U.K. Gold Exports To Switzerland Explode Due To Allocated and Asian Demand
Tuesday, 20 August 2013
Gold and silver both pulled back yesterday on profit taking and as stop loss limits triggered selling. There were jitters among some market participants as President Obama met the heads of the CFTC, SEC, CFPB, FHFA, NCUA, FDIC, the Comptroller of the Currency and the Federal Reserve.
U.S. Mint data showed a drop in sales of American Eagle gold bullion coins in August to 3,000 ounces as of yesterday. This is down from the record levels seen in recent months and below the monthly average of nearly 100,000 ounces for the 7 months of 2013.
Liquidated ETF gold holdings are being shipped from the U.K to Switzerland for refining into smaller one kilogramme gold bars, Australian bank Macquarie wrote in a note yesterday. These were then sent to Asia and bought by Asian investors. The note confirmed, what has been known anecdotally for some weeks.
This is contributing to the increased tightness in the physical market as large London Good Delivery bars (400 oz) are air freighted to Switzerland for refining into smaller kilo bars (32.15 ounces) for the voracious Asian market.
There is also an increasing preference for allocated storage in Switzerland by high net worths and family offices. Switzerland still has much of the world’s gold refining capacity and remains a favourite destination of investors and savers concerned about sovereign risk – including sovereign risk in the EU, U.K. and U.S.
Most of the gold ETFs holdings were held in London vaults, and U.K. gold ‘exports’ to Switzerland exploded from 92 tonnes in all of 2012 to a whopping 240 tonnes in May this year alone and a very large 797 tonnes in the first six months of 2013.