Swiss 'gold vote' worries markets

As Switzerland prepares to vote this month on whether to force the country's central bank to increase its gold reserves, economists warn a "Yes" vote could wreak havoc in financial markets.

The "Save Switzerland's gold" initiative, which will be put to a referendum vote on November 30, would oblige the Swiss National Bank to boost its gold reserves to at least 20 per cent of its holdings, nearly three times more than the current level of 7 per cent.

It would also require the bank to stop selling its gold and repatriate reserves held in Canada and Britain to ensure all of its holdings of the precious metal were stored within Switzerland.

"A majority of the Swiss don't even realise that part of 'the people's fortune in gold' is stored abroad and that [the central bank] has already sold off more than half of its gold reserves," warns the committee behind the initiative, made up of members of the populist right-wing Swiss People's Party.

Posters showing a smiling piggy bank painted red with a white cross like the Swiss flag have been plastered across the wealthy Alpine nation urging voters to "protect the people's wealth" by voting "Yes".

But the initiative has been rejected by the government and all the large political parties, even including the Swiss People's Party whose members are divided on the issue.