Having bounced modestly yesterday, EURCHF is testing new lows post its peg (at 1.2020 vs 1.20 peg) as the reality of the referendum on the "Save Our Swiss Gold" initiative starts to get priced in. The Swiss National Bank has decided to unleash some propaganda, as WSJ reports, Thomas Jordan, president of the Swiss National Bank, warned adoption of the so-called 'Save Our Swiss Gold' initiative would be a "fatal error of judgment." With the vote looming on Nov 30th, Jordan explains that maintaining stable prices would be harder to achieve if the call for gold repatriation and increased reserves is approved. The M.A.D. rhetoric has begun as not just stability but jobs are at stake, according to Jordan.

EURCHF continues to drop (Swiss Franc strengthening) towards a test of the 1.20 peg...

And The Swiss National Bank is stepping up the M.A.D. rhetoric... (via WSJ),

The head of Switzerland’s central bank has warned that maintaining stable prices would be harder to achieve if the Alpine country votes to require the bank to keep a minimum amount of gold in its vaults.

The adoption of the so-called “Save Our Swiss Gold” initiative would be a “fatal error of judgment,” Thomas Jordan, president of the Swiss National Bank , told Swiss newspaper 20 Minuten in an interview published Wednesday.

Mr. Jordan said the proposals would damage the SNB’s ability to deal with inflation, while jobs could be endangered.

“Too little gold in the economic crisis was never the problem, the strong franc was the problem,” Mr. Jordan said in the interview. “We had a massive overvaluation which has led to major problems.

“We must be able to dampen this problem, but our ability to do this would be severely restricted,” he said. The initiative would force the SNB to buy gold every time it buys euros, which it has done to curb the rise of the Swiss franc.

So fire and brimstone if the SNB can't just print Francs willy-nilly...

As Grant Williams perviously concluded,

Sometimes I think these people are completely delusional.

So, let me get this straight: gold is a relic which restricts your ability to do such vital things as... oh, I dunno, promise to print unlimited amounts of your currency in order to peg it to another, failing currency and thereby debase it by 9% in 15 minutes? Or it might mean the market doesn’t have complete faith that you might be completely relied upon to do really smart things like that?

Disaster!

Somebody. Please? Make it stop.

The Swiss establishment has been reliant upon the public’s ignorance in these matters, but now they are up against a formidable opponent in Egon von Greyerz. Not only that, but they can clearly see that, as elsewhere around the world, the public is fast becoming disenchanted with the status quo; and that is potentially very dangerous for these people.

What is important to understand here is that if the initiative passes it will be part of the Swiss constitution IMMEDIATELY — not in two years, as many blogs and websites are suggesting. This means that the government and parliament cannot touch it. Only another referendum can change it. This is proper democracy for you.

The closer we get to the vote on November 30, the bigger this story is going to become, and the bigger it becomes, the higher the chance that the yes vote wins.

Should that happen, it will undoubtedly set off alarm bells throughout the gold market, as yet more physical gold will need to be repatriated and another sizeable, price-insensitive buyer will enter the marketplace.