Official Trade Balance Manipulated by UK Sales Of 1464 Tonnes of Gold To Switzerland

The following article was submitted by Global Gold Switzerland, whose managing director, Claudio Grass, is a regular contributor on our site. The article analyzes how Eurostat trade balance figures of the UK and Switzerland show striking figures for 2013. When looking under the hood, it appears that a massive 1464 tonnes of physical gold was sold from the UK to Switzerland in 2013 (which is no big news for regular readers of our site), but that these figures were included in the Eurostat trade balance. The net result is that the UK trade deficit looked not that bad, while Switzerland had a spike in its trade surplus.

Of course, including gold sales in a trade balance does not make sense, and, ultimately, is proof of manipulation of data. The associated gold transactions are merely currency transactions, rather than transactions of products. The author of the article, a strategist at a Swiss consulting firm, explains it as follows.

From George Dorgan, global strategist of SFC Consulting, writing for the Swiss National Bank blog

Somebody who follows regularly the trade balance updates from Eurostat and Swiss customs, may have seen the following sentence in each monthly release of the Eurostat  trade statistics: “The EU28 trade surplus increased significantly with Switzerland.”

In 2013, the trade surplus for the EU28 was +75.3 bn euro compared with + 27.6 bn in 2012.

We started investigating this 75 bn euro and looked initially for a big consumer spending or imports which took the traditionally positive Swiss surplus into negative territory. But we did not find anything along those lines.

When we compared the Eurostat data with the one of Swiss customs, we saw that the number of the Swiss officials was completely different: it showed a deficit against EU28 of only 21.382 bn CHF, about 17 bn euro, a number massively lower than the one provided by Eurostat.


Our suspicion went to a manipulation, something the Greek statistics bureau did for many years or the Chinese are supposed to do today. The solution to this mystery came only after I asked both Eurostat and Swiss customs.


The key points

  • The Swiss do not include sales of physical gold