Swiss stock exchange introduces gold as a trading currency

swissaustrian

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Some news from September 2011 that I didn't post here before:
Sep 24, 2011 - 18:33
Swiss stock exchange bets on gold
Is gold becoming the new currency? The Swiss stock exchange will soon offer clients the possibility of having post-trade profits paid out in gold.
Introducing the new service, post-trade specialists operating on the Swiss stock exchange Six Securities Services (a subsidiary of Six Group, owner of the Swiss stock exchange) said the new payment versus delivery service using gold was the first of its kind in the world and would operate “exactly like” a new currency.
The Swiss stock exchange and Scoach Switzerland, the stock market for structured products, plan to introduce the listing and trading of products in XAU gold units (equal to one troy ounce of gold) in October.
Clients wishing to take advantage of the new payment versus delivery service will need to have an account denominated in XAU gold with Six Securities Services, as they would have an account in euros, francs or dollars, Six spokesman Alain Bichsel told swissinfo.ch.
And although there is no minimum requirement on the amount a client has in the gold account, the account will need to be stocked well enough to cover the proposed trade – as with any other currency, says the company.
Gold will be valued in dollars and stocked at Six’s gold warehouse facilities in Olten, northern Switzerland. Gold account keeping fees have yet to be determined.
“Gold is like the new currency,” Bichsel explained. “You can trade about 23 currencies on the Swiss stock exchange. It works exactly the same as a new currency.”
Security
Bichsel said the service was a world first and was being introduced because of the current economic climate which was seeing a high demand for “the security of gold”.
The price of gold has jumped from around $1,400 (SFr1,260) an ounce in January to peak at nearly $1,900 in August and is currently trading at around $1,730 an ounce.
Professor of finance at St Gallen University and director of the Swiss Institute of Banking Manuel Ammann said the volumes of gold products that have been traded in recent times had increased significantly.
One reason for that, he said, was that as economic conditions force more central banks, including the Swiss National Bank, to pursue policies of weakening their currencies, trust in traditional currencies is eroding.
“Gold has appreciated a lot and there’s not so much trust in paper currencies,” Ammann told swissinfo.ch. “This means that more and more people start thinking of new means of how their purchasing power can be maintained.”
According to Bichsel the service has been introduced following consultations with stock exchange customers who asked for the possibility of trading with gold. He said the service would be open to anybody with permission to trade on the stock exchange, regardless of the size of the client.
Niche potential
Exactly who those clients will be remains the great unknown. Bichsel says observers will have to wait until the service officially begins to see what happens. He said while the service is here to stay, there are no plans to introduce it on other stock exchanges.
Theoretically it’s open to everybody, so it’s not closed to only big fortunes or big banks,” he said. “The market will show us if it’s needed or if it works.”
Ammann said that although he could see a “potential niche” in the use of gold as a settlement currency, it was difficult to see broader applications of the offer.
“I can see a certain application in terms of gold products or structured products on gold, or funds denominated in gold or things like that where a settlement currency in gold could facilitate in the setting up such products,” Ammann said.
However, he added that while the service had potential, “the interpretation of gold being a new shadow currency or parallel currency is probably going a bit too far”.
Perhaps the Swiss exchange is now a really early mover and has a lot of foresight in that respect, but currently I see no immediate threat that we are all going to be soon thinking in terms of gold when we go shopping!”
http://www.swissinfo.ch/eng/specials/swiss_franc/Swiss_stock_exchange_bets_on_gold.html?cid=31202904
 

pmbug

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Good thing that news didn't get reported here in the USA. It would likely have blown the Bernank's mind.

Tradition!
 

DoChenRollingBearing

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Bravo, Switzerland!

I hope that kind of thinking spreads. Word does seem to be getting out, slowly, but it DOES seem to be getting out:

Gold, bitchez!
 

bushi

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Very, very clever... I wonder if it wasn't in the cards, when they have pegged CHF to Euro (AFAIK, CHF was pegged to gold beforehand)

Direct democracy at works... The more I learn about Switzerland, the more I like it...

Do you know that general public in Switzerland gathers regularly to vote on certain changes in law, that is their process of law-making? And afterwards, it is parliament's work to incorporate the direct wishes of the people into the laws of the country. That is amazing.

regards,
 

swissaustrian

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Very, very clever... I wonder if it wasn't in the cards, when they have pegged CHF to Euro (AFAIK, CHF was pegged to gold beforehand)

Direct democracy at works... The more I learn about Switzerland, the more I like it...

Do you know that general public in Switzerland gathers regularly to vote on certain changes in law, that is their process of law-making? And afterwards, it is parliament's work to incorporate the direct wishes of the people into the laws of the country. That is amazing.

regards,
Look what we're currently trying to get a referendum on :wave: http://www.pmbug.com/forum/f2/switz...les-snb-storage-only-ch-min-20%-reserves-434/
 

DSAbug

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I think the direct democracy idea works for the swiss because they have a very well educated public. In the USA, we'd probably be much worse off right now because such a vast majority of the public are emotional and irrational with their voting. I'm not saying Switzerland doesn't have their share of morons, but we've definitely got more per capita in the USA.
 

swissaustrian

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I think the direct democracy idea works for the swiss because they have a very well educated public. In the USA, we'd probably be much worse off right now because such a vast majority of the public are emotional and irrational with their voting. I'm not saying Switzerland doesn't have their share of morons, but we've definitely got more per capita in the USA.
Voting participation in referendums averages 40%, the media is prohibited from running political ads before the vote. The ballots have to contain pro and con arguments, and the government can be sued for misleading the public about the consequences of a particular referendum. A referendum also has to be constitutional, so there are some restraints on such votes. We have a 700 year tradition of direct democracy, and maybe the citizens are a little bit better educated as you said.

Having said all this: We still had bad votes, e.g.
- to use money raised from gold sales to fund the Swiss SS.
- to ban minarettes from Switzerland (unconstitutional imho).
 
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