Thursday, November 6, 2014

VIDEO Peter Schiff Statement to Swiss Voters on Gold Referendum

In the video statement below, Peter Schiff makes a direct appeal to Swiss voters to pass the Save Our Swiss Gold initiative on November 30th. The constitutional referendum would require the Swiss National Bank to repatriate its foreign gold holdings and maintain 20% of its foreign reserves balance in gold. If passed, the franc would effectively be the only developed market currency to opt out of the ongoing “currency wars,” and could therefore become a destination for a deluge of foreign capital.

Here's  the full transcript:

Hi, my name is Peter Schiff and I am the CEO of Euro Pacific Capital, a US-based broker-dealer and investment advisor. I made a name for myself in the United States by being one of the only investment professionals to have loudly and repeatedly warned about the dangers of the housing bubble and the financial crisis that would ensue when it burst. Unfortunately, the problems that I saw in the US economy, contrary to the current conventional wisdom, were only exacerbated by the monetary policies of the Federal Reserve. As a result, I think the United States is staring at an economic crisis in the very near future that will be much worse than what was experienced in 2008.
In preparation for this crisis, and to help protect my clients and preserve their purchasing power, I have been looking around the world for countries in which I can invest my clients’ money. For years, one of the countries I have trusted to deposit and invest monies entrusted to me by my clients has been the nation of Switzerland. One of the reasons that I like Switzerland was because they had a tradition of sound money. The franc was a solid currency, and a currency that I could trust to retain its value in the future.

Unfortunately, like bank secrecy, a sound Swiss franc is a tradition that the Swiss are in the process of abandoning. Originally, when the idea of the euro – the common European currency – was conceived, Switzerland had the good sense to stay out. The Swiss didn’t want to turn in their Swiss francs for a yet unknown, untried brand-new currency. The creators of the euro hoped that what it was going to be was the new deutschemark. Well, instead of the new deutschemark, it’s now the Italian lira, or the Spanish peseta, or the Greek drachma. It is nothing like the creators had envisioned.
The Swiss were right to have had no part of the euro. Unfortunately, Swiss politicians and Swiss bankers have made a grave mistake recently. They have decided to adopt the euro currency de facto. By basically pegging the Swiss franc to the euro, they have turned the Swiss franc into the euro. By turning it into the euro, I mean the Italian lira, or the Greek drachma. That is now the currency of Switzerland.

In 1999, Switzerland was really the last industrial nation to abandon the gold standard. A standard that served Switzerland and many other countries well for centuries. In 1999, when the Swiss went off the gold standard, they had about 2,600 tons of gold in reserve. That represented about 43% of the total reserves held by the Swiss National Bank. By 2008, reserves had dwindled to just 18% of reserves. Today, as of October, gold reserves are now just 7.6% of total reserves. The raw tonnage of Swiss gold has dwindled all the way down to 1,040 tons.

It has really gone into a whole new speed in the last six years, because since then, the size of the Swiss National Bank’s balance sheet has ballooned fivefold. The Swiss National Bank is now sitting on a whopping 462 billion francs worth of foreign exchange, mostly euros. If you want to break it down per capita, that’s 57,750 francs for every man, woman, and child living in Switzerland. About 80% of the total reserves – the 462 billion – was accumulated in just the last six years. On a per capita basis, that’s about 50,000 Swiss francs per year.

Think about that. If you’re a typical Swiss citizen, and you’re living in a family of four. You’ve got a husband or wife, and maybe you’ve got two kids – that’s 250,000 Swiss francs worth of purchasing power that was literally stolen from you by the Swiss National Bank and given to the people in other countries who made the mistake of adopting the euro. The point is that it’s not that they took your francs away from you. They took the purchasing power away from your francs. Because if the Swiss government hadn’t debased the value of the Swiss franc to prop up the value of the euro, prices in Switzerland would have gone down. The average Swiss would be much richer today, because their francs would buy a lot more.

