Switzerland is ranked as the freest economy in Europe in the 2014 Index of Economic Freedom, published by the Heritage Foundation in partnership with the Wall Street Journal. In the world rankings, Switzerland is the 4th most economic free country. 

While the United States Federal Reserve argues that inflation is necessary for economic stability, it should be noted that Switzerland has achieved its economic freedom with a current inflation rate of negative 0.7%. That means consumer goods are getting cheaper for the average Swiss citizen every year. Try to wrap your head around that, Janet Yellen. And while you’re at it, explain why the United States isn’t even in the top 10 freest economies in the world. 

Yet in spite of this relative prosperity, the Swiss populace is not satisfied. They want more freedom and are getting ready to demand more economic responsibility from their central bank, the Swiss National Bank (SNB). This fall, the citizens of Switzerland will be voting on a referendum that would dramatically alter the SNB’s gold bullion allocations and holding policy.

If passed, the initiative would dictate three important gold policies for the SNB:

1. 20% of the SNB’s assets would have to be held in physical gold bullion.
2. All Swiss gold would have to be repatriated from foreign countries back into domestic Swiss vaults.
3. The SNB would no longer be allowed to sell any Swiss gold.

This initiative would force the Swiss central bank to make large purchases of the yellow metal to comply with the new guidelines. Not only that, it would make it very difficult for the SNB to manipulate the Swiss economy with destructive monetary policies. It’s a lot harder to lend money to irresponsible politicians when your holdings are in hard assets like gold bullion. Unsurprisingly, the bureaucrats of the Swiss Parliament and SNB are strongly opposed to the initiative.

Back in May, a guest columnist for David Stockman’s blog Contra Corner wrote in detail about the Keynesian opposition to Swiss gold repatriation. He raised some excellent points countering the SNB’s argument that the gold initiative would severely limit its flexibility and damage its credibility.

“There should be no ‘flexible currency’ and no central planning of money. They are at the root of the boom-bust cycle, the very reason for the various crises that have beset Western economies in recent decades. Switzerland would be far better off if no-one had the power to meddle with its money supply. As it is, there has been plenty of meddling already, and quite a bit of suspension of disbelief would be necessary to conclude that there will be no price to pay.”

Dr. Ron Paul brought the referendum back into the limelight just the other week in a new essaypublished at The Ron Paul Institute. As always, Dr. Paul brings common-sense wisdom to the table and urges the Swiss to vote for gold and freedom.

“Just like the US and the EU, Switzerland at the federal level is ruled by a group of elites who are more concerned with their own status, well-being, and international reputation than with the good of the country. The gold referendum, if it is successful, will be a slap in the face to those elites. The Swiss people appreciate the work their forefathers put into building up large gold reserves, a respected currency, and a strong, independent banking system. They do not want to see centuries of struggle squandered by a central bank. The results of the November referendum may be a bellwether, indicating just how strong popular movements can be in establishing central bank accountability and returning gold to a monetary role.”

So while the United States and much of the West seems to have become completely disenchanted with the yellow metal, there is a bright spot over in Europe. Just as Dr. Paul points out, if the Swiss pass their gold referendum, it could play a huge role in reestablishing gold as a foundational monetary asset for modern economies.