Official Eurostat Trade Balance Massively Distorted by UK Sales Of 1464 Tonnes of Gold To Switzerland

Trade numbers by Swiss customs completely differ from Eurostat. The reaon: In 2013, private investors from the UK sold net (!) 1464 tons of physical gold (and similar) for a value 44.3 billion EUR. Those are (misleadingly) included in Eurostat trade figures but not in the Swiss ones.


Somebody who follows regularly the trade balance figures from Eurostat, may have noticed a sentence that was repeated in each monthly release from the Eurostat trade statistics since March 2013:

“The EU28 trade surplus increased significantly with Switzerland”

The final 2013 trade surplus for the EU28 was “+75.3bn euro in 2013 compared with + 27.6 bn in 2012”. We wondered why the number of 75 bn euro was nearly four times higher than the total Swiss trade surplus for 2012. There must have been massive consumer spending and imports to Switzerland that suddenly moved the traditionally high Swiss surplus into negative territory; or simply: data manipulation.

When we compared the Eurostat data with that of Swiss customs, we discovered a huge discrepancy in each monthly release. The trade numbers the Swiss officials delivered were completely different: it showed a Swiss deficit against the EU (aka “EU28”) of only 21.38 bn. CHF, about 18.5 bn euro, a number that was massively lower than the one reported by Eurostat. Switzerland usually has a big total trade surplus, but it imports energy from its European neighbors and many products and preliminary goods from Germany. For this reason it has a trade deficit with the EU, but a big total surplus.

swiss trade balance 2013,

Swiss Trade Balance 2013, source Swiss customs

Our suspicion was manipulation, something the Greek statistics bureau did until 2009 or the Chinese are supposed to do still today.

The solution to this mystery came only after I asked both Eurostat and Swiss customs.

eurostat: physical gold exports uk to switzerland

Eurostat: Physical Gold Exports UK to Switzerland, source Eurostat

The key points

  • The Swiss do not include sales of physical gold in their trade statistics, Eurostat does.
  • In 2013, private investors from the UK sold net (!) 1464 tons of physical gold (and similar) for a value 44.3 billion EUR. This was 1 464 000 kilograms each at the current price of 30254€ per kilo.
  • Physical gold sales are caused by the liquidation physically-back gold ETF holdings in the UK. “They are being shipped from the U.K to Switzerland for refining into smaller one kilogram gold bars, as the Australian bank Macquarie said. These were then sent to Asia and bought by Asian investors.” (source The Market Oracle)
  • Asians buy gold for several reasons. One reason is the fear of inflation, given that prices still rise quickly in Asia. Europeans and Americans, however, focus on the de- and disflationary environment.
  • “There is also an increasing preference for allocated storage in Switzerland by high net worths and family offices. Switzerland still has much of the world’s gold refining capacity and remains a favourite destination of investors and savers concerned about sovereign risk” (again The Market Oracle)
  • The gold sales inflated the British exports recorded at Eurostat: it reduced the British trade deficit from 128 bn to 84 bn.EUR.
  • The temporary weakening of the Swiss franc in Spring 2013 can be (partially) explained by these big gold purchases, Swiss investors sold CHF to buy the gold from the British sellers. From summer on, the franc recovered; potentially because Asians had to sell dollars to buy the kilogram gold bars from the Swiss.


Our critique

Manipulation of the key economic indicator trade balance

The inclusion of physical gold in the Eurostat trade balance figures is a manipulation of the key economic indicator “trade balance” for many market participants.

  • The trade balance is similar to a profit and loss statement, just as any company would publish. It is the most important part of the current account.
    The international investment position is the sum of yearly changes in the current account.
  • If more goods are imported than exported then the trade balance is negative; people are consuming more than they produce. If investment income and changes in asset valuations are not able to offset this difference, the net international investment position and wealth is reduced.  Therefore the difference between exports and imports, the trade balance, is a measure of profitability of the country and of change in wealth.
  • Production and export of goods contained in the trade balance usually happens in the same year. As opposed to goods in the trade balance, physical gold (or a gold ETF) is often acquired many years before the sales.
  • The purchase price of the gold, however, is not considered in the Eurostat trade balance, unless acquired in the same year. For a commercial or a financial company the purchase price would be contained in the profit and loss statement, only the profit would be shown but not the full sales amount.

Including fire sales of gold in trade figures helps to raise confidence in Europe

Till now we have just looked at UK sales of physical gold. But it could also apply to the weak European member states (to be verified). People in these countries were possibly forced to sell their gold for economic reasons. Selling the gold would increase their trade surplus at Eurostat and thanks to a higher surplus, investor confidence in the euro zone would improve.

Similarly, it needs to be verified if the “great improvements” in the U.S. trade balance are related to such fire sales of gold acquired many years ago or via the liquidation of gold ETFs registered in the U.S. It is already well known that the weakening of Asian trade balances is partially caused by big gold purchases; the Indian government has been trying to stop these purchases for years.


Gold is money and has nothing to do with the trade balance

Moreover, it is misleading to mix physical gold with items like machines or fruit. Gold is a mean of exchange, just like currency has become (as a substitute for physical gold); gold is money.

Eurostat excludes the sales of gold ETFs from the trade balance, and certainly it excludes the sales of currency, the exchange of fiat money. Including money (aka gold) against money (aka currency) in a trade balance is as misleading as including spot exchange of dollars against euros.


Read also:

Switzerland releases detailed trade statistics for gold, which is published outside of the trade balance.



George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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