Gold and Switzerland – the perfect combination
Gold and Switzerland – a summary
Assets can be stored anywhere in the world, and your own country won’t always be the optimal location. If you wish to retain control of your capital, you should store it where ownership really means ownership. As an alpine state with an active democracy and a long-established precious metal trade, Switzerland’s attractive options make it an ideal location for storing gold.
Both private and institutional investors prefer to place their tangible assets in competent hands. So what could be more obvious than storing precious metals in their natural habitat? Swiss gold is known and respected around the world. Four of the world’s six largest refineries are located in a country where gold mining itself plays a secondary role. The state maintains its premiere position alongside China, India and Great Britain as the world’s largest gold importer with trade consistently in the four-digit-ton range.
This gold is not only imported, but also exported in much the same order of magnitude to every country in the world. And to facilitate this, the raw gold is refined in accordance with the demands and specifications of the many different markets. Though the vast majority is processed into gold bars and coins, Swiss gold refineries also produce intermediate products – often described as semi-finished products – for the jewellery and watchmaking industries. Thus, more than 80 percent of gold imports are re-exported after the refining process. According to customs data, these Swiss gold exports were worth around 80 billion Swiss francs in 2021. Such figures demonstrate that more than two thirds of global gold is refined in Switzerland.
Switzerland is closely linked to the processing and trading of gold and also plays a central role in international markets. And with the city of Zurich, capital of the Swiss canton with the same name, the Alpine region boasts one of the world’s leading financial centres. All kinds of products, from securities to commodity derivatives, are traded on the Swiss stock exchange which is the third largest in Europe. Switzerland is governed and acts entirely independently, and also operates its own currency, the Swiss franc. It does not belong to the European Union (EU), nor is it a member state of the European Economic Area (EEA). All business relations with other countries are regulated by bilateral agreements.
The Swiss gold industry then and now
So why, in terms of the gold industry, is Switzerland so important internationally? The answer is down to several factors: On the one hand, the Swiss Confederation offers a level of security that is almost unique in today’s world, while an efficient logistics system and financial market independence are further criteria of critical importance to the precious metals sector.
Switzerland has a long tradition rooted in the early mining of gold from mines and watercourses, as well as its gold processing industry developed in more modern times. Around the middle of the 20th century, the country became an international trading centre for precious metals, especially for the trading of gold. Switzerland’s refineries initially supplied the nation’s banks, but the term “Made in Switzerland” quickly became synonymous with a quality and reputation which spread well beyond national borders. In accordance with global standards, gold bars are still cast with a fineness of up to 999.9 thousandths of gold.
The exact quality of fineness appears on every gold product made by Swiss gold refineries. This in turn ensures the country’s leading processors are always included on the London Bullion Market Association’s (LBMA) Good Delivery List. This institution, the largest over-the-counter trading place in the world for physical gold, is responsible for defining the standards applicable to gold bars. Only bars that meet such standards (as regards size, weight, purity, etc.) are considered eligible for trading. Manufacturers only qualify for the coveted LBMA certification after completing a rigorous and intensive test procedure.
Switzerland’s best known refinery is Argor SA from Mendrisio in Ticino, a company originally founded in 1952. Jointly funded by the Swiss UBS Bank and the German company Heraeus, this collaboration eventually became the modern-day Argor-Heraeus. Other well-known precious metal refineries include PAMP and Valcambi, both of which are also located in the canton of Ticino.
This reputation for quality does not just apply to gold coins and bars, semi-finished products are also manufactured with great precision. Such items include coins, medals and, above all, raw gold goods and preliminary products destined for the jewellery and watchmaking industries, such as cases, bracelets and watch chains. Major refineries in western Switzerland, such as Metalor or Cendres + Métaux, are numbered among the principal suppliers. During the 1970s and 1980s, Italy was the world’s largest producer of jewellery and watchmaking products, with Italian goldsmiths sourcing their precious metal direct from suppliers in neighbouring Ticino.
