at the end of February, accounting for about 10 per cent of its balance sheet, are the best store of value available to the central bank.

 

…”Today gold is almost the only really valuable asset left on the SNB’s balance sheet,”…

 

…

 

“We have considerable concerns with regard to the monetary policy implications of the demands in the initiative,” the [SNB] said, adding that it would provide a fuller response “in due course”.

 

A date for the referendum has not yet been set. However, it is not uncommon for the period between an initiative being accepted for referendum and a vote being held to extend to several years.

Zero Hedge

Swiss To Vote On Gold Repatriation - "Gold Is The Only Valuable Asset On The SNB"s Balance Sheet"

Switzerland to Hold Referendum Banning its Central Bank from Selling Gold Reserves

In Swiss law, private citizens can put forth any initiative that can gather 100,000 signatures. A campaign by the Swiss People’s Party to “Save our Swiss Gold” gathered 106,052 signatures so a vote will be coming up.

Switzerland is to hold a referendum on a popular measure that would ban the central bank from selling its gold reserves and force it to keep at least 20 per cent of its assets in the metal.

Under the terms of “Save our Swiss Gold”, which is led by members of the ultra-conservative Swiss People’s party, the Swiss National Bank would have to repatriate gold reserves held abroad and keep them at home.

Governments in the eurozone’s beleaguered southern periphery tend to hold a large part of their total foreign reserves in gold – the Italian central bank holds 2,451 tonnes, more than 70 per cent of its total reserves, while Portugal’s holding of 383 tonnes accounts for 90 per cent.

However, proponents of the Swiss measure flatly reject the idea of sales, arguing that disposals of gold reserves at low prices between 2001 and 2006, as well as more recently, have cost Switzerland billions of Swiss francs.

They insist that the SNB’s gold reserves, which stood at SFr49.5bn at the end of February, accounting for about 10 per cent of its balance sheet, are the best store of value available to the central bank.

The Swiss National Bank is of course against the idea and will provide a response in “due course”. I can translate their response in advance: “We reserve the right to trash the Swiss Franc at will, if and when we want to.”

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com 

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Switzerland to Hold Referendum Banning its Central Bank from Selling Gold Reserves

Switzerland, U.S. consider solution to tax dispute

Swiss Finance Minister Eveline Widmer-Schlumpf gestures during a news conference after the weekly meeting of the Federal Council in Bern February 27, 2013.

Credit: Reuters/Pascal Lauener

By Emma Thomasson

ZURICH | Wed Apr 17, 2013 11:04am EDT

ZURICH (Reuters) – The Swiss finance minister said on Wednesday that she wanted all countries to be treated equally in a drive to stamp out tax evasion, addressing concerns that Swiss banks had been unfairly singled out in recent years.

“We consider it very important that rules must apply to all and are engaging ourselves for a level playing field in multilateral forums,” Eveline Widmer-Schlumpf told Reuters in written responses to emailed questions.

Her comments came after several leading EU countries announced a joint push against tax evasion, a message they will take to a meeting of finance officials from the Group of 20 top economies this week in Washington, which Widmer-Schlumpf will attend.

Swiss banks have repeatedly been in the firing line for aiding tax evasion, but the country often complains it is unfairly targeted compared to offshore centers elsewhere like Singapore, Miami and the Cayman Islands.

“Recent revelations have confirmed that various financial centers in America and Asia do not comply with international standards,” Widmer-Schlumpf said, referring to the leak this month of data on thousands of holders of secret bank accounts, mostly in other centers like the British Virgin Islands.

The Swiss Bankers Association has said that only 0.05 percent of the 120,000 companies and trusts uncovered by the leak were based in Switzerland.

“Switzerland will continue to work to ensure that global standards are not only adopted by all countries, but also implemented. This concerns, for example, the identification of beneficial owners in trusts,” the minister said.

Trusts, which allow assets to be held by one party on behalf of another – often unidentified – party and are common in Britain and other centers, can be abused to evade taxes.

Austria’s finance minister, who has defied growing pressure for her country to follow Luxembourg’s decision last week to end bank secrecy, has attacked the G20 for not tackling what she branded centers of money laundering such as the Cayman Islands, Virgin Islands or Delaware.

Earlier on Wednesday, the Swiss government said it was considering a possible solution to a long-running dispute with U.S. authorities over Swiss banks accused of helping wealthy Americans evade billions of dollars of tax.

Meanwhile, the German state of Rhineland-Palatinate said on Tuesday it hoped to yield half a billion euros in lost tax revenues from a CD it purchased containing data on secret accounts including at Credit Suisse (CSGN.VX) subsidiaries, triggering police raids across the country.

