Lawrence (Lawrie) Williams is a precious metals market expert. He worked as a mining engineer and analyst in Africa and North America and wrote for the Mining Journal, and subsequently managed the publishing company, for over 36 years. Williams shares his unique knowledge of the precious metals industry at the United States Gold Bureau and other outlets.
The small (in area and population) European nation of Switzerland is the location of four of the world’s largest gold refineries – Argor-Heraeus, Metalor, Produits Artistiques Metaux Precieux (PAMP) and Valcambi.
Between them they refine annually a volume of gold equivalent to more than half global new mined gold output – sometimes far more when Asian demand is running particularly high, as in 2013, and when supply is plentiful (2013 saw huge disinvestment out of the major gold ETFs). That year Swiss refineries processed, and exported, around 2,600 tonnes of gold equivalent to about 80% of global new mined gold output.
According to Singapore based precious metals website, www.bullionstar.com, which undertakes considerable research into global gold flows, in a normal year the Swiss refineries account for around 65-70% of global gold refining capacity. Switzerland has a population of only around 8 million people and a GDP of around US$700 billion – compared with the USA’s 320 million and $18 trillion respectively – thus this small European nation produces well above its weight in terms of global gold flows.
And, in a normal year around 80% of this gold is exported to Asia and the Middle East – in particular to the world’s two biggest gold consuming nations – China and India where most of the gold (all of it in the case of mainland China) ends up in firm hands, not to be released back on the global open market.
A Dominant Power in the Gold Market
Why are the Swiss refineries so dominant? A mixture of years of history and their specialty which is re-refining gold bars of the standard 0.995 purity as held by most central banks and produced by most other refineries and outputting the smaller higher purity (0.9999) bar sizes and wafers in demand in the eastern markets.
(A standard good delivery gold bar, as defined by the London Bullion Market Association (LBMA), weighs between 350 and 430 troy ounces with a minimum acceptable fineness of 995 parts per thousand pure gold (0.995).
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