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BFI Bullion
June 6, 2018

Y? Series – Switzerland is the global leader in precious metals. Why is that?

The Swiss precious metals industry is extremely competitive and has an excellent reputation worldwide. Most people, even the Swiss themselves, don’t realize how central Switzerland is to the global precious metals industry, and to the gold market in particular. The Swiss Confederation is by far the world’s largest importer and exporter of gold.

The reasons for Switzerland’s dominant position in the gold industry are manifold. They are largely found in history and arguably in Switzerland’s sustained position as the number one international wealth management center. But, before getting too deep into the WHY (Y?) of this matter, let’s first review a few hard facts and statistics of interest.

Gold imports and exports

Total worldwide gold demand in 2017 has been estimated at 4’066 tons or US$ 162 billion, while total supply came to approximately 4’398 tons or US$ 175 billion. In 2016, Switzerland was by far the largest exporter and importer of gold.

Which countries exported gold in 2016?

Source: Observatory of Economic Complexity ,,(

Which countries imported gold in 2016?

Source: Observatory of Economic Complexity ,,(

Switzerland’s economy – not built on chocolate and banking alone…

A big part of Switzerland’s success comes from its global exports across a broad array of sectors. And, as depicted starkly in the graph below, precious metals play a bigger role in the GDP of Switzerland than most realize. In 2016, gold exports were only surpassed by the exports of chemical and pharmaceutical products.

Source: Swiss Federal Customs Administration ,,(

People who are not familiar with Switzerland may only know it in the context of chocolate, watches, and banks…oh, and possibly Heidi! Indeed, Switzerland was once a very “poor country” of farmers with very limited natural resources to live off. Today, however, the Swiss economy is versatile and vibrant with innovation and leadership across numerous sectors. The Swiss have succeeded in building a robust economy. About 75% of GDP (gross domestic product) is generated by the service sector and 25% by industry.

Today, the country is rich by all standards and its economy is one of the healthiest in the world. In terms of GDP, Switzerland has the second highest per capita in the world and at the end of 2016, it stood at CHF 79,887 (approx. USD 80,000). The unemployment rate is approximately 2.7%. Also, Switzerland has the lowest rate of value-added tax in Europe, while most Swiss firms (over 99%) are small- and medium-sized enterprises (SMEs), with less than 250 employees. Finally, the public debt-to-GDP ratio in Switzerland is currently at only roughly 35%(!) – especially striking when compared to other “wealthy” countries.

But why is all that gold in Switzerland?

The Swiss precious metal industry has a long tradition. It occupies a key position in the Swiss economy with its large percentage of Swiss exports. The reasons are found in the aforementioned strength of the Swiss economy and its society, in the trust the Swiss Confederation enjoys worldwide, and in the leading position the country continues to hold in the world of wealth management.

Switzerland remains the global center of wealth management, as investors around the world continue to have many good reasons to invest and keep their wealth in Switzerland. A total of $1.84 trillion (CHF1.85 billion) of international assets were managed in Switzerland at the end of 2017.

Granted, due to the OECD’s efforts to “shut down tax havens” and “destroy Swiss banking secrecy”, Switzerland has lost some ground and has come under competitive pressure from other financial centers. However, it has become clear to all that Swiss wealth management was not built on “secrecy and tax evasion”. The sector is thriving and, ,according to the accountancy firm Deloitte, Switzerland is still on top in all aspects of wealth management that matter: “Switzerland is still the leading center in terms of competitiveness, size and performance.”

Largely based on these circumstances, Switzerland hosts the largest concentration of gold refineries globally: four of the six largest refiners in the world are found in Switzerland! Therefore, gold ore, recycled gold, and existing bar gold physically arrive in the country from around the world for processing before being exported again.

Swiss gold refineries account for 65-70% of annual worldwide gold refinery output, among them four of the largest precious metals refineries in the world: Argor-Heraeus, Valcambi, Produits Artistiques Métaux Précieux (PAMP) and Metalor Technologies. The customer base of these giant Swiss gold refineries includes multinational mining companies, precious metals scrap dealers and recyclers, international commercial banks, central banks, governments and international financial institutions, as well as the luxury watch sector.

Finally, it is noteworthy that in its role as the central bank for central banks, the Bank for International Settlements (BIS), headquartered in Basel, Switzerland, plays a critical role in the international gold market and an often overlooked part in the Swiss gold market. In essence, the BIS acts as the gold broker to the world’s central banks.

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