Widmer-Schlumpf said she was following closely developments on the tax issue in the EU and elsewhere, adding a Swiss working group will deliver proposals by summer concerning how much client information banks should share in future.

(Reporting by Emma Thomasson; editing by Mike Collett-White)

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Reuters: Business News

Switzerland, U.S. consider solution to tax dispute

The Fatter the Cat, the Louder the Howl

Bloomberg reports Swiss Voters Approve Limits on ‘Fat Cat’ Executive Pay

Swiss voters approved some of the world’s toughest limits on executives’ pay in a referendum, a move critics say could make Switzerland less attractive to multinational corporations. The initiative against “fat cats,” proposed by Thomas Minder, head of a herbal toothpaste company, was backed by 67.9 percent of the voters today, the government said on its website today.

The proposal gives shareholders an annual ballot on managers’ pay. It eliminates sign-on bonuses, as well as severance packages and extra incentives for completing merger transactions. The initiative also includes rules punishing executives who violate the terms with as long as three years in jail.

How much executives take home was called into question in Switzerland after the country’s biggest bank, UBS AG (UBSN), had to be bailed out during the financial crisis, while in 2010 Credit Suisse (CSGN) CEO Dougan received 71 million francs ($ 76 million) of shares. That compares with a gross average Swiss monthly wage of $ 7,800 for 2011, according to UN statistics.

Fat Cats Respond

• Economiesuisse, a business lobby which had campaigned against the proposal, said “the result is a “negative signal for Switzerland as a place for doing business.”
• Nestle CEO Bulcke said the plan Switzerland less attractive to corporations and managers.
• At least five of Europe’s 20 highest-paid chief executive officers work for Swiss companies: Credit Suisse Group AG CEO Brady Dougan, ABB Ltd. (ABBN)’s Joe Hogan and Joe Jimenez of Novartis AG. (NOVN) Roche Holding AG (ROG)’s chief Severin Schwan and Nestle SA (NESN)’s Paul Bulcke are also in the top tier.
• Offshore drilling contractor Transocean Ltd. (RIG) and oilfield service company Weatherford International Ltd. (WFT) choose Switzerland as their base. It’s safe to count those companies in the opposition list.

Unsurprisingly, the fatter the cat, the greater the opposition to “fat cat laws”. However, that does not address the primary question at hand.

Is Executive Pay a Problem?

Before finding solutions, we must first understand the problem. Is executive pay a problem?

The answer (that too few see) is executive pay is a “symptom of a problem” not the “real” problem.

Three Real Problems

1. Fractional reserve lending
2. Central bank “too big to fail” policies
3. Government spending out of control

Want to rein in excesses at corporations? Then fix the real problems and the executive pay problem will mostly take care of itself.

For further discussion, please see

• Top 1% Received 121% of Income Gains During the Recovery, Bottom 99% Lose .4%; How, Why, Solutions
• Is Inflation the Legacy of the Federal Reserve?

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

The Fatter the Cat, the Louder the Howl

Goldman Implicated In Heinz Insider Trading Probe

When the news broke of the SEC’s action against the HNZ call option insider traders, and we posted the full SEC charge against the perpetrators whose actions Zero Hedge reported on first, we asked this regarding one of the entities named: “the trade occurred through an “omnibus account located in Zurich, Switzerland in the name of GS Bank IC Buy Open List Options GS & Co c/o Zurich Office (the “GS Account”).” Does GS stand for Goldman Sachs one wonders?” This followed our prior post, rhetorically titled “Guess Who Was Buying HNZ Stock From Its Clients“, with the answer of course being Goldman Sachs, which had had HNZ stock at a Sell rating for months, and which just days before reiterated its negative sentiment. But for the most part the post was written in jest. Turns out the joke was on everyone else, because just as we feared, or rather knew, Goldman was indeed implicated all along.

From Reuters:

Goldman Sachs Group Inc is cooperating with a U.S. Securities and Exchange Commission probe into insider options trading in H.J. Heinz Co before the food company announced it was being acquired, Goldman said on Friday.

 

Earlier in the day, the SEC filed suit against unknown traders using an account in Switzerland to buy options in Heinz before the company was purchased. The SEC suit does not explicitly name Goldman Sachs but refers to the account in Switzerland as the “GS Account.”

While none of this is surprising, we do find it curious that from “Vampire Squid”, Goldman Sachs has now metastasized into “he who must not be named.”

Zero Hedge

Goldman Implicated In Heinz Insider Trading Probe