 This weekend we welcome back to the show Claudio Gras, the managing director of Global Gold in Switzerland, to discuss Sunday's historic gold referendum vote from his insider's perspective. This referendum would require the Swiss National Bank to stop selling gold reserves, to keep its gold in Switzerland, and to maintain 20% of its total assets in gold. What might the growing gold repatriation movement mean for the ECB and the Fed? Is hostility against Swiss neutrality, Swiss wealth, and Swiss identity the unspoken motivation behind EU and US attempts to control this country of only 8 million people? And why do financial elites hate the idea of a strong Swiss Frank? Stay tuned. Ladies and gentlemen, welcome back once again to Mises Weekends. And as promised this weekend we're joined once again by our friend in Switzerland Claudio Gras on the eve of Sunday's Swiss gold referendum. Claudio, how are you today? Fine. Thank you very much, Jeff. Glad to speak to you again. Well we spoke to you most recently in October and I'd like to know, has anything fundamentally changed since then and do you have any predictions for Sunday's vote? Well fundamentally changed, you know, and I remember we had the first, I mean we had to call I think on the 10th of October and at that time we basically were saying, you know, that it's, there is no debate taking place, that you know the establishment basically is trying to keep the whole topic as quiet as possible so no TV shows, no debates were planned and what we then experienced basically at the end of October the first poll came out, you know, amongst 14,000 people and for a surprise 44% of all the people were pro gold initiative and only 39 against it and then basically you know everything started. You know then we had the TV debate taking place beginning of November the 7th of November on the Swiss TV which is the biggest political arena show, I mean it's typical politicians fighting in any kind of arena and so we had that one and then basically since then we just have faced, you know, a huge and enormous anti-gold propaganda campaign by all members of the Swiss establishment. I think I haven't seen, I mean okay I'm now 43 years old but I haven't seen or realized that we ever had such a campaign in the past, you know, by all the political parties of course, you know, that you had even, you know, the National Bank, the President was all over the place, that never happened before, you know, then we had the mass medias basically all the print medias completely against it saying, you know, that these gold guys are completely crazy and right-wing and isolationists and old fashioned and of course dumb they don't understand the economy and so I mean that's what happened in the past and now we had the last poll coming out the 20th of November basically, you know, a poll sponsored by the National TV station in cooperation with the companies called GFS and so these polling agencies mainly is, I mean, they only work for the government, you know, they're the burn office and, you know, they have also Syriac office but they basically only have big banks and big insurance companies and as well, you know, NGOs. So I mean, I don't know how neutral they are but they came up, you know, with another poll amongst 1200 people and then basically 38% were only pro-gold and 47 against so the picture has changed and that's where we are today. Claudio, do Swiss citizens living outside of Switzerland get to vote and do non-citizens who are residents of Switzerland get to vote? Yeah, I think both is possible. I mean, you know, Swiss citizens which are outside of Switzerland, they basically can vote at the embassy and so yeah, that's not a problem. And if the referendum passes, the national referendum, do the individual cantons have to pass it as well? That's correct. I mean, you know, because it's basically we're talking about the constitutional change, so there you need more than 50% of all, you know, of the inhabitants of Switzerland, which are allowed to vote. So you need to have a majority there, but you also need a majority amongst the cantons, you know, that you have, let's say, you know, we have 26 cantons. So basically you need at least 14 pro-gold initiative so that it goes through. But you don't need 100% of the cantons to pass it, only a majority. Only majority, yeah. Now you mentioned that the Swiss establishment has come out firmly against this referendum. Are there international elements of that as well? In other words, our central bankers at the ECB and the US Fed, our investment houses like Goldman Sachs, our Western politicians outside of Switzerland speaking up against the referendum? I was really focusing especially on the Swiss media. So, and I mean, there we had enough propaganda because everyone was against the gold initiative. I haven't seen that much, you know, negative argumentations from other international institutions. I mean, we had some international players which are in favor of gold, so they were basically now coming up with some support when it comes to that. But I mean, you know, I think quite small. I mean, really, because, you know, the Swiss people, you know, we had one guy basically asking also for some financial support from abroad. And I think maybe he got it, you know, a few thousand. I mean, I would say 20, 30,000 Swiss francs. And that has now been used, you know, as an argument against the gold initiative saying that, yeah, these gold speculants are basically supporting, you know, the initiative from the back off of the Swiss people, which is absolutely, I mean, nonsense, because really, it hardly has any impact. Well, in the US media, this vote has not received nearly as much attention as the Scottish independence vote did a few months back. But let's talk about the actual requirements of the referendum. The 20% reserve rule does not seem radical when you look at the Swiss National Bank historically. In other words, for many, many decades, the bank held about 40% gold reserves and really even as recently as 2008, it held 20% gold reserves. So I think the notion that this is seen as an attack on Swiss central bankers or a radical measure of reform is wrong. I like your thoughts on that. Yeah. I mean, I also, I don't see any, any problem with the 20%. I mean, the biggest argument basically has been that, that the S&B is not allowed to sell in any, any gold reserves in the future. So, you know, a lot of people who basically don't understand that a gold is money and that also gold is