From Turdville With Love; An open letter to the good people of Switzerland

I hate to be the bearer of bad news, Switzerland, but what you suspected all along is actually true. Your gold is gone. All of it. Leased and sold away by your central bankers and politicians.

As recently as 1996, the Swiss Franc was considered "good as gold". Why was this the case? Since the early 20th century, the Swiss Franc had offered a reserve backing of gold. This uniquely sound currency had given the country of Switzerland considerable financial power and independence, yet, at the urging of their politicians and central bankers, the Swiss willingly forfeited this enviable position. 

The demise of the Franc and Swiss sovereignty began in 1992 when the Swiss made the fateful decision to join the International Monetary Fund (IMF). The IMF's Articles of Agreement (Article IV, Sec 2b) clearly state that no member country can have a currency linked to gold and, as such, Switzerland immediately set out on a course to de-link the Franc from gold. Just four short years later, the Swiss National Bank (SNB) and the Swiss government had formed a plan to eliminate the Franc's gold backing and, in March of 1997, a revision of the Nationalbank Act was passed and all links of gold to the Franc were removed. Further, since the Swiss constitution mandated sound money, it had to be amended, too. Thus, in a hastily organized vote, a new Swiss constitution was approved in May of 2000. (http://www.efd.admin.ch/dokumentation/medieninformationen/archiv/00382/index.html?lang=en) This served to finally and permanently sever the Franc's gold backing and initiated the Swiss into the world of global fiat currency.

The SNB has spent the 14 years since leasing and re-leasing the country's gold reserves. In 1999, the SNB reported gold reserves of 2,590 metric tonnes. The most current "audit" of SNB reserves showed just 1,040 metric tonnes of gold remaining on the balance sheet and I believe that none of this is actual, physical gold. Instead, what the SNB holds are paper claims and promissory notes. The remaining 1,040 tonnes has been sold and re-sold into the marketplace by greedy bullion banks, intent upon suppressing price through the leverage of paper metal futures contracts and rehypothecation. In other words, the "gold" that the SNB claims to hold/own on behalf of the Swiss people is gone. This makes the Swiss people just another bagholder, certain to be left in line wanting with all of the other holders of unallocated accounts when the fractional reserve bullion banking system inevitably collapses.

Furthermore, I've come to the conclusion that it was this last bit of Swiss gold that was utilized to suppress and manipulate price away from the alltime highs of September 2011. What makes me think this? Let's start with a history lesson...

Again, the Swiss officially forfeited their birthright of national independence and sovereignty when they joined the IMF in 1992. Then, by formally de-linking the Franc from gold in 2000, they accepted full membership into the clique of fiat currencies. Regardless, and perhaps just by tradition, the Swiss Franc was still considered a "safe haven" currency as late as 2011. But that's when things got out of hand.

You recall 2011, don't you? Under the weight of $600B worth of QE2, the U.S. Dollar Index was collapsing. From a high near 90 in mid-2010, it had fallen to near 73 by the spring of 2011. Shortly thereafter, the U.S. fiscal situation began to wobble as "Debt Ceiling" negotiations took place in Washington and the U.S. credit rating was downgraded by Standard & Poor's. The ensuing political rancor drove gold from $1500 to $1900 in eight weeks. Also catching a bid in this "safe haven" trade was the Swiss Franc and, in the summer of 2011, it also rallied over 20%.

"We can't have this!", screamed the Swiss Keynesians. "Something must be done or our export-driven economy will suffer", they warned. So what happened next? The SNB went ALL IN.

In the wee hours of Tuesday, September 6, 2011, the SNB announced a permanent and horrific change to the Swiss currency. Henceforth, the Franc would be linked/pegged to the Euro. No more safe haven bid. No more national sovereignty. Going forward, the Swiss were all in. Their fortunes had been officially tied to the fortunes of the European Union, for better or for worse. At this point, there was no further reason to hold any gold in reserve. Why would the Swiss need it? Their currency was now officially fiat and it's value was permanently pegged to another fiat, the Euro. What purpose would gold serve going forward? As the Keynesians say, it had become "a barbarous relic".

