“Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?” was the famous question that Steve Jobs asked PepsiCo’s vice president John Sculley to win him for his company. We ask you the same question to win you for the Swiss Gold Coin Initiative. It is a project with historic potential, fully developed and ready for one or several visionary investors to make it happen.
Let’s get to the point:
Switzerland is in a unique position, thanks to its direct democratic rights, to legalize, via a popular initiative, the introduction of constitutionally protected private gold coins. The constitution shall be amended as follows:
Article 99bis (new)
Swiss Gold Coins
1. The Federal government shall define the rules for the issuance of a set of quickly and easily tradable gold coins with a solid, clearly recognizable gold content starting at 0.1 grams.
2. The issuance of the coins (production, coinage, placing on the market) is provided by Swiss companies. The coins bear a unified symbol of Swiss origin, indicate the gold content in grams and a freely designed identification of the issuer.
3. The issuance, acquisition and trading of the gold coins are tax and duty free.
I spare the distinguished readers of this journal the arguments of why gold is the best known hedge against the dangers in today’s paper money regime.
Less well known are the obstacles in today’s gold market. In Switzerland, for example, the federal government has the monopoly for minting coins which means the private production of gold coins is illegal. The last government made gold coins, the “Vrenelis”, were manufactured in 1949. They cost about 220 Dollars per coin and their buying generally requires professional advice.
Even more serious is that the tax exemption for gold as an investment is regulated in an ordinance and ordinances can be changed relatively easily. As long as the ownership of gold is, according to ProAurorum, limited to 13% of the Swiss population, a sudden tax on gold would leave 87% of the population unaffected and therefore likely unconcerned. At the same time the tax exemption for gold is an essential precondition for gold to serve as an investment hedge.
The Gold Coin Initiative will remove these obstacles and allow the private production of simple and practical gold coins.
The smallest size will be regular metal coins with 0.1 gram gold in their center, available for about 5 Dollars, which will open up a new dimension in accessibility to the gold market. The new coins will be standardized, suited for daily use and readily available, even from ATM’s. With their introduction it may be expected that ownership of gold increases from 13% of the population to 99%. This is decisive because only when the great majority of the population has an interest in it is the taxfree status of gold guaranteed in a democracy!
The initiative not only has advantages but at the same time no disadvantages. The reason ultimately lies in the fact that technically we are just facilitating the already existing gold trade and anchoring the also already existing tax exemption in the constitution. There are no costs and no risks to the public and the taxpayer.
To illustrate the potential benefits let’s take a look into the future, let’s say three years after the acceptance of the initiative.
Today, that is, three years after adoption of the initiative, gold coins are as familiar to the Swiss as Euros and Dollars. Small savers diversify their investments with gold as easily as only specialists and big savers used to. Gold coins serve as part of investment plans, as presents and kids once again love to save in piggy banks. Pension fund clients may choose to save up to 10% in physical gold coins, in life insurance contracts up to 20% can be selected.
On the international level large scale investors value the constitutionally protected tax exemption for gold coins. Insurance companies offer life insurance policies with gold coin annuities and their VIP clients can tour the gold storage facilities. Banks plan to issue debit cards, gold bonds and international commercial contracts in gold.
Swiss Gold Coins are produced for the whole world and foreign gold producers are building Swiss subsidiaries. A new high tech industry is developing around the technology to prevent forgery through new alloys, holograms and even microchips for large coins, in cooperation with the jewelry and watch industry.
Marketing departments and artists love to issue coins with innovative designs, tourist regions and hotels use gold coins sold exclusively on site as an additional unique selling point.
The highly visible and popular gold coin souvenirs are appearing all over the world and are causing grass root “bottom up” political pressure in other countries to introduce Gold Coins as well, while the manufacturing and financial industries there are putting on pressure “top down”.
The Swiss experience has shown that Gold coins are used not as a medium of exchange, but as an additional “safe haven” alternative for investors. Gold coins will therefore not be monetary competition for the Central Bank’s independence. In the special Swiss case the National bank was even helped in its fight for a less volatile exchange rate by the gold coins function as a safe haven alternative to the Swiss Franc.
These are only rough sketches of already foreseeable developments while we may expect that reality will far surpass them. Who would have thought, for example, that the opening up of the airwaves for personal communication, the “democratization of the walkie-talkie” so to speak by the mobile telephone would simultaneously lead to SMS to mobile Skype apps, and Twitter? Reality has in that case far surpassed even the imagination of science fiction writers and it is quite possible that the “democratization of Gold” will lead to similarly surprising innovations.
