Gold keeps flowing from Switzerland to the US

Switzerland keeps exporting large quantities of gold to the United States, according to Swiss customs data. In May and June large quantities of gold were shipped to the other side of the Atlantic, where the demand for the precious metal is still very high. Switzerland exported 126 tons of gold to the US in May. A month later it was 68 tonnes. As a result, the United States are by far the most important export destination for the precious metal in recent months.

As we wrote earlier, this new trend is the result of a run on gold in the United States. Investors are not only buying coins and bars, they are also putting billions of dollars into gold-ETFs. In order to absorb the influx of new participants, these funds have to further expand their gold reserves. At the same time a lot of gold goes to various bullion banks, which need it to be able to meet their delivery obligations. On the futures market many more gold contracts are nowadays settled with physical delivery of the metal, instead of being rolled over. So traders buy precious metal on a large scale.

Gold flows from east to west

In recent years India and China have been the main markets for gold, but now it is mainly savers and investors in Western countries who are buying. Due to the corona crisis, the economic outlook has deteriorated drastically. Due to a flight to government bonds the interest rate has also decreased further. As a result, more people are seeking refuge in precious metals. This was accompanied by a rapid rise in the price of gold, which enticed even more investors to step in.

As a result of the rise in prices, demand in countries such as China and India has actually fallen in recent months, causing the center of gravity of the gold market to shift back to the West. Switzerland, for example, has not exported any gold at all to China in the last four months, which is exceptional. Swiss gold exports to other parts of the world have also been much smaller than usual in recent months. Exports to India are also negligible, whereas they are of the largest markets under normal market circumstances.

The last time so much gold went to Western countries was in 2016, the year of the Brexit and the American presidential elections. Then a lot of precious metal went to the United Kingdom, where many gold ETF’s hold their physical stock.

Gold keeps flowing from Switzerland to the US

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