Left as the sole remaining "safe haven", one would have expected a huge rally in gold on 9/6/11, likely moving price up and through $2000/ounce from the weekend close near $1920. Instead, with the same counter-intuitive move to which we've all grown accustomed in the time since, gold was raided and price was smashed. Here are some flashback c&ps for you. First two charts from 9/6/11 and 9/7/11 showing the unusual price action:

And, as you might imagine, I was actively chronicling these events on this site. Here's a sample from Wednesday, Sept 7:

"I think it's quite clear now why gold responded yesterday in the opposite direction from what you would have expected. With central banks actively managing a debasement of their currencies, we are now seeing them also attempt to actively manage a debasement of gold, too. Be careful. Be very careful.

We all wondered yesterday why gold would plunge on the SNB news. Now we know. In an attempt to mitigate the "negative" effect on francs priced in gold, the SNB sold a massive amount of gold futures at the same time. How do we know this, because it appears that the same thing earlier today.

Yes, that's 7,000 contracts (700,000 ounces) (nearly 22 metric tons!) dumped on the Globex while London and NY are closed! This should also raise your deja vu spidey senses regarding silver in May. The $ drop in silver was greater because the silver market is considerably smaller. However, it's the same strategy. Maximize the downward impact and collateral damage by executing the attack at a time of minimal liquidity. This all wreaks of malicious manipulation. If you are trading, be prepared for anything."

And there you have it. Speculated upon at the time and again here in this post: The SNB is the culprit. It was the remaining SNB gold that was leased and dumped onto the market in late 2011, shoving price back from the record highs and smashing gold for nearly $400 in a little over three weeks. What was left of the Swiss gold was then leased to bullion banks throughout 2012 and the first half of 2013. Physical demand only increased, however, and that remaining Swiss gold has now been delivered to China and points East. Yes, the SNB still shows this leased gold on their balances sheet as an asset. Most every other western Central Bank utilizes the same accounting gimmick. Instead, it should be listed as a liability as the actual, physical underlying is no longer there. It is...gone for good.

Sensing this, a movement has begun in Switzerland to reclaim their sovereignty and birthright. The Swiss People's Party (SVP), which was the only major party voting against the new Constitution back in 2000, began an initiative last year to re-enforce a gold backing to the Franc. After collecting more than the requisite 100,000 signatures, a national referendum on the issue is planned. First, however, a vote was held last week in Swiss parliament. This procedural vote is basically a "recommendation" from Parliament, designed to impact the eventual, national vote. Here's how Bloomberg described it in an article dated May 5: 

SWITZERLAND (BLOOMBERG) - >

Swiss parliamentarians urged rejection of a popular initiative that would curtail the Swiss National Bank’s independence by requiring it to hold a fixed portion of its assets in gold. 

Members of the Swiss parliament’s lower house voted 129 to 20 with 25 abstentions today against the plan, which demands that at least 20 percent of the central bank’s assets be in gold. It would also disallow the sale of any such holdings and require all SNB gold be held in Switzerland.

No date for a national vote has yet been set. The government in November also recommended the initiative be opposed, saying it would impinge upon the SNB’s ability to conduct monetary policy. Parliament and the multi-party government issue recommendations on all national referendums as a matter of procedure.

Of course! How could anyone, in their right mind, be in favor of this:

  1. Demanding that at least 20% of your central bank assets be in gold
  2. Disallowing any sale of said gold
  3. Require repatriation of all foreign-held gold

Don't you silly peasants know what's good for you? By making these demands, you "impinge on your central bank's ability to conduct monetary policy" and "curtail the SNB's independence"!

Then, check this out, also from the same Bloomberg story. Last year, even Thomas Jordan, the head of the SNB, got in on the act:

"SNB President Thomas Jordan took the extraordinary step of commenting on politics last year when he urged rejection of the initiative, saying it would crimp the Zurich-based institution’s independence and force it into “large-scale” purchases to meet the required 20 percent threshold."

Hmmm. "Large-scale purchases", just to get back to the 20% threshold? Well, that's interesting, now isn't it? And what about this repatriation requirement? Why should that be a big deal? The SNB currently provides this list of its gold storage:

  • 70% (728 mts) of the gold is already held in Switzerland
  • 20% (208 mts) is held at The Bank of England
  • and 10% (104 mts) is held at The Bank of Canada

I can't speak for the 104 metric tonnes held in Canada but the Swiss people should be very nervous about the gold the SNB allegedly stores in London (http://www.tfmetalsreport.com/podcast/5678/empty-vaults-london). Also, the SNB has been reticent to discuss where in Switzerland their gold is stored. Could this be because the "gold" is stored with the Bank of International Settlements for easy distribution and leasing? And where is the BIS? It's in Basel, of course. And where is Basel? It's in Switzerland!! How about that??

