Storing gold outside the EU: A highly promising alternative
Overview: Storing gold outside the EU
Banking confidentiality is sacrosanct to the Swiss
Banking confidentiality no longer applies anywhere in the EU or across the European Monetary Area (EEA). However, things remain unaltered for Swiss residents, and no change seems likely for the foreseeable future. Because, for Swiss people, banking confidentiality is sacrosanct. They don’t like to talk about their assets, or discuss their finances. Furthermore, any move to abolish banking confidentiality would require the approval of a majority of the population – because Switzerland is a direct democracy. So for this reason alone, any future obligation to declare stored assets seems hardly conceivable.
Direct democracy determines Swiss politics
A special feature almost unique in today’s world dominates politics in this Alpine republic: direct democracy. In practical terms, this means that every change in the law must be submitted to the Swiss population for a vote – provided at least 50,000 voters demand this via a referendum.
This prospect of the people’s entitlement to vote, and thus directly influence, or even prevent, the adoption of new laws has a clear influence on Swiss politics. The country’s politicians know that changing the law is not easy, since even relatively small minorities can request a referendum. This explains why legislative initiatives are always discussed particularly intensively within the state, and all shades of opinion are taken into account. Only then does any new proposal stand a chance of getting on to the statute book without a referendum.
This peculiarity in the Swiss political system is also a major reason for the country’s comparatively low tax regime. Any tax increases must first be broadly acceptable to the population, and they will only agree to such measures if there really is no other option, and only if it can be demonstrated that the money will not be wasted.
The Swiss way does not depend on EU/EEA regulations
Since Switzerland is neither a member of the EU nor the European Economic Area (EEA), it is not bound by the laws of these political communities. Instead, the country remains politically independent and regulates its relations with neighbouring countries via bilateral agreements. The Swiss way, Switzerland’s laws, and Swiss interests are thus not shaped or influenced by occasional awkward or difficult compromises – as is the case for many individual states within the EU.
One example is the 5th EU Anti-Money Laundering Directive, which applies to all EU members and EEA states as well as Liechtenstein. Switzerland, on the other hand, can decide for itself which elements of this directive it considers useful and would like to convert into national law. And unlike the situation within the EU and in EEA countries, there is no financial market regulation governing the storage of precious metals in Switzerland.
Storing gold in Switzerland has many advantages
Gold has been a popular medium of payment and exchange for thousands of years. However, very early in history, people also learned to appreciate the value of this rare precious metal as a stable and crisis-proof investment. Unlike bank accounts and investments in stocks and shares, gold never loses its value as a consequence of political crises, wars or natural disasters. On the contrary: In times of crisis, this shiny yellow metal’s reputation as a safe haven means it often increases in value. In any emergency, this precious metal, which commands a high value even in small quantities, can still be traded worldwide. Whether during the subprime mortgage crisis of 2008, the coronavirus pandemic, or the Russia-Ukraine war – gold has always remained the rock which stands strong against the surging waves of politically and economically turbulent times.
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In what form can gold be stored
As an investor, you have various options for investing in this precious metal. The most common of these are gold bars and gold coins, but jewellery and so-called semi-finished products (gold before it has been processed and refined) may also be suitable as investments. OrSuisse offers secure storage of precious metal coins and bars.
Naturally, you can always store such gold in your own country, but third countries can be an attractive alternative to custody in an EU or EEA country. Switzerland’s neutrality and exceptional political stability make it particularly suitable for this purpose.
Advantages of storing gold outside the EU
Fears are repeatedly expressed that Switzerland could one day impose its own ban on gold, or agree to an expropriation. However, due to the country’s political system, as outlined above, this is extremely unlikely. Because even a small minority of 50,000 voters could effectively prevent any such political attempt.
In addition, Switzerland is internationally known and respected for its strong tradition of safeguarding and protecting the private property rights of all investors.
Low risk of national bankruptcy
Switzerland’s political and economic stability makes it an internationally sought-after location for precious metal storage outside the EU. Risks such as bank failures, financial crises, or forced expropriation of investor’s assets are many times lower in a stable, neutral state like Switzerland than in many other countries elsewhere in the world.
In addition to all this, the country is located right in the heart of Europe, with a very well developed infrastructure, and can be quickly reached from many countries – whether travelling by car, plane or public transport.
This small Alpine nation is thus ideal for diversification, i.e. the distribution of investments (and various forms of investment) across different financial markets. Dividing your own investments between different countries and markets is the classic way to spread risks to your assets. For example, when the euro came under significant pressure as a result of the Greek crisis and dragged down European financial markets, Switzerland was largely able to decouple itself from this turbulence. This is also an argument for storing precious metals such as gold, palladium or platinum in a country outside the EU and the EEA.
Ultra-low national debt
As a result of the coronavirus pandemic, national debt has increased worldwide, including in Switzerland. But if you compare it with other European countries, Switzerland is still far better placed than almost all other European countries. In Germany, the 2021 debt ratio was more than 69% of gross domestic product (GDP), whereas in Switzerland it was just 27.5%. If you compare Switzerland’s own national debt (CHF 105 billion) with its national wealth (CHF 1,800 billion), the ratio is roughly 1:17. Expressed in practical terms, this means that if the state wished to pay off its debts solely through expropriation, every Swiss person would have to hand over just 6% of their personal wealth to the state. This, of course, is no more than a theoretical mind game – because, as described earlier, the people’s right of veto would immediately nullify any such step.
And when it comes to debt, this small country in the middle of Europe continues to think big – and the ‘debt brake’ enshrined in Swiss law ensures things will stay the same for the foreseeable future. As a result, the state must always generate a surplus when the economy is doing particularly well. So that, in the bad times, such as during the coronavirus pandemic, the money can then be used to stimulate the economy.
Overview: Storing gold outside the EU
- Politically and economically, Switzerland is a very stable country.
- Switzerland is located at the heart of Europe, has a good infrastructure, and is easily accessible from all over Europe.
- Switzerland’s public debt (27.5% of GDP) is less than half that of Germany.
- The country’s direct democracy ensures a high level of financial and fiscal policy stability.