the superior currency, even as per Alan Greenspan, who basically had a discussion. I don't know if you have seen it, 18th, 18th of October at the Council of Foreign Relations. I mean, so, I mean, he was talking about gold. He was talking about why central banks held gold, because he was saying, you know, we, we don't get out of the actual crisis with another crisis, because he was talking about turmoil. And in this regards, he also came up saying that gold is a very good investment. And, and though he also explained why central banks basically held fiscal gold as an insurance against, you know, the, the, especially US dollars and the whole fiat money system. So, you know, a lot of people, they basically just saw, okay, gold as a reserve, you know, and we buy it as an insurance, but in a crisis scenario, if they don't understand, you know, how, how the paper money system came into existence. And if they don't understand that at the end of the day, I mean, you know, it's gold has been money for 3,000 years. And I'm sure because of that, it will stay another few thousand years and all the paper currencies basically have gone. So they don't understand that when we buy fiscal gold, that we basically back up, you know, the Swiss franc and the more gold we have, you know, the stronger the Swiss franc gets, even, you know, if the crisis is going to accelerate in the future. And as, and then it doesn't make sense, you know, that you would sell your physical gold, but at the same time, you basically will back up your, your papers with Frank, you know, by gold. And so it will, in my point, if you have a much higher acceptance as a, as a medium of exchange than also in the future. Well, since 2011, the Swiss franc has effectively been pegged to the euro at a ratio of one 20 to one. Now, did the Swiss national bank adopt this peg unilaterally? Was this done solely by the central bank and not legislatively? Yeah, um, I, to be honest, that's a good question. I think they never, you know, because I mean, the SMB, I mean, the central banks are independent. That's what they are telling us all the time. I mean, okay, I mean, even, okay, Greenspan again, he gave speech in New Orleans at the conference, and then he was also asked how independent, you know, the federal service, and he was like, you know, we are not that much independent. So I mean, that's most likely we also see that, you know, just when we see that the banking system of the politicians, the government, the bureaucrats, mass media, I mean, everyone is supporting the SMB. So I don't know how, you know, how independent they are, when they have basically the whole establishment backing them up. But at the end of the day, I think it has been a natural decision by the SMB to peg to one 20. And most likely they got in advance, you know, some support from from the council. But I'm not sure if there was an official vote taking place, because that would be basically against this kind of picture that the National Bank is always independent. Would a yes vote on Sunday's referendum mean an end to the peg? In other words, at least in the short term, it appears the Swiss National Bank would have to sell euros or buy gold. You know, I mean, at the end of the day, whatever happens on Sunday, I mean, the SMB still is in the lead. So what they basically could do, I mean, they can also print Swiss francs and buy gold instead. And not selling, you know, Euro assets, for example. So I mean, that would lead to the fact that they could also inflate Swiss francs. And then, you know, they might, you know, I believe they can keep the peg up anyway, you know, as far as I know, I mean, you know, I think 10 days ago, 14 days ago, the Swiss franc times very close to this one 20. And I mean, the National Bank is never communicating anything what they're doing. But at least, you know, of their of their actions. But there has been, you know, strong voices and also reliable sources in the market saying that they purchase another 500 million of euros just to keep, you know, to push Swiss franc up. So, you know, in the long run, I mean, even if you don't have you have the balance of 7.8%. I mean, a lot of people still trust Swiss franc. Also, we have, you know, the highest balance sheet of central banks in comparison with, you know, for example, the GDP. I think there we are number one. So there is a lot of of paper money risk in the Swiss franc. But a lot of people still, you know, trust in the Swiss franc. We still have an economy that is, you know, working fine. We still have this political stability, you know, direct democracy. So I think it will be hard anyway, especially now when it's rocky, I mean, drug is trying really everything, you know, to inflate the euro. So I mean, if this and this most likely he will succeed one fine day, if he brings it out, out of the banking system into real, you know, circulation, I think then it will be hard anyway to keep that back, you know, even midterm. Well, Peter Schiff describes the peg as the de facto adoption of the euro by the SNB. And with that comes, of course, an importation in effect of ECB inflation. Claudio, do you think average Swiss understand that the SMB policy of weakening the franc hurts them? First of all, you know, Schiff, I mean, I fully agree with him. Secondly, yeah, yeah, I mean, a lot of a lot of Swiss people realize that, you know, that that the money is losing purchasing power and they even now realize that, you know, it's an ongoing redistribution. So they, you know, most of them and the funny stuff is basically, I mean, you know, also when you look at who is pro gold and who is against gold. So the more you go lower in the in the hierarchy of the society and you're getting closer to the average Swiss worker, I mean, they are pro gold. And the higher you go up into the hierarchy, you know, more towers, you know, the today's elite, the more they are against gold. So I mean, you know, the normal people, they realize that they're not better off. And they also realize that rentals are going more rentals for for mortgages, not mortgages to rent an apartment. These prices are increasing, especially health care stuff and the insurances are increasing tremendously. And they even see that we have, you know, higher food prices, for example. So they, you know, they don't buy at least, you know, the official data from from the SMB, which is saying, you know, we have zero percent inflation. Now we have even, you know, deflation, but, you know, the people which