Look, I'll cut the chase here to save some time. Here's the "open letter":

To the good people of Switzerland:

You have been scammed and sold down the river. Your politicians and bankers, in a pathetic attempt to consolidate power and curry favor with the EU, have given away your independence and your historic sovereignty. You should be angry.

The initiative you have taken and the referendum you have planned are all well and good. I applaud you for taking these steps within the context of Swiss law and tradition. However, you must understand what is truly at stake and if you don't take more powerful and forceful acts soon, the likelihood of you ever regaining your birthright as an independent, sovereign nation is slim.

The next steps you undertake must include these:

  • Demand an immediate and full, independent audit of the SNB gold reserves. This is your gold, not the SNB's, and you should be allowed a full accounting.
  • All Swiss gold that is held domestically must be held in Swiss-owned bank vaults, not at the BIS.
  • Demand an immediate repatriation of all foreign-held gold. Do not accept excuses regarding "logistics". Give the BoE and the BoC no more than 90 days to return your gold.
  • Immediately de-peg the Franc from the Euro and divest yourself of all accumulated Euro holdings. Ignore the Keynesian shills who would have you believe that a strong currency is bad for economic growth. 
  • Use the process of divesting yourself of the Euro to accumulate and rebuild your gold reserves. Then, use these reserves to once again partially back your currency. 

The world is rapidly changing and tomorrow will not be like yesterday. The current global financial system, based upon promises, debt and unlimited fiat currency will one day soon by replaced by a system that returns the world to a sound money platform. The monetary powers of the 21st Century will come to the forefront by virtue of their accumulated reserves of sound money, not by their addiction to easy money. 

You, Switzerland, still have time to act and prepare but you must move quickly. The possibility exists for you to reverse course and demand change but time is short. The end of the great Keynesian experiment is upon us. Reclaim your gold and your sovereignty now or be forever consigned to the trash heap of fiat currency history.

Faithfully submitted with all sincerity,

TF

201 Comments

Turd Ferguson's picture

This is serious business

MODERATOR

Just this once, let's dispense with the whole "first" thing. 

Additionally, if you have acquaintances in Switzerland, please forward this to them. Thanks.

silver66's picture

First

Silver66

​Edit: Sorry Turd, just saw your request

Double edit: great article, I wonder if the Swiss people will go all William Tell on the politicians, but miss with their shots, sounds like the Spaniards are restless

http://news.yahoo.com/spain-ruling-party-politician-shot-dead-174223399.html;_ylt=AwrBEiQXCXFTeQsA1dzQtDMD

4 oz's picture

Yep---

Lately have been thinking that things truly don't get any better....and as we age we grow...we get better at dealing with  things...that don't get better.

Sad.

I do miss the 'wonder'  that each day brought as a child.

Craig---  enjoy the passing of an 8th grader on Thursday.... Time really is an exhale on a winterly Kansas night...there for but a second or two   then you see it no more...

wildstylechef's picture

Ok Turd

because I can living on canned beens waiting for gold to make its move.

As far  as gold reserves the question remains as to who apart from Asia, India and Russia have any actual gold left?

I think the entire paper system will go bankrupt before we find out the real holders of gold. Which at this rate could be the end of the world as we know it.

Spartacus Rex's picture

Gee Turd, Why Favor The Swiss?...

So when are you going to present that challenge to Americans (again?) to finally audit Fort Knox? Just wondering.

ClimbThatHill's picture

Why Favor the Swiss?

Because the Swiss constitution allows the people to call a referendum and override their politicians.

Do you know of any other country where the people can enforce their democratic will so directly?

DeaconBenjamin's picture

Where have all the gold francs gone, long time passing

ausecure-inventory_0018_gold_0.19-or-oz-
ausecure-inventory_0019_gold_0.19-or-oz-

Maestro's picture

Turd

Excellent work Turd.

