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Switzerland Is Rethinking Transparency Around Sourcing of Gold

Derek Wolfe

Updated: April 6, 2022

source of gold
Editor’s Note:

EDITOR'S NOTE: The idea of a first-world nation achieving freedom through oppression is nothing new. It isn’t present in every aspect of 21st-century civilization, but it hasn’t quite disappeared. It’s apparently alive and well in the gold industry; along with favorable laws or favorable loopholes protecting the process. We’re talking about Switzerland—the nation that processes two-thirds of the world’s precious metals. Activists suspect its refiners have been producing something that smacks of “blood gold.” Nobody’s really sure, as Switzerland’s source of gold remains opaque; this segment of the supply chain, hidden and protected. But many suspect that refiners’ gold suppliers may be among those nations forcing their workers to operate in inhumane conditions. If you’re interested in the details, and how people may be inadvertently supporting an alleged system of oppression to attain assets representing financial privacy and freedom, then read on.

Swiss gold refiners are not required to disclose the sources of the precious metal. Bond villian Auric Goldfinger would likely have welcomed such news.

Silence is golden, goes the old saying. So too is secrecy in some cases. The four largest gold refiners in Switzerland are not required to disclose the origins of the precious metal they smelt, a federal administrative court ruled, keeping in place what could be viewed as outmoded secrecy, a report from the «Keystone-SDA» news agency.

The NGO Society for Threatened Peoples is calling for more transparency around the sourcing of gold. In this context, the ruling can be seen as placing the interests of gold producers above the human rights of threatened minorities. 

Court Case

The NGO called on the Federal Customs Administration (FCA) to disclose the gold suppliers of the refineries for the years 2014 to 2017. During an arbitration procedure, the FCA was in favor of making the information public, but the refiners appealed. And won.

At the heart of the case is whether gold used by the refiners was extracted under inhumane conditions abroad. The case is now pending before the Federal Supreme Court. In fact, when the Money Laundering Act was revised, parliament rejected a requirement to designate the origin of the gold, instead relying on self-regulation.

It's not just about melting down small amounts of gold from the wedding rings of divorced people or inherited gold jewelry from grandma that looks outdated. Two-thirds of the world's precious metal is refined and processed in Switzerland, and the source of the gold is not always clear.

Progress

That is not to say no progress has been made. Neuchatel-based precious metal supplier Metalor Technologies, in collaboration with the University of Lausanne, has developed a «geoforensic passport». Considered a breakthrough by experts, the passport confirms the origin of the gold refineries receive from the mines, through systematic analysis of the «DNA» of each mine. 

Major Swiss banks Zuercher Kantonalbank and Raiffeisen also rely on certified gold, as reported by finews.ch, and Zurich-based company Assarée targets its certification process at the many small-scale miners that dominate gold extraction.

Hopefully, these measures go some way to stopping future Goldfingers.

Goldfinger

Bond villian Auric Goldfinger was the head of the fictional Swiss-based company «Enterprises Auric AG», an engineering firm based in the canton of Vaud, which manufactured seats for the Swiss railway and an airline in India. It was also a core part of his gold smuggling operation. 

Gold's untraceability and malleability was a key element in Goldfinger's operation. The armor plating of his Rolls Royce was replaced with gold after which he and his chauffeur Oddjob would drive a few times each year from England to Switzerland. Along the route, they would make dead-drops of gold bars which went to pay criminals. 

Once in Switzerland, the gold armor plating was removed, melted down and then used to make structures of airline seats. The seats were then flown to India, the gold frame was removed and melted down. The gold was sold at a huge profit since gold fetched a far higher price in India than in Europe where its price was fixed.

Originally published on Finews Asia.

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