204 (04.11.18)

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8. Ticino, Switzerland

How one canton cornered the gold bar market

At an airport in West Africa, $130m of roughly-cast gold bars are bagged-up in plastic, stacked on a pallet and stuffed into the hold of an Air France flight to Paris. Landing six hours later, the gold is transferred to a second flight to Zurich and handed over to the Swiss subsidiary of security group Brinks, which loads the bars into armoured vans, driving them to the border with Italy. Surrounded by snowy mountain villages and crystal clear streams, this is the world's gold refining capital: in one sleepy canton, Ticino, known for its vineyards and lowing cattle, three of the largest precious metals refineries sit within a few kilometres of one another. PAMP, Valcambi and Argor-Heraeus all keep a “deliberately” low profile, one refinery says, but Switzerland occupies a “central position” in the global gold market, handling tonnage from mines from Peru to the Philippines. Trade figures suggest that 2,000 to 3,000 tonnes of gold is flown in and out of Switzerland every year, worth up to $130bn. Ticino's refineries are run by lawyers and tax accountants and have variously been owned by Credit Suisse, Commerzbank, gold miner Newmont, a sheep trader from Beirut and the Austrian Mint. The gold is weighed, melted in furnaces and refined to a purity of 999.9 parts per thousand, using acid, caustic soda and huge quantities of electricity, before being poured into investment-grade bars that are insured against everything except war or a nuclear accident. They are given serial numbers and put into vaults outside the banking system. Clients can convert them into cash, or have them flown anywhere in the world. Most end up in Asia: Switzerland has exported $170bn of gold to China and Hong Kong since 2012, plus $121bn to India. Old bars are also bought from vaults in London and the US and melted into smaller and more pocketable, higher-purity units. Ticino's refineries pioneered the 1-oz gold bar in 1967 and today make 1-gram bars, the size of a microchip. Critics of Switzerland's banking system say its refineries are “untransparent”: they do not disclose their revenue figures and authorities “prefer not to know” where the gold comes from. Brinks offers “in person contact” with customs authorities, the company tells clients. Bribery and corruption is “a potential risk”, one refinery says.

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24 hours

Refineries in Switzerland promise to fly gold to clients anywhere in the world, or it can be converted into dollars and remitted within 24 hours

3 tonnes

Central banks refuse to discuss how gold is transported (it is “one question that we cannot answer” says Germany’s Bundesbank), but it is flown in 3-tonne packets in the hold of commercial aircraft


Switzerland imported 83m ounces of gold last year, according to UN trade figures, worth nearly $100bn at spot prices of $1,200 per ounce, down from a peak of $130bn in 2013