DeaconBenjamin's picture

The value of the Swiss Franc

Using Kitco, today it takes 1150 Swiss Francs to buy an ounce of gold. An ounce of gold reflects 107 gold Swiss Francs (more than 5 20 franc coins). Thus, it takes 10.75 fiat Swiss Francs to buy a gold Swiss Franc [in weight of gold].

Today it takes 1295 US Dollars to buy an ounce of gold. An ounce of gold reflects $20.67 gold US Dollars. Thus, it takes $62.65 fiat US to purchase a gold US Dollar [in weight of gold].

Today it takes 767 British Pounds to purchase an ounce of gold. An ounce of gold reflects 4.23 Gold British Pounds. Thus, it takes 181.33 fiat British Pounds to purchase a gold British pound [in weight of gold].

All in all, the Swiss Franc has held up pretty well.

DeaconBenjamin's picture

All Swiss gold that is held domestically

Shouldn't that be all governmentally-held Swiss gold held domestically should be held in Swiss-owned bank vaults? Otherwise, it sounds like FDR.

Mr. Fix's picture

This is great!

Now we just need to come up with a list of how many other countries this applies to, because it's the majority of the Western Hemisphere, and the people need to know what their governments  and the bankers who own them have done to them.

I feel a call to action coming on…wink

PS, as per Deacon Benjamin's post, sure they've created the illusion that the Swiss franc and other Fiat currencies have been holding up reasonably well, but that's through sheer manipulation of the gold markets.

If gold were to reflect its true value, (as it soon will), the damage that has been done would be far more apparent.

Regardless, most people are aware of massive inflation, regardless of whether their government  acknowledges it or not.

Turd,

creating a letter writing and “spread the knowledge” campaign such as this one across the globe would make a real difference.

I wonder how many newspapers this could get printed in. Just change the names and the numbers, and it could be global.

Spartacus Rex's picture

Say Again Deacon Benjamin?

The current U.S. Gold to Dollar Fix is $42.22, and has been since the '70's, up from $35 when F*n Derelict Retard (FDR) raised it from the previous $20.67 back in '34

DeaconBenjamin's picture

You go Spartacus

Buy as much as you can at $42.22 an ounce. The rest of us pay spot +.

pforth's picture

Are GDX and SLW leading indicators for SLV?

Based on some discussion recently I was curious about this.  Previous work only done by others only looked at binary situations where a negative GDX and a positive SLV or GLD yielded a negative GLD/SLV the next day.  I decided to go one further... I've built a genetic algorithm matcher program, that "breeds" best performing formula's together using historic data inputs to try and predict future outcomes.  I set it to optimize for the outcome of selling short silver at the close of the day and covering at the open of the next day.  The inputs were the % change in GDX, SLW and SLV.

It found formulas using those inputs that generated an 85% win rate when they were triggered... but they were only triggered once a month or so and the formulas were long and complicated.  In short... the trading opportunities were too sparse to bother with.

If there was a simple relationship, the genetic algorithm breeder would have found it.  I might muck around with it a bit more... perhaps using minute bars, or looking at optimizing a slightly different outcome, but I'm not optimistic.

ClimbThatHill's picture

Switzerland

I used to live in Switzerland... The Swiss prize their national identity and their country's independence - they are a very patriotic people. Point out how the SNB's disingenuous behavior has created a threat to this, and you will have an audience.

Occasnltrvlr's picture

Turd,

Love ya', love the power, candor, and insight.  I appreciate your sharing the insights with us plebes.

But, just curious, what accounts for your Swiss-on?

DeaconBenjamin's picture

Why Did Both Silver and Gold Become Money?

5645077343_d53b8165ca_b.jpg

Gold is the most marketable good, the best money. If gold is the best, then why is silver also money?

It is significant that a second commodity survives and coexists with gold to this day. No one wants to use the second best money, and lose more than the bare minimum. One explanation is that smaller denominations are possible with silver coins than with gold. It is important to have coins for grocery shopping, but there is a more important economic principle than just making small change. Silver is the most marketable good in one important case.

