Swiss banks running out of storage space for gold bullion
Worries about the economy and the success in marketing gold ETFs has seen Swiss banks finding difficulty in meeting secure storage requirements for gold bullion.
Author: Lawrence Williams
17 July 2009
In a note entitled No more space for Gold Bars, Swiss news website 20 Minuten
Online reports that Swiss banks are running out of secure storage space for gold
bullion held by investors and institutions. Fears of hyperinflation, the
economic downturn and the success of gold index funds (ETFs), which are
supported by physical gold, has led to a run on precious metals investment - and
in gold in particular, and in the necessary secure storage space in which to
hold it..
One Swiss bank, earlier this year, reported that it was having to relocate some
of its stored silver bullion to another site to make room for gold. The Zurich
Kantonal bank put this down to the success of its gold ETF.
The website reports another Swiss investment banker despairing "We have the need
to store more gold for our clients but are finding it difficult to find secure
storage facilities". Gold storage makes high demands on security which is what
is making the gold holding task more difficult. Few banks will divulge exactly
where their gold is stored for security reasons.
Another banker reported that his bank still had space but that it is beginning
to run out.
Some of the problems are being handled by improving the storage systems in
existing space. As one banker commented "A 12.5 kilo gold bar only occupies
about the same amount of space as a tetrapak of milk".
While the big U.S. based ETF, the SPDR Gold Trust has recently seen a relatively
small decline in its gold holdings with some investors seeking better returns in
the markets, the ever-cautious Swiss seem to be seeing continuing growth in
locally managed ETFs. A recent report noted that Swiss Bank, Julius Baer, for
example, was still seeing a 3.3% growth in its gold ETF in the current week. And
even though the Swiss Central Bank has been selling gold via the Central Bank
Gold Agreement, it still holds 38% of its foreign exchange reserves in the
yellow metal.