Archived World Gold Council Document

28 October 1997

Swiss Authorities Should End "Damaging Uncertainties"

The World Gold Council calls on the Swiss authorities to end the damaging uncertainty following the untimely release of the report of the expert group on the revision of the Swiss currency law. This report, which inter alia recommends large-scale sales of gold from the Swiss reserves, has resulted in damaging uncertainty to the world's gold market.

The statement of the Swiss Finance Department (EFD) of 24 October, and subsequent press coverage, leaves unclear to what extent the Swiss authorities endorse the proposal of the panel of experts.

The best indications of their views, according to the 24 October statement, are:

• that there should be "a limit to the extent of disposal/transfer" of gold reserves;

• that they "prefer to stay with the original concept which is based on simply making it possible to dispose of gold to a counter-value of CHF7 billions" ($4.75 billion, or about 460 tonnes at $320 per ounce; this was originally intended to finance the establishment of a humanitarian fund); but

• that "the additional gold reserves not needed for monetary policy would remain the property of the National Bank and be managed by them or by third parties authorised by them". The timing and scale of any gold sales for this purpose are left completely open;

The Council welcomes the recognition by the report of the advantages of gold as a reserve asset, especially for a country like Switzerland, a major financial centre. The report states that a relatively high gold reserve "reflects the fact that many depositors view gold as the only asset which keeps its value over the centuries". The positive view of gold has not been reflected in the media coverage of the Swiss report.

The World Gold Council points out that all these proposals are subject to decisions by parliament and popular referendums. It is considered unlikely that the referendum on the proposed Solidarity Fund can take place before 2000 at the earliest.

Press Contacts:
R. Pringle (Switzerland)
D. Ware (London)
G. Milling-Stanley (New York)

Note to Editors
On Friday 24 October an expert group, led jointly by representatives of the Swiss Finance Ministry and Swiss National Bank, produced a report on reform of the country's currency law which, among a number of proposals, makes recommendations on Swiss gold holdings. Over the course of time, it is suggested that 1,400 tonnes of the country's reserves (currently 2,590 tonnes) should be sold off for general state and/or cantonal purposes (the precise use to be decided later).