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LAWRIE WILLIAMS: 2018 Swiss gold exports = 46% global gold production

LAWRIE WILLIAMS: 2018 Swiss gold exports = 46% global gold production!

March 14, 2019

 

We have often in these pages recounted the importance of gold refined or re-refined and exported via Switzerland in terms of global gold flows, and the latest figures out of the small European nation serve to emphasise that point despite 2018 being perhaps a weaker year for the nation’s overall gold trade.  In terms of gold imports the country took in some 1,500 tonnes of gold during the year and exported 1,473 tonnes - mostly to Asia where Mainland China was the dominant recipient.  Indeed if we add exports to Hong Kong to the Chinese total, given that most of this will have been fabricated and re-exported to the Chinese mainland, the flows to the Asian giant alone amounted to around 729 tonnes of gold last year.  See Graphic of Swiss gold exports last year below from Nick Laird’s

 

Switzerland has a batch of major gold refineries which specialise in taking doré bullion from mines, scrap gold and large refined gold bars - the latter primarily from the UK, probably the centre for global gold trade - and producing high purity gold in the small kilobar sizes and wafers most in demand in Asia.  The amounts flowing through Switzerland have probably fallen in recent years due to the building of new gold refineries in Asia and the Middle East (some owned by by the Swiss refiners) but nevertheless the amount of gold routed through Switzerland remains substantial.  In 2018 it amounted to around the equivalent of nearly half global new mined gold.  Indeed if one takes Chinese gold production (which all remains in China) of around 400 tonnes out of the equation, Swiss refineries handle an amount of gold equivalent to some 50% of global new mined non-Chinese output.The other statistic which can be gleaned from the Swiss gold export figures for all of 2018 is that around 1,266 tonnes - or close to 86% - flowed to Asian and Middle Eastern nations. This serves to again emphasise the continuing flows of gold from West to East, with the Eastern holdings seen as being in stronger hands and less likely to flow back into the markets.

 

So Asia/Middle East remains the principal consumer area for global gold - with China still the main recipient.  There is little doubt that the global gold supply/demand situation relies heavily on the Middle Kingdom’s continued high consumption levels so recent indicators that the nation’s demand may be slipping a little could be worrying for the gold bulls: See: China’s gold demand looks to be slowing this year so far.  But even with a perceived slowdown the country remains far and away the world’s largest gold consumer and with global gold output plateauing, and expected to start falling, perhaps a small fall in Chinese consumption might not be seen as too worrying, particularl if global central bank purchases continue to remain at an elevated level.

 

Source: https://www.sharpspixley.com