Everyone needs to save while working, to pay for expenses in retirement. Working people must set aside part of their weekly wages. Silver has an advantage over gold, which becomes clear with an example. Suppose Jen makes $1000 a week. She wants to set aside $100. This is a tiny amount of gold, well under 1/10 ounce. It’s an extremely small coin, and it costs more to manufacture and is harder to sell. To buy it, Jen must pay a big premium over the value of the gold in the coin. This cost comes straight out of her savings.

Fortunately, Jen can turn to silver. Her weekly savings will buy about 5 ounces of silver. Compared to a 1/10 ounce gold coin, a 1 ounce silver coin is a typical size. It’s priced closer to the value of the silver it contains. The bottom line is that Jen loses much less of her hard-earned money by using silver.

Wait a minute. Earlier, we saw that gold had the least loss, that gold is the most marketable good. Now silver seems to claim this title. This is not a contradiction. There are two types of marketability. For larger transactions, such as typical commercial trades, gold is superior. Gold imposes the least loss in these trades. In other transactions, far less value is exchanged. The most important is the typical small purchase used for savings. For saving, silver is superior to gold because it offers a smaller loss.

With this background, it’s possible to state the reason why there are two forms of money. Gold is the most marketable good when large values are traded. Silver is the most marketable good in small transactions.

http://www.forbes.com/sites/keithweiner/2014/05/10/why-did-both-silver-and-gold-become-money/

Spartacus Rex's picture

Hey Deacon, I'm just saying...

BTW, When was the last time you actually bought at "Spot"?, Normally I always offer a tad over on U.S. Minted Cons. Do you have any you would like to convert into Clown Bux? I recently "redeemed" beaucoup FRN Clown Bux into $5 Hall of Fame Hall of Fame Half Eagles and as always fully intend on taking the write off provided under Title 26! Gee, for some reason my "Dollars" can neither bend, nor burn. How about yours?                                                            B31_detailed.jpg

Turicum's picture

Switzerland

I am Swiss and live in Switzerland. Your article points out what I already suspected. As for the impact your article will have on Swiss people? Don't expect too much. As far as I can tell the legendary will of Switzerland for independence is as much a recollection as "Franc as good as gold". Most people here, especially when politically active, can't be bothered with that element Gold, nor do they understand the role of a currency. They're unable to link the activities of the SNB (or any other fiat money issuing entity) to their monetery situation or future. The few that can or that point out these things are labelled "right wing"/"old-fashioned" and perceived as trouble makers without benefit.

I guess it's more or less the same all over Western Europe and probably over the pond as well.
 

J Siefert's picture

BIS is not in Switzerland

Hi Turd, I've just joined and yes I'm in Switzerland. Thanks for your article which I will try to pass around.

One small point, the BIS is legally not a part of Switzerland but has extraterritorial status, something like the Vatican in Italy. They don't even have to pay taxes. :(

tyberious's picture

Excellent Craig

At least the Swiss have a opportunity to reclaim their independence, sovereignty and quite possibility their future.

I hope you forward this to Koos, Ned, Alasdair, Turk, Max, Andrew, Mike Maloney and David Morgan!!!! 

This needs to go VIRALLLLLL!!!!!!

Barfly's picture

Powerful Message

Great piece, Turd. Has anyone done a comprehensive study of mine supply vs. world demand since the last time that the banks were audited? I think that the only way to empirically prove that the vaults are all empty would be a study of all the available supply/demand data. I have heard Eric Sprott talk about that before, so I'm pretty sure that the data exists in someone's collection.  It will be interesting to see over the course of some years in the future as the lawsuit is prosecuted against the bullion banks what is revealed in the discovery process. However, I wouldn't hold my breath because these banks have practically unlimited resources to pay lawyers to do what they do best, which is obfuscate and delay.

As far as relying on the political or legal processes go, I honestly think that it's a dead end street. These civilization level institutions are just as rigged as the markets. Didn't the Attorney General of the United States say that certain financial organizations could not be prosecuted due to the inherent systemic risk? What's more I think I recall something in the CFTC statement about the silver manipulation probe that if carried out by certain agents at the behest of government entities that market manipulation was basically legal. 

What we are watching in slow motion is a rotten social structure in the process of collapse. The internal processes are useless to stop it or change the course because they too are just as rotten as the rest of the system. I hate to sound all gloom and doom, here. However, I have heard it said that there is a point where a house becomes so rotten and infested that it simply is better to tear it down and build a new one. I say the economy and the monetary system has to collapse before it can be rebuilt. And the process of collapse will naturally force all the rats and roaches and termites out of the structure and into the light of day so they can be dealt with accordingly.

