Precious metals retest lows as Swiss vote on gold sends a false price signal as all Indian import restrictions suddenly end

Swiss voters yesterday resoundingly rejected a referendum to boost the role of gold in central bank reserves and ban exports. The price of gold headed back to $1,150 and silver fell below $15 an ounce. Traders said the rejection was expected and largely priced into the market.
The proposal stipulating the SNB raise the portion of its assets held in gold from eight per cent now was voted down by 77 per cent to 23 per cent. The initiative would have also prohibited the Swiss National Bank from ever selling any of its bullion and required the 30 per cent currently stored in Canada and the UK to be repatriated.
India votes for gold
Meanwhile, the world’s largest consumer of gold, India, has suddenly withdrawn all restrictions on the importing of gold, a major positive for precious metal prices almost entirely missed by most commentators as they focused on the Swiss referendum.
India’s 10 per cent import tax on gold and other restrictions was one of the major reasons for the post-2011 price collapse and this has now gone. Demand for gold will surge with prices at current levels. India is a far more important player in the gold market than Switzerland.
Polls forecast the initiative’s rejection after a strong campaign from the SNB. The referendum’s proponents perhaps overstated their case and made it easy for the ‘no’ campaign to ridicule them.

This post was published at GoldSeek on 1 December 2014.