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Scott Schamber
April 22, 2020

Swiss Refiners Rebooting Their Operations - Gold Outlook

Over the past few weeks, the COVID-19 pandemic has paralyzed the key players of the global precious metals supply chain. At Global Gold, we’ve seen delays in deliveries, increased premiums on some precious metal formats, and the outright scarcity of some others. Now that COVID-19 appears to be in retreat, the Swiss refineries are starting to ramp up their operations again. That is GOOD news!

Over the past two months, the ominous virus has had a growing impact across the supply chains and operations of many industries across the globe. The precious metal industry has been no exception.

The virus stopped the global precious metal industry in its tracks

At the time of this writing, for instance, miners in South Africa, Argentina, Peru and Mexico have suspended their operations. In Canada, mining was suspended in Quebec. The refiners in Switzerland, particularly in the southern part of Switzerland, bordering on Italy, have been out of operation for several weeks. They make up more than half of the world’s precious metal refining and fabrication. Equally, the logistical firms such as Swiss World Cargo, Loomis, Brinks or Malca-Amit, i.e. the companies that store and transport the precious metals around the globe, have been struggling with social distancing of employees, home office, and have been out of their usual order.

As many of our readers know, Switzerland is by far the most important jurisdiction for the refining of gold. The world’s largest LBMA-certified refiners, namely Valcambi, Argor Heraeus, Metalor and Pamp, are all located in Switzerland. Therefore, it was no surprise that the global supply was impacted when, at the end of March, the refiners based in Ticino, the most southern part of Switzerland, were shut down temporarily.

COVID-19, confirmed cases in Switzerland, as of April 14th, 2020

Source: Swiss Federal Office of Public Health (FOPH)

Fortunately, as shown in the figure above, the confirmed cases of COVID-19 in Switzerland have been on the decline and Switzerland is preparing to get back into a more normal mode, step by step. The positive news has extended to the Swiss refiners too, in that they have now restarted their operations. They are still far from pre-crisis capacity. But at least the first steps of “revival” are done.

Looking ahead

At this point, some products are still in short supply. While at Global Gold, we will take orders and are executing those at good prices, the time for delivery in some cases is still quite substantial. That has not stopped our clients from stocking up on gold, and over the two weeks, on silver too.

While the Swiss refiners are starting to ramp up their operations, other parts of the world are only now heading toward the “peak” of this pandemic. In India, for instance, inbound passenger and cargo flights were blocked at the end of March. And, a nationwide lock-down was enacted since. Normally, around this time, the retail and jewelry demand in India would be on the rise.

We expect further turbulences ahead in the global precious metal market. However, at least for our operations, the worst seems behind us, since we source our gold bars from Swiss refiners. However, with regard to coins, things may stay tight for a while longer.

Gold Price in USD/oz, from 1973 to 2020


The shortage in supply, by the way, had only limited influence on the recent rise in the price of gold. That is due to other and more fundamental economic factors. And, the biggest part of gold pricing is not dominated by the physical markets, but by the much larger “paper market” (OTC etc.), in other words, the worldwide trading and clearing activities of banks and traders.

That said, it is important to note that the gold price has reached a historic high in most world currencies except the dollar. Below is the chart in Euro per troy ounce. Gold, globally speaking, has been the best asset class to invest in over the past 10 years. And, based on the physical scarcity and big picture economic realities – with the COVID-19-induced QE4 even more so – it looks to be a safe haven and outperformer in the years ahead too.


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