Swiss banks running out of storage space
for gold bullion Author: Lawrence Williams
Posted: Friday , 17 Jul 2009
Worries
about the global economy and the success in marketing gold
ETFs has seen Swiss banks finding difficulty in meeting secure
storage requirements for gold bullion.
LONDON -
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 in their vaults. 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.