“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