On Sunday, the people of Switzerland will go to the voting booth to decide their nation's economic future. The "Swiss gold vote," as it's being called, would require that the nation put its currency back onto a gold standard, which would require the Swiss central bank to buy large amounts of gold from the global market in order to put their currency on a gold-based standard.
The Swiss gold vote will have historic implications whether the citizens of Switzerland vote yes or no this weekend. This referendum is a measure that sets requirements for the Swiss National Bank (SNB) with the following rules, according to Business Insider:
Both BI and the Wall Street Journal agree that if the Swiss gold vote is positive, the franc could see a rise in the value, which could trigger deflationary issues for Switzerland. This would severely affect the nation's economy, which relies heavily on exports that would become too costly against the Euro if the franc's value rose too much. Some are suggesting that the SNB drop interest rates into the negative to counter this.
So how much of the shiny stuff would the Swiss gold vote mean the country would have to buy to get to that 20 percent point? About 1,650 tons of it, according to U.S. News & World Report.
Bloomberg reports that though the current polls are showing that the Swiss gold vote is not going to get a yes this weekend, there is a large enough contingent of undecided voters in the polls that it could swing the other way. Many citizens in Switzerland have been building personal reserves, says CNBC, despite the "6,000 year bubble" warning of Citi economist Willem Buiter. The Citi economics believes that central banks should not hold gold at all.
"No central bank should hold any gold reserves, in our view."
It's also noted by Forbes that the current gold price is likely in expectation of a "no" tally on the Swiss gold vote this weekend.
This weekend will see a historic moment as the Swiss gold vote is cast. Either way, it will have implications that reach globally.