Now, Swiss politicians and Swiss bankers have said, “No, No, we can’t have a strong franc. We can’t have deflation, because that’s going to be terrible, because it’s going to hurt our exports.” Well, the economists who are trying to convince you that weakness is strength and strength is weakness don’t understand that exporting is not an ends in and of itself. Exporting is a means to an end. That end is importing. The only reason you export is to import. There are a lot of things the Swiss people want that they don’t make. How do they pay for those things? They make other things that other people want, and then they trade.

The beauty of a strong currency is that the stronger the franc, the less the Swiss have to export to pay for their imports. In other words, you don’t have to work as hard to enjoy greater consumption. A strong currency increases your standard of living. The Swiss standard of living would be much higher today if it wasn’t for the reckless actions of Swiss politicians and Swiss bankers who have tethered the Swiss franc to the euro. Now the Swiss franc is sinking along with the euro. What will save Switzerland is a sound franc, and the Swiss have an opportunity.

I’m very jealous as an American, because we don’t have this opportunity in America. The people of Switzerland actually have the opportunity this November. On November 30th, you can vote to put an end to the madness. You can vote to restrain the bankers from ruining your currency and destroying your economy. Unfortunately, we can’t do that with the dollar. The Federal Reserve is on a path and it will not veer from it. We’re headed for a monetary crisis in the United States, but the Swiss can still save themselves. They can enforce the discipline on their bankers.

Now, I know in Switzerland you have all kinds of protests coming from the Swiss National Bank or the government – “You can’t do this. You can’t require that we have 20% gold backing.” Well, prior to the removal of gold backing, think about the Swiss economy prior to 1999. Was there a problem having a gold standard? No. Why do you think the Swiss economy did so well? Why do you think Switzerland prospered more than countries like Italy or Spain or France or Greece? It’s because the Swiss politicians were disciplined by a gold standard. So you had sound money. You had limited government. You had real economic freedom, and you made progress.

Other countries were undermined by politicians making promises that they kept with a printing press. And a promise that you keep with a printing press is a promise that you renege on, because printing press money doesn’t buy what real money buys. Real money derives its value from economic growth, from production. When you just print money, all you’re doing is debasing its value and creating inflation. You have central bankers around the world that are trying to convince the public that inflation is desirable, that inflation is a necessary ingredient of economic growth. It is not.

Economies throughout history have prospered from increased production and the falling prices that result. All of this is consistent with a gold standard. An increasing standard of living and sound money, through a gold standard, go hand in hand. But what the politicians and bankers are doing now is undermining our standard of living for their own good.

The Swiss went to the polls not too long ago and were smart enough to vote down one of the dumbest propositions, which was to impose on workers in Switzerland the highest minimum wage in the world. The good people of Switzerland had the intelligence to understand that if you increase the cost of unskilled labor, you will decrease the demand for unskilled labor and create widespread unemployment. You will take away jobs from the people who need them the most. You will take away opportunities to learn on the job, to develop the greater skills that are necessary to earning higher incomes in the future. Well, you voted down that initiative. Hopefully, Switzerland will be smart enough to vote for the initiative requiring a 20% gold backing.

Again, the politicians are screaming, “If you do this, you’re going to handcuff us. You’re going to tie our hands behind our backs, and we’re not going to be able to interfere and manipulate in the foreign exchange market.” That is precisely why you want to do it. You need to tie the hands of the bankers, because the actions that they have taken thus far have done nothing but harmed the Swiss economy, transferred the purchasing power that rightly belongs to the Swiss and distributed it throughout the eurozone. This is going to continue, and you are going to follow the euro down this path of destruction.

The best thing that Switzerland can do is say, “No more.” Because if the Swiss National Bank is forced to back up its reserves with gold, it’s not going to be an unlimited printing press. They’re not going to be able to continue printing Swiss francs and buying euros, because they’ll have to buy the gold to do it. You can put an end to the madness. The bankers and the politicians aren’t going to do it unless they are forced to do it by the Swiss people.