The advent of the global financial crisis in 2008 once again increased the demand for gold bars, pushing semi-finished products into the background. The price of a troy ounce (31,103 grams) of gold in Swiss francs has more than doubled since then. In difficult times, investors often turn to precious metals to protect their assets and thus minimise risk, with physical gold in particular playing a central role in asset protection. And the Swiss gold trade is well-placed to meet this kind of demand.
Living democracy protects assets
Unlike banking practice in the EU, bank confidentiality remains very important in Switzerland. This concept applies not only to the interests of our own Swiss citizens, but also to our relationships with clients and customers from abroad. This is how direct democracy operates: the people decide on changes in the law and thus directly influence the country’s politics. Among other things, this creates a climate in which the protection of personal property has absolute priority. In Switzerland, for example, there are no “safe deposit box registers” of the kind which already exist in EU countries. This official formality arises indirectly whenever banks store a summary of their customer data – which can then be accessed by government agencies if they should suspect any violation of the Anti-Money Laundering Act.
Switzerland determines its own guidelines for curbing money laundering which are then incorporated in national law. This is how a living, direct democracy ensures the protection of assets remains the highest priority. Investors know and rely upon the fact that assets and valuables can be stored in Switzerland with no reporting requirements. And thanks to the country’s exceptional economic and political stability and comparatively low national debt, there is a negligible risk of any emergency expropriation. You can find out more about this topic in our article about storing gold outside the EU.
Secure gold storage in Switzerland
Switzerland is a safe country for storing precious metals, especially investment gold, and there are several good reasons for this. This democratic Confederation is located in the heart of Europe in an excellent geographic location. The Confoederatio Helvetica (CH) is traversed by more than 3,350 high Alpine peaks which thus create a series of natural barriers. This topography includes the Matterhorn itself which rises to 4,478 metres and is the highest point in the Swiss Alps. Symbolizing protection and security, this mountain often appears as a popular symbol representing the Swiss Confederation.
Switzerland’s central location makes the country an essential connecting transport link between Northern and Southern Europe. It focuses on the import and export of goods and services of all kinds, and places Switzerland in a leading position among the world’s most important exporting countries. Naturally, Switzerland is a member of key world trading institutions such as the World Trade Organization (WTO) and the European Free Trade Association (EFTA). And thanks to its consistent market access policy, the Swiss state is both an economically important market and a successful trading centre.
Thanks to its efficient infrastructure, Switzerland has developed a very modern transport system. This includes a comprehensive network of motorways with an important north-south connection through the Gotthard Pass. The Swiss rail network is equally well developed. In addition, the state has three major airports, with Zurich International Airport being one of Europe’s most important transport hubs with flight links to more than 60 countries.
This means Switzerland can not only be reached very quickly from the neighbouring countries of Germany, Austria and Italy, but also from all over Europe and elsewhere in the world. These are all ideal conditions for the safe storage and protection of gold assets.
How can gold be stored in Switzerland?
Specialist storage companies such as OrSuisse Ltd in Altdorf, in the Swiss Canton of Uri, are available for safe and discreet storage of your precious metals in Switzerland. This is a bank-independent storage facility for precious metals, which are exclusively stored under segregated arrangements. This means investors will always be able to retrieve the precise gold bars or coins they originally delivered into storage. This arrangement should not be confused with collective custody, whereby investors are only entitled to the return of items of equivalent value. In addition to gold, white metal holdings – in silver, platinum or palladium, for example – can also be stored. Duty-free warehouses are specifically recommended for this purpose, because they allow the ex-VAT purchase and storage of white precious metals.
Individual custody is secured via individual bar or seal numbers which are entered on special warehouse receipts. These OrSuisse negotiable warehouse receipts have the status of tradeable securities under the Swiss Code of Obligations – which means that physical precious metals instantly become an altogether more fungible commodity. Negotiable warehouse receipts can be easily transferred, so investment products can be sold or mortgaged without the need for any physical movement of goods – and once again free of VAT. This significantly increases the liquidity precious metals can offer, while certification also guarantees on-time delivery.