are, which has to spend, you know, the money they basically earn, they just realize they're getting less and less. And and maybe, you know, this maybe the people when it goes up to the hierarchy, which spent more time in this government controlled educational system. I mean, some of them, they really came up with always the same, the asset needs to be independent, you know, the economy is much too complex. You are all stupid. You don't understand how it works. So they just believe what they learned at the government controlled schools. And they, you know, some of them, I mean, I had one conversation with a guy and he told me he was like, you know, we have to support the export industry. And and then he also realized that we get poorer, but he wants to keep up, you know, the export industry. So at the end of the day, even these guys, when they're completely against it, they realize we are, yeah, we are going to be impoverished if we stay on the same track, but they never thought the whole thing through. You know what I mean? They have an answer, basically an indication, but they never think the whole, the whole process on until, you know, to the end. Well, you mentioned the elite propaganda against this referendum, trying to characterize the pro gold people as somehow right wing. But it sounds like what you're saying, it's actually more of a top to bottom thing where elites are against it. And there's a populist undercurrent that's for the referendum. I mean, it's really, you know, the distrust among centralized government is growing. I mean, that's clearly visible. And I think that also the first polls showed that. And when I, when I saw these discussions or pro gold articles or, you know, which which you hardly find because they were really, you know, oppressed in the Swiss media. But I found a lot of people, you know, even working in the banking system, they were telling me listen, don't tell anyone. But I wrote, I voted pro gold, because yeah, it's insane. You cannot fight over indebted with piling even more debt. And they also understand that by printing money, you don't increase your your personal wealth. They understand that it's basically just, you know, depreciating the currency and reducing your purchasing power. Well, on that note, this referendum seems to be about more than just having the SNB hold more gold. It almost sounds like this is fundamentally a referendum about Swiss neutrality, about Swiss identity, about Swiss wealth and about Swiss independence from the rest of Europe. Would you agree that there are, that there's a bigger picture here? At the end of the day, you know, we should not, I mean, even if, of course, I mean, you know, we have literally, we basically took over the euro. So this means, you know, we are just right now, we only feel we are importing inflation and we basically, you know, give a lot of wealth of the Swiss people. We basically give it to the to the eurozone. So we're supporting, you know, the eurozone by buying those debt papers. But, you know, we still have the direct democracy in place. So I mean, that's, I mean, there are some stuff that they want to reduce, you know, how easily it will be to place, to hand in the referendum or initiatives. But, you know, we still have it when it comes to that entity. Yeah, I mean, it's the identity is basically, you know, that people need to Swiss people have to realize once more, you know, what is more important, we want to have more centralized system, or do we go back to the federalistic structures? But I think this debate has been raised. And, you know, we, we really achieved it to have an active conversation among the Swiss people. And we reached out to a lot of Swiss people. And they we opened up their minds, you know, for to question the actual system and to question, you know, is it good that we hand over more liberty and freedom to the centralized government or not? And of course, you know, I mean, independence means, you know, when we are when we have a strong economy, or we have a strong currency, and we are, we you know, we are, we are independent than basically, yeah, the last influence we see, you know, from the eurozone. And up to today, I mean, still, you know, the majority of the Swiss people is against the euro access, or that we would join the European Union. And that hasn't changed at all. So really, right now, it's, it's more about using the debate to explain, you know, the people that there is also a different point of view when it comes to an economical system, and that they should reactivate all these cultural genes, which are still, you know, within the Swiss people, in terms of, you know, that the history we have is 800 years with the federalistic structures and that we don't trust, you know, centralized government and so on. So at the end of the day, nothing, you know, we are not lost, even if it's Switzerland will be still, you know, direct democracy, I think it will be still the last bastion of liberty. And I have seen, you know, that even this SVP, the political party who brought up, you know, the golden initiatives, I mean, they are coming with more initiatives in the future, which mean, for example, Swiss law against international law. And, you know, we have a Gold Frank initiative which is also coming in the future. So I mean, they raised the right topics. And I think now it's clear that we have to keep that discussion open. And because we have to better idea, so we have to better, you know, ways how to look at certain things even at an economy. And it's time, you know, that we really spread, you know, the principles of liberty, as well as what it doesn't mean sound money, and how an economy is working. That's, you know, based on that the market is always stronger than governments. And I think that's what we now have to push forward. Claudio, it certainly is a debate that's taking place outside of Switzerland as well. We see the gold repatriation movement is growing. The Dutch central bank recently announced some repatriation of gold reserves from the US. The French central bank is now facing some political pressure from the right to do the same. And of course we remember that the Bundesbank famously abandoned its effort to repatriate gold from the US earlier this year. So this is a growing phenomenon. I think central banks are going to have a hard time containing this. Claudio, thank you so much for your time and a fascinating interview. We will watch for election results Monday. Ladies and gentlemen, have a great weekend.