Once again, I envy your choice and I hope you make the right one. I hope that the rest of the world is listening to what you do. Because hopefully this will be the first shot in what could be a war against central bankers worldwide. If the Swiss can do it, other people can do it too. The global economy prospered under a gold standard. All of the instabilities, all of the economic unbalances, all of the bubbles and the booms and busts are a direct consequence of these centrally planned, fiat monetary systems that are blowing up all around the world. The people of Switzerland can finally put it to an end and save the Swiss economy before it’s too late.

Don’t believe all that political propaganda about the dangers of deflation. “We can’t have a franc that’s too strong,” they’ll say, “Because we’ll have deflation.” By deflation, they mean that consumer prices will go down. There is absolutely nothing wrong with consumer prices going down. Who doesn’t want lower prices? Everybody wants the price of the things that they want and need to go down. That’s what makes living standards gain. A rising standard of living goes hand in hand with a falling cost of living. You’ll hear the bankers or the politicians or the economists say, “When the prices go down, people will stop shopping.” No they won’t. They’ll shop even more. As prices go down, you’re buying more. It’s basic supply and demand. The lower the price, the more you can buy. The less things cost, the more you can afford, the higher your standard of living. It’s rising prices that retard living standards. As prices go up, that’s when you spend less, because things cost more, so you have less money. You have lower purchasing power.

What inflation does is rob you of your purchasing power. That’s what you get with a weak currency. That’s what you get by pegging the franc to the euro. A strong currency gets you falling prices and a rising standard of living. That’s what you get by going back to a gold standard and sticking with the Swiss franc and not adopting the new euro, which is in effect a repackaged version of the Italian lira or the Spanish peseta or the French franc. That’s not what you want. It’s not the deutschemark. The euro is not the deutschemark, and the deutschemark was never the Swiss franc. The Swiss franc was the strongest currency in continental Europe, and Switzerland prospered as a result. So if you want your prosperity back, if you want to preserve your country, then preserve your franc.

Thank you for listening to my message here. I hope that it does not fall on deaf ears, like my warnings about the 2008 financial crisis fell on the deaf ears of so many of my colleagues and so many people around the world. Had they listened to me back then, they would have been better prepared not only for the crisis that passed, but for the greater crisis that’s coming. I hope that the people of Switzerland will take heed of what I’m saying and understand that I speak from the heart. I wish Switzerland the best.

Thank you.

Peter Schiff  is Chairman of gold bullion dealer SchiffGold and CEO of stock brokerage firm Euro Pacific CapitalHe is the best-selling author of The Real Crash: America's Coming Bankruptcy - How to Save Yourself and Your Country.


  1. There's no other way to put it. Peter Totally fucking NAILED it!

  2. The Scottish had their chance at recession and folded like a cheap suit. Let's hope there is one country out there with a pair. Come on, Switzerland. Show us the way.

  3. Looking at the breakdown of the vote in the Scottish referendum it appears the older voters didnt want the upheaval to threaten their pensions and welfare. In doing so they doomed the minority of young people, who generally voted for hope and secession, to remain wage and debt slaves. Small is beautiful and this is never more true than of the public sector imho.

    Regarding the gold std I think you could take issue with Peter's view that life and economies are all fine and dandy under a gold std, Britain endured a nightmare between world wars thanks to Churchill returning to a gold std without devaluing Sterling first. However politicians and bankers have never been more morally and de facto corrupt than we see now. Also we are once again subject to bread and circuses, continual war, attacks on individual freedoms and constant propaganda telling us that the only way to secure a bright economic future is to achieve a holy grail of 2% inflation, i.e rising prices and destruction of purchasing power as debt would be onerous under a deflationary environment. Yes but who keeps increasing taxes and so creating just such an environment? You know who...the overbearing STATE. Joe Public is forced to endure stagnation and dropping living standards, endless propaganda and fiscal untruths whilst the so called elite live high on the hog.

    As such i agree handcuffing scumbag politicians would be no bad thing. Come on Swiitzerland, your lifestyle used to be the envy of the world...take back control and vote for the gold tie.