All products are stored in Switzerland in high-security facilities located outside of metropolitan areas, with the precise locations known only to clients. Investors can choose to bring assets and valuables themselves, or have them delivered via a specialist transport of valuables. No bank account is required to book a fully insured storage space, and storage fees can be paid in cash (in various national currencies), by bank transfer, or otherwise using cryptocurrencies, for example.
Stored precious metals always remain your property. No client data will be passed on to third parties, and there is no obligation to report details of client holdings to government agencies. In addition, as a pure storage provider, OrSuisse does not trade in precious metals, nor does it buy or sell warehouse receipts. Clients who have not already acquired investment products can buy bars or coins from OrSuisse’s authorised retailers and have the goods delivered direct to the depository.
The import of gold into Switzerland
European investors who wish to transfer their investment products to Switzerland and store them there are obliged to pay an import tax. This applies not only to white metals, but also to gold investments, whose purchase is otherwise exempt from VAT.
However, Swiss customs authorities also provide for exceptions. Gold bars or coins manufactured by a certified refiner, are exempt from VAT when imported into Switzerland. To achieve this status, the respective manufacturer must be included on the LBMA Good Delivery List and the investment products to be imported must bear a corresponding label clearly showing this designation. You can read more about this extensive topic in our article about importing gold into Switzerland.
Switzerland comfortably leads the Human Freedom Index
How is freedom defined in any country? This is the task addressed by the Human Freedom Index, an annual calibration determined annually by an American think tank. Switzerland has maintained top position in this unique ranking list for several years, followed by New Zealand, Estonia, Denmark and Ireland in descending order. Meanwhile, the USA, Germany and some other prominent European jurisdictions are placed outside the top ten, with Syria occupying the lowest position of all. The Human Freedom Index highlights the status of human freedom as measured across all the world’s populations. The index evaluates the personal, social and economic freedoms of each individual nation. Human freedom is defined as the social component which focuses on the dignity of the individual and the abandonment of coercion. The outcomes of this assessment highlight and clarify the close correlation between human freedom and democracy.
The Human Freedom Index (HFI) is an independent annual report published by Canada’s Fraser Institute in cooperation with the American Cato Institute. The analysis of each country employs 83 different criteria to determine personal and economic freedoms. This evaluation includes areas such as: the rule of law, monetary stability, security and safety, the right of assembly, freedom of movement and expression, size of government and the legal system, as well as property rights and freedom of trade. The Freedom Index gathers data from 165 countries, making this a major survey representing around 98% of the world’s population.
HFI findings indicate that personal freedom in the world has been increasingly restricted over recent years. Significant reasons for this include the loss of freedom caused by the coronavirus pandemic in 2020, plus the Ukraine war in 2022 and the resultant global economic crisis. Switzerland was also affected by numerous restrictions during the same period, with its own index rating falling below the 9 mark for the first time. Nonetheless, thanks to its record on human compassion, this sovereign state has continuously topped the freedom index year after year since 2019. Thus, Switzerland is considered to be the freest country in the world.
A selection of countries extracted from the 2022 Human Freedom Index:
Ratings: The HFI scale employs values from 0 to 10, with 0 representing very unfree and 10 indicating very free.
|Country||Personal freedom||Economic freedom||Human freedom|
Source: 2022 Human Freedom Index, Fraser Institute
Gold and Switzerland – a summary
- Switzerland is one of the world’s largest importers and exporters of gold. The largest and most important refineries are located here, smelting and refining around two-thirds of the global demand.
- The precious metal is processed into bars and coins as well as high-quality semi-finished products for the jewellery and watchmaking industries.
- Gold is in particularly high demand in times of crisis when it is typically used to secure assets and diversify an investment portfolio.
- Among other things, Switzerland’s direct democracy serves to protect the assets and property of its citizens and foreign clients.
- An important EU-independent financial market, high-level security and an efficient infrastructure make Switzerland the ideal location for gold storage.
- Gold and white precious metals can be stored safely and discreetly with OrSuisse in Switzerland. Individual custody is guaranteed via fully tradeable negotiable warehouse receipts, which are recognised as securities.
- For several years in a row, Switzerland has held top place in the independent Human Freedom Index, which ranks world nations according to their perceived human freedom.