How well is Switzerland’s gold export market performing?

Switzerland might not be well known for its gold producing capabilities, but the precious metal nevertheless remains an important part of its export market.

Recent years have seen a significant rise in interest in both bullion and coins alike, not only from Switzerland’s European neighbours, but also those from much further afield.

Asian importers come to the fore

Earlier this year, it emerged that Swiss exports had surpassed many of the country’s closest rivals, making the nation a major player in the trade of bullion. Figures show that gold accounts for 20 per cent of products exported by the nation, with Asian countries typically in receipt of the precious metal.

Switzerland’s customs administration reveals that the top five buyers of gold and silver coins and bullion are from Asian nations, including the likes of Hong Kong and Singapore. In many cases, companies are buying the precious metal with a view to using it for luxury watches and other jewellery.

However, it is China that has really come to the fore over recent months, with March data indicating that exports to the country almost doubled to 46.4 metric tonnes. Meanwhile, exports to India also increased by more than 100 per cent to reach 72.5 tonnes, while the UK’s orders marked a sixfold rise from previous results.

Matthew Turner, an analyst at the Macquarie Group, told Bloomberg that while this activity may point to a positive future for Swiss gold, in reality this might not be the case.

“The big investor outflows from the UK via Switzerland to China and India is a continuation of the flow of metal from West to East. Short-term, it is a sign of weakness, not of strength in the market,” he commented.

Save Our Swiss Gold

Switzerland’s gold trade has steadily increased over the past decade and during this time, there have been some significant rises in the value of transactions. However, the country has been keen to regulate its gold trade, and a referendum was held last year to determine what the future should have in store.

Plans were put forward for the country’s central bank to hold a fifth of its assets in gold. There were widespread concerns that this would have affected its ability to carry out monetary policy. However, 78 per cent of voters were strongly against the scheme, which was nicknamed Save Our Swiss Gold.

If the initiative had been passed, there would have been a ban enforced on the sale of gold and it would have been exclusively stored in Switzerland. The Swiss National Bank warned that an extremely high gold share would arise, not least because interest or dividends could be paid on gold.

Allying with European neighbours

The Swiss National Bank currently has an agreement with other central banks in the wider European area to place further emphasis on the importance of gold in trading markets.

It is the fourth agreement that has been made between the nations alongside the European Central Bank, through which they agree that gold plays a crucial role in global monetary reserves. Participants have also committed to coordinating their gold transactions in a bid to avoid turmoil in the wider markets.

Furthermore, each of the countries announced its intention not to sell any substantial quantities of gold in the near future.

Switzerland is relying on Asian nations to keep its export market going strong, and while transactions appear to be on the rise, any significant transactions do not appear to be on the horizon. However, if demand continues to increase, there is no guarantee that this will remain the case.

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