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Mention Switzerland and most people think of watches, chocolate and mountains. But with around 70% or 1’500 tonnes of the total annual global gold supply being refined here, Switzerland is also the largest refiner of gold in the world.


When it comes to supply chain disruption, one context less talked about is that of gold refinement, where a shortage of the precious metal on global markets led to events not witnessed since refinement began in the Swiss canton of Ticino decades ago.

The Swiss hold on gold refining

All three gold refineries at Valcambi, Argor-Heraeus and PAMP in the Swiss canton of Ticino  have had to suspend operations under federal lock-down rules. The refineries had already experienced challenges keeping their businesses running due to a labour shortage, as many of the refinery employees live in Northern Italy, which was badly affected by Covid-19.

As the Swiss refineries ground to a halt, so the world’s supply of refined gold effectively began to dry up.

The price of gold per troy ounce on March 23 was €1’391.57.  Some weeks later on April 8, Bloomberg reported that supply shortages in the gold market would likely ease in the coming weeks as Swiss refineries became operational again, albeit at a limited rate. This situation still made it hard for investors to find refined gold to purchase. On April 8, the price per troy ounce stood at €1’520.90, a rise of nearly 10% in 2 weeks.

On May 4 as refinement began again, the price per troy ounce stood at €1’558.29 and on May 18 it reached €1’630.73. This represents a rise of 17% in less than 8 weeks. With a gold bar weighing 400 troy ounces, an investment in just one bar on March 23, would have realised a profit of €95’664 in just 8 weeks.

Time for a rethink of the gold supply chain – what will it mean for Ticino?

As a result of the COVID-19 crisis, re-engineering supply chains now has become a “must” for businesses across all industry sectors. According to MIT professor Jonathan Byrnes, “Many supply chains are perfectly suited to the needs that the business had – 20 years ago”.

Switzerland is accredited with a quality certification from the London Bullion Market based on its exceptional level of security as well as efficient logistic and financial systems, all of which are important factors in the precious metals sector. Given the global importance of precious metals both to industry and financial trading markets, this is perhaps a well-timed reminder for the refineries in Ticino to also take a hard look at how they can best serve their supply chains.

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