Benjamin Franklin said that a little revolution, now and then, is a good thing.

SS121's picture

@Turicum Thank You (and question(s) if you don't mind)

After reading Turd's article I was trying to find some Swiss/English news sites to try and get a feel of how they might receive such news should they ever read/hear it.  So thank you for the first-hand account of things from your perspective.

Question:  What is the physical market like where you are?  

Are there many retail outlets where you can walk in with fiat and walk out with Silver and Gold bars?   

Does Switzerland mint a pure Silver Swiss Franc, similar to the ASE or Canadian Maple?

--

And even if you are the only person in Switzerland stacking up Silver and Gold, I hope you don't let the public attitude get you down.  You just got in first on the biggest financial opportunity in history!

J Siefert's picture

Is the BIS in Switzerland?

Actually not, because legally the BIS has extraterritorial status in a similar way to how the Vatican in not part of Italy. The BIS and its employees do not even pay taxes to Switzerland. :(

PS I will pass your great article on to others and post it to at least one other site.

Safety Dan's picture

Turd, this is an outstanding

Turd, this is an outstanding idea. I admire your actions and request for steps to be taken. It's no doubt going to impact the leaders of their government. Let's see the fall-out results. 

What would happen if the other nations, who have requested their gold back from the Fed, citizens received a similar letter?  Maybe this could be a question for Jim Rickards when he does his A2A with you. Turd, you have got my mind churning... Thanks again for a great site, idea, steps motivating thoughts. 

stackaloha's picture

amazing idea!

I wish I knew somebody, anybody in switzerland! I will send a couple pm's to some you tubers and see if someone wants to give it exposure. That's all i can think to do that will help...

awesome idea though Turd, you should run with it imho

wouldn't it be incredible to see any government have to do a gold audit? only problem is you would really need to audit the other countries at the same time or they would just shuffle it around.

ReachWest's picture

Great article Turd. Very well

Great article Turd. Very well laid out and logically presented. I don't have any Swiss acquaintances, but I'm sure some other Turdites do and I'm hopeful that this article gets published in the Swiss media, then goes viral.

metalsbyamile's picture

Fitting for this thread

"You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.’ … George Bernard Shaw

Dagney Taggart's picture

Noble, Turd

But too late probably. At least to be done without blood.

"The few who understand the system will either be so interested from its profits or so dependent on its favors...." -Mayer Amschel Rothschild.

This is the part where lines on maps don't exist because this is a transnational battle of ideologies. Each individual on the planet looks out and sees the world with an individualist or collectivist perspective. The individualists within each country must prevail and set an example for others. If someone does it right and creates a real roadmap demonstrating this can be done, others will quickly follow.

As you say, at least Switzerland still has the political framework to make this relatively bloodless. It's as good a place as any for this to begin. Maybe there are some lessons from Iceland to be thrown in. If this succeeds, it helps too that people are still people, still desire decency when it's a viable option, and still move in herds.

Turicum's picture

@SS21

Physical Market: I take it to mean the PM market? If so, I never had a problem to acquire the amount of Gold/Silver that I wanted. If you want to buy over the counter (in a very literal sense) in excess of CHF 25000, you must document where that money comes from (anti money laundering)

Retail Outlets: From the top oft the head I know of 4 retail shops in 30 min driving distance. I work and live in the vincinity of Zurich, so that might be different in more rural regions. I go to only one, so I don't know about the others. My parents once bought 1 kg of Gold from their Bank. They had to telephonically anounce their wish one or two days prior to the deal. Since they had an account with that bank, no anti money laundering shicanery took place.

Minting: they mint a very limited collection of CHF 20 pieces. The alloy is Ag 83,5/Cu 16,5, and weighs 20 g. I don't buy these as they are not very known. A friend of mine did, however. I *believe* that he mentioned that he only could lay hands on some 100 pieces or so, because they don't want a few people to have the limited issuance. I should check with him before I state something untrue. More details at http://www.swissmint.ch/en-products-collectorscoins.collectors-coins.html

HTH

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