Gold is, along with silver, the oldest money in the world, hence its unbreakable relation with the . Gold is also the most liquid and transportable wealth protection in time and space. In case of war or revolution, it is hard to flea with one's property or other valuable assets as can be done with gold. In 1685, when the Nantes Edict was revoked by Louis XIV, Protestants were definitely denied their religious rights. This led most of the Huguenots to flea to the European Protestant countries, such as Switzerland.
We all know about Switzerland's banking secrecy, but a little less about its origins. One might think that it originates in a text of law, like in other . But banking secrecy is profoundly buried in the Swiss mentality. One can always revoke a law, but it is very hard to change one's state of mind or tradition. When you ask a question of a Swiss, you have to follow up with ten more questions in order to get a complete response. He will answer bit by bit. If you ask the same question of an Italian, he will tell you about his whole life. Having lived in Switzerland, this is how I can best describe Switzerland's banking secrecy. Swiss people are discreet by nature. They don't need laws... laws only reinforce what is de facto.
« It is not the federal banking laws' article 47 that defines the notion of banking secrecy in Switzerland, but common law; banking secrecy thus falls under the general dispositions of the code of contractual obligations, as well as under articles 27 and 28 of the civil code, which put into law the principle of identity protection. » (1) « Penalties for breaking this principle are covered by the federal banking laws' article 47, constituting a disposition of administrative penal law. »(2) The civil code protects every personal right worth protecting and, notably, private life secrecy. The Swiss federal Court estimates that, « the inviolability of private life does not only constitute a moral principle, but is also a civil right, a « judicial asset »; it is an attribute of personality, and the law protects it. »(3) And privacy in the economic sphere is also protected.
« What sane man would not put away some money in swiss ? Switzerland is the vault of the world », Félix Houphouët-Boigny, former President of the Ivory Coast.For a long time Switzerland has been building infrastructures to safeguard assets such as gold. Its political stability, its neutrality, its defense system based on a militia army, and the Alps, that serve as a natural fortress, make Switzerland the ideal safe vault for gold. In addition, we can add to that ultra-qualified personnel, more dedicated to excellence than to volume.
During the crisis of the London Gold Pool in the ‘70s, Zurich has even come close to becoming the main gold trading hub, at the expense of London. The Bank for International Settlements (BIS), the central banks' banker, is still based in Basel. Almost all of central banks' gold trades are effected by the BIS in the utmost discretion. The headquarters of the World Gold Council was in Zurich, before moving to London recently. Geneva, where the most important jewelry auctions take place, has also been the global center for jewelry and watchmaking for many years.
The Swiss have a reputation for excellence in gold refining. That has let Switzerland become the hub of gold refining, with nearly 70% of the world's gold transiting through the country. Mining companies and gold recyclers export to Switzerland, where the gold is purified to the highest levels (.9999 or even .99999). It is then exported in the whole world to jewellers, investors or central banks.
The best precious metals storage and safekeeping companies are also based in Switzerland.
Other countries are trying to compete with Switzerland, but they still have a long way to go, especially since Switzerland is not sleeping on its laurels. Two of those countries are City-States like Dubai and Singapore. Singapore is a stable haven in Asia, as is Dubai in the Middle East, but they haven't reached Switzerland's level yet. Dubai is trying to develop an expertise in refining and trading gold, whereas Singapore, already with an excellent infrastructure for wealth management, is developing its capacity for gold storage and, also, a gold trading market for Asia.
We live in uncertain times, and no one is safe from unforeseen events. In the actual context, it seems to me that Switzerland is the best place to store gold. However good the infrastructures may be, one must never lose sight of the financial health of the country in which one wants to store gold. A fiscal or financial paradise that has gone into loses its independence and will not hesitate to use legal means to confiscate assets and, thus, gold, that are on its territory, as we've seen with Cyprus recently. The United States and the European Union have already adjusted their legislation for possible confiscation. Even Switzerland was taking the wrong road with its public finances in the ‘90s but, thanks to direct democracy, a positive radical change has taken place. This is a positive element for Switzerland, even though I remain vigilant. The only caveat I have is that the large Swiss banks, because of high exposure to derivatives and being very present in the United States, have lost a little of their financial stability and, consequently, a little of their independence.
« It is said that the Swiss only love money... this is not true. They also love gold. » AnonymousGold Price vs Swiss franc
Largest Gold Refineries by Capacity (tonnes per year)
Switzerland's Gold Trading (2013)
Gold Trading between Hong Kong and Switzerland
(1) (2) (3) Maurice Aubert, Jean-Philippe Kernen, Herbert Schonle, Le secret suisse
Dan Popescu Gold & Silver Analyst / Member of the Goldbroker.com Editorial Team
Mr. Popescu is an independent investment analyst and studies the gold and silver market and their future role in the international monetary system. He has followed regularly since 1970 the gold, silver and foreign exchange markets. He has a bachelor degree in physics (1993) from Concordia University in Montreal, Canada and has completed the Canadian investment management certificate (1999) of the CSI. He is a member and was the president in 2004 of the CSTA and also was president in 2005 of the Montreal CFA Society. He is a member of the CFA Institute, the MTA, NYSSA, UKSIP, the CSTA and the Gold Standard Institute International.
Switzerland: the world's gold hub http://www.swissinfo.ch/eng/business/Switzerland:_the_world_s_gold_hub.html?cid=33706126
Edouard Chambost, Guide de la suisse et de ses secrets
Maurice Aubert, Jean-Philippe Kernen, Herbert Schonle, Le secret bancaire suisse
Nick Laird, www.sharelynx.com
Koos Jansen, www.ingoldwetrust.ch
Jan Skoyles, Where are the world's largest gold refineries?, http://therealasset.co.uk/gold-refinery-list/