Twenty-five years ago, the Swiss National Bank (SNB) began to sell parts of its gold reserves. Between 2000 and 2005, the bank sold around one ton of gold daily, generating a total revenue of 21.1 billion francs. In hindsight, this decision appears costly, as the 1300 tons of gold sold would be worth around 112 billion francs today.
Historically, gold was seen as a symbol of stability and trust in the Swiss financial hub. The SNB held an exceptional 2590 tons of gold per capita, but with the abolition of the gold standard and the shift to flexible currency systems in the 1970s, the strategic value of gold for central banks decreased. Additionally, the gold price fell steadily in the 1980s and 1990s, sparking discussions about the need for high reserves.
The sale of gold was also influenced by international pressure. The discussions about Switzerland’s role in World War II and the Bergier Commission’s investigation led to criticism from the US. In this context, the idea of a solidarity foundation, to be financed by the gold sale’s revenue, was born. To enable the sale, the Swiss Constitution was revised – an aspect that received little attention in the voting campaign. The proposal was accepted and the way for the sale was cleared.
The distribution of the revenue led to intense political debates. The Swiss People’s Party and trade unions demanded that the entire amount be added to the old-age insurance, while the parliament proposed a compromise: one-third for the federal government, one-third for the cantons and one-third for the solidarity foundation. The latter, however, failed in the 2002 referendum and the money was ultimately distributed between the federal government and the cantons, with the cantons receiving varying amounts based on their financial strength.
The rumor that Switzerland was pressured by the US to sell its gold persisted, particularly the theory that the Swiss gold in Fort Knox did not exist at the time of the sale. Swiss banker Ferdinand Lips argued in his book “Gold Wars” that the US deliberately pushed countries with high gold reserves to sell, to artificially keep the gold price low and stabilize the dollar. Notably, the SNB no longer stored its gold in the US after the sale.
Even after the large sale of 2005, the SNB sold an additional 250 tons of gold in 2007, without a political debate. Between 2000 and 2010, the bank sold around 1550 tons of gold for 28 billion francs, a value that would be worth 133 billion francs today.
In retrospect, the sale appears as one of the most costly economic missteps in Switzerland. The idea of investing the money in a state fund, which did not gain a majority, would have resulted in a much lower return than the appreciation of the gold’s value.
Today, the SNB still holds 1040 tons of gold, with 70% stored in Switzerland, 20% in England and 10% in Canada. A new sale is not currently being discussed. However, a new debate is causing unease: around 40 billion francs from the old-age insurance fund are deposited with a US bank and voices are growing louder, calling for a return to Switzerland.