Conclusion: The Swiss Gold Coin Initiative is a unique, politically realistic and potentially far reaching reformation of the monetary system. The next step is the collection of 100 000 signatures in Switzerland. To get started requires about the same number Dollars Considering the dangers in today’s paper money system and in view of the anticipated benefits of the initiative its realization is not only a urgent opportunity, but a moral obligation for whoever can contribute to it.
More information under www.goldfranc.org
President Gold Franc Association
Graphics by Robert Ruggiero
Gold is omnipresent on Earth. It is one of the most precious metals, of vital importance to the economy and jewellery but also essential for science and industry. One of the reasons for its value comes also from the fact of its rarity: gold atoms are present on Earth only in fractions of parts per billion other atoms. Compared to our solar system and the Sun, where its abundance is found in the range of a few parts per trillion atoms, on Earth though rare, gold is found highly enriched.
Where does the gold on Earth come from? Which processes can generate gold and what is its origin? Why is it that rare, and can we produce gold in the laboratory? Obviously nature produced gold. However, its creation is not a simple process. Although we now know a lot about element formations, we do not know the details and even the main sites of gold creation. In the following, a physicist’s view of the origin of gold is presented.
This question, where does gold originate, actually relates to ‘What processes lead to the elemental abundances we observe on Earth?’ which is listed as one of the most important fundamental questions in physics: ‘How were all the heavy elements from iron to uranium made?’ (US National Research Council – The 11 Greatest Unanswered Questions of Physics). Thus, it is a very topical question in astrophysics and nuclear physics. In order to improve our understanding, researchers combine astronomical observations, experimental studies in the laboratory and theoretical models to elucidate Nature’s secrets of how all the atoms were created that we are made of.
Gold belongs to the heaviest atoms. Its mass is 197 times larger than hydrogen, about three and a half times heavier than an iron atom and only a few percent lighter than the heaviest stable elements lead and bismuth. Since the 1950s, we have a basic understanding of the principles of element formation. We know that many different processes are required to match the elemental abundance pattern we observe on Earth. We also now know that the reason for the existence of rare and more abundant nuclides is primarily a function of nuclear forces and nuclear properties that shape the relative abundances. To summarise, gold and the other heavier elements are produced in nature by nuclear reactions.
Physicists now have strong evidence that nucleosynthesis of all elements started very shortly after our expanding Universe was created in the so-called Big Bang, about 13.7 billion years ago. Within the first few minutes mainly hydrogen and helium was produced, but only minute traces of other (light) elements. Then the temperatures and particle densities became too low for continued nuclear reactions.
Interestingly, nature’s very specific set of a few stable light nuclides, when combined lead to very short-lived reaction products. The rapid decay of these short-lived nuclides blocked the formation of the heavier elements, like carbon, oxygen, iron, gold or lead, in these first minutes. It required a few 100 million years until the next nucleosynthesis process came into play: stars were born, leading to a fundamental transformation of the early Universe that also started the ongoing enrichment with heavy chemical elements: their dense and hot cores eventually allowed the ignition of nuclear fusion. This stellar fusion process, at core temperatures between some ten and a few hundred million degrees, turned lighter elements to heavier ones. Huge amounts of energy are released, which powers the stars to shine.
These stellar cauldrons synthesise almost exclusively all heavier elements, from carbon and oxygen, the main building-blocks of life, to iron, gold and uranium in the nuclear burning of lighter elements. In general, all elements except hydrogen, that compose our body, were produced in high-speed collisions in previous star generations.
Our Sun is a very typical small star and is quietly burning only the lightest elements hydrogen and helium over a time period of some 10 billion years. The Sun does not add new nuclides to the heavy element abundance in our solar system. It is the massive stars, most effectively those eight times heavier or more than our Sun, that run through a series of stages in stellar evolution and eventually generates the heavier elements that we observe on Earth today. Energy generation in stars works for fusion of lighter elements up to iron, the most stable element in nature, and therewith a small fraction of mass is transformed into energy according to Einstein. Fusion of heavier elements than iron, as is the case for gold, however, does no liberate energy. Further, massive stars burn much faster than sun-like stars, because their energy consumption is so much higher.
