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

201
Mon, May 12, 2014 - 9:51pm

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. (https://www.efd.admin.ch/dokumentation/medieninformationen/archiv/00382/...) 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 0 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 (https://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

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  201 Comments

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realitybiterinfometron
May 14, 2014 - 12:14pm

Thorium

Does sound like the right idea. The history of nuclear and the use of uranium as fuel is muddy. Much of the use of uranium is because of nuclear weapons. Apparently, thorium doesn't offer such great secondary benefits as extinguishing all humanity! So you have this great infrastructure based on the uranium fuel cycle...I don't think we just throw a switch and go thorium. I think the SMR generations (small modular reactors) would be a great technology to introduce thorium fuel...I have read papers showing how the modification is fairly straight forward....I'm no nuke engineer mind you...

SMR :

https://www.nuscalepower.com/

we shall see. Maybe uranium can be a "gateway nuclear fuel" to thorium...cleaner and cheaper...

ivars
May 14, 2014 - 12:07pm

I respectfully return to thinking it over again:)

Thanks for comments but with so much at stake planning has to be very careful. And execution, despite the ongoing fight for position. The risks if smooth transition fails are too high.

The risks of smooth transition are calculated in: fragmentation instead of globalization, at first into 2 power spheres, then further deglobalization and decooperation with reduction in trade, debt and population, reduction in democracy .

This is all plannable if you keep track on money supply and control it. I think that is what is happening, or we shall consider the people with real power to be idiots. That is a risky assumption, to denigrate ones opponents..it is actually self defeating. It is kind of escaping from reality so that one does not have to deal with it as its nasty and corrupt. Since reality does not go away, the one who denies it departs from it.

So I am assuming that people at power are trying to figure the best outcome for THEM taking into account the realities of todays wars- the big ones. I think the only reasonable outcome from both sides is slow advance by raising power and slow retreat of waning power, in mutual coordination ( never mind there will be spats and jockeying for position along the way) . Overwhelmingly so.

China is the last country on earth interested in loss of USD value, or treasury value. There is no big hurry, and China has power to reign in too fast movers if it wishes to do so - I mean from BRICS camp.

But there is certain time window that can not be missed to assert the new order, so pressure has to be applied on USD constantly. So it hangs in a bit precarious state at level where if needed gold price can be increased again. It is NOT in the USG or Rocks hands. It is in Roths and Chinese hands. By 2017 I think the remnibi transition will be on its way and gold price will start to go down again after 2015-2016 increase as jockeying will go on.

ancientmoneyCPE
May 14, 2014 - 12:06pm

CPE, ivars re: dollar devaluation, derivatives . . .

There seems to be a quickening of events, as the derivatives fiasco festers, BRICs move away from dollar trade sytems, and the Fed pretends to taper while fraudulently using Belgium to hide its bigger-than-ever UST purchases.

Syria, Iran, Crimea, Ukraine, and now we get Nigerian girls supposedly kidnapped. China is making inroads in Nigeria, so I suppose we have to find a way to deliver troops there now.

What is more stirring and galvanizing to red-blooded Americans than a mission to save a couple hundred young, innocent girls?

https://www.veteranstoday.com/2014/05/14/mccain-says-us-should-send-troo...

Of course, kidnapping of young girls has gone on for centuries, in Africa and almost everywhere else in the world, but then there wasn't a need for cover to do desperate things.

rl999
May 14, 2014 - 11:59am

thorium - completely agree

However that doesn't change the fact that thorium is 10 years out (probably more) and the Japanese peoples want the lights on today. The Jap. gov has already stated that they will restart the power plants. Remember that the US had the choice between thorium and uranium way back in the day - but the US chose uranium so they could try to rule the world with nukes.

That doesn't make this a sure bet, however it does increase the odds that the price of uranium goes up sooner rather than later.

Russia may have a small role in this as well since it is highly unlikely they will sending the US any nuke bomb material to turn into fuel given the current political nightmare.

tyberious
May 14, 2014 - 11:57am
infometron
May 14, 2014 - 11:51am

Uranium? Yuck!

So tempting to invest in what appears to be a sure thing... but even though the world is going to hell in a hand basket, I just cannot bring myself to participate. Fukushima is too fresh on my mind. What kind of world will we bequeath after peak oil and the impossibility of maintaining, let alone cleaning up after nuclear plants?

To my way of thinking, while we still have sufficient hydrocarbon resources left, we should be decommissioning and dismantling all of those plants with great haste. Moreover, we should be investing in developing alternatives, like thorium reactors.

https://www.peakprosperity.com/podcast/85431/kirk-sorensen-detailed-exploration-thoriums-potential-energy-source

I don't want my yellow cake and eat it too!

CPE
May 14, 2014 - 11:45am

@ivars

I truly enjoy your independent thinking and posts, I hope you are right.

I just don't think we get to here from there without massive printing, or a default ala Lehman and massive printing. Paper gold goes the way of the Dodo.

In other words, I don't believe these guys are smart enough to muddle through, and if they are smart enough to muddle through then they will induce MASSIVE volatility along the way for profits sake. After all, order out of chaos...

What is fiat currency of any name but zero duration debt of a counterparty? Therein is the issue that should never be lost site of. It cannot absorb the stores of value necessary that gold can. Gold can revalue in a vacuum, but fiat cannot or it destroys interest structures and all other debts.

rl999
May 14, 2014 - 11:42am

uranium speculation

Along those lines this might be the ones you would want to investigate first if considering a uranium speculation.

CCJ - Cameco Corp Com

DNN - Denison Mines Corp Com

FCUUF - Fission Uranium Corp Com

LTBR - Lightbridge Corp Com

MLRKF - First Factor Developments

UEC - Uranium Energy Corp Com

URA - Global X Fds Gblx Uranium New

URPTF - Uranium Participation NOTE- NO LONGER SUGGESTED

URRE - Uranium Res Inc Com Par

URZ - Uranerz Energy Corp Com

USU - Usec Inc Com

UUUU - Energy Fuels Inc Com

UWEFF - U308 Corp

disclaimer: I am a subscriber to his services, and I do own ccj, dnn, uec, urz.

tyberious
May 14, 2014 - 11:40am

Ivars

With all due respect, if you look at the CRB index, other commodities, bond prices, inflation, art prices, expensive home prices, and just about every other metric, when compared with gold, it becomes apparent that Gold was not, is not in a bubble! The run up in gold was due to people seeking a safe haven in the face of increased QE. Now you should, of all people, know that the gold price has been painted to reflect what TBTP want it to look like. Gold without intervention and manipulation would be in the mid 2000's. I will be here during the upcoming snapback and perhaps you will recant that statement.

ivars
May 14, 2014 - 11:37am

@CPE

This change is already ongoing..so far only eruptions have been geopolitical so of course there will be currencies swept under..but i think the planning from USD to USD/remnibi shared world is done with utmost care and smoothly, as that is more important then few wars in periphery. And USD protection during that transition is important also to Chinese, so both parties act in concert, once Rocks have realized its better to share money supply power than to continue life in nuclear dust. Now what will happen after 20 years when remnibi will want to take over all money supply control from USD is a different story. That might end in WWIII easily. But not now.

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