NEW YORK (TheStreet) -- Monday the Swiss parliament urged rejection of a popular initiative that would curtail the Swiss National Bank's independence by requiring it to hold a fixed portion of at least 20% of its assets in gold.
At the same time, the initiative requires that all the SNB gold be held in Switzerland. In November, the government also recommended that the popular initiative be opposed. According to Swiss Finance Minister Eveline Widmer-Schlumpf, the initiative "reduces the credibility of the SNB's policy and limits its ability to act when it's necessary." No date for a national vote has been set yet.
This information contrasts with the announcement by the Ukrainian government to use the first portion of an International Monetary Fund (IMF) loan for augmenting its gold and currency reserves in order to stabilize the financial situation in the country. The National Bank of Ukraine chairman Stepan Kubiv believes that the IMF loan "will send a positive signal to foreign investors and domestic entrepreneurs, improve the investment climate in the country and stabilize the hryvnia."
This is another example of the difference in attitude toward gold between developed and developing countries.
Further escalation of the situation in Ukraine has also prompted gold purchases today. It is not the Ukrainian conflict that is bullish for gold, but rather its larger impact on geopolitics. A new cold war seems to be starting. In this new cold war, we don't just have two actors (USA, Soviet Union) but four (USA, European Union, Russia, China). In this new geopolitical environment, the European Union is not really allied with the U.S. and China is not really allied with Russia as Ian Bremmer, author of Every Nation for Itself, says perfectly in his book. This created a very uncertain geopolitical environment and therefore is positive for gold.