In the late phases of stellar evolution – and as a non-energy generating by-product – stars produce also elements heavier than iron over time periods of millions of years in a slow process involving free neutrons. These neutrons are sequentially captured by existing nuclides. By adding more and more neutrons as building blocks to lighter elements, in combination with radioactive transformations, heavier and heavier elements are produced, and eventually also gold, lead and bismuth. This process takes place during a quiet burning phase at a late stage of a stars life and is responsible for the production of about half of all nuclides heavier than iron.
At least one additional process is required to match the missing second half of the heavy element abundances observed on Earth and in our solar system. The site for this nucleosynthesis process, however, still lies in a mystery. We know such a process lasts only for a few seconds, involving neutrons as well, however, at extremely high densities. This process requires a very short and intense burst of neutrons and it involves the most violent processes known in our universe: most-likely supernova-explosions or the collision of two neutron stars. Actually, as much as 95% of all gold is made in this violent process, only 5% in the slow process mentioned above. The reason is, that in the slow process, destruction of gold (adding a neutron to gold) is favoured compared to its formation probability. Thus gold to a large extent has a very turbulent past!
Supernovae occur when the core of a massive star collapses towards the end of its evolution and huge amounts of energy at high temperatures are released with a shockwave creating a sea of protons and neutrons, the latter the main source for heavy element nucleosynthesis. During this event heavy elements (i.e. gold) are created; an explosion drives the freshly produced elements into the interstellar medium. Supernova-explosions have a brightness of a whole galaxy. If this happened in our Milky Way, it would appear to observers on Earth like a bright new star has formed and would be visible even during daytime in the sky for a few weeks. Researchers are eagerly waiting for the next one in our galaxy being already much overdue. In rare cases, close-by supernovae could leave traces on Earth. Researchers are searching to find minute traces as a fingerprint of such events.
The second candidate for heavy element formation and thus gold creation, are merging neutron stars, even Black Holes. Neutron stars are extremely densely packed objects that are more massive than the Sun, but only about 10 kilometres in radius, and that consist predominantly of neutrons. They are actually the leftovers, the dead cores of stars running out of nuclear fuel and exploded as supernovae. If two such neutron stars orbit around each other, they slowly spiral inwards until they merge. In a massive collision they eject large amounts of material that is made of heavy elements. These events are, however, exceedingly rare. In the whole Milky Way, such an event happens about every 100,000 years.
Supernovae and neutron-star mergers are the two most likely scenarios for how gold and the other heavy elements are synthesized in nature. Which of these is the dominant production site is an ongoing hot question in astrophysics.
But, how does gold find its way from its production sites in stars to eventually arrive on Earth? The heavy nuclides that are created in massive stars or their remnants are ejected during their explosions and expand rapidly into the surrounding interstellar medium. Thus the interstellar medium is continuously fed with heavy elements synthesised in many stellar sites and then expelled via such explosive events. A next generation of stars can form from this mixture of pristine Big Bang material and stellar-processed heavy elements – with a new nucleosynthesis process triggered in this new star. As a consequence material produced in massive stars is recycled many times into next generation stars.
Our solar system is the product of dozens of previous star generations all with their individual nucleosynthesis processes. There is strong evidence, that the collapse and formation of our solar system itself some 4.6 billion years ago was triggered through one or more close-by supernova-explosions. When our solar system and Earth formed, the Universe had already been around for about 9 billion years. Previous stars in conjunction had generated the heavy elements and fixed also the abundance of gold now present in our solar environment.
However, the gold we find and dig today on Earth is likely not the primordial gold when the Earth formed. This primordial ‘terrestrial’ gold is rather concentrated towards the core of the Earth, as it sank at the early time when the Earth was too hot and no solid crust existed. We have now evidence that the gold we find on Earth actually originates from meteorites – built from the same parent material – that bombarded Earth’s surface a few ten to a few hundred million years later after our planet was formed but, by then, already with a cold crust surface.
Thus creation of gold relies on a very violent and rare process. In fact, we are all star stuff (© Carl Sagan) and moreover, all the gold we love, the gold rings on our fingers, the jewellery, the gold whose value we see changing up and down in terms of paper money has experienced much more turbulent times in the past.
Dr. Anton Wallner
Department of Nuclear Physics
Research School of Physics and Engineering
The Australian National University
ACT 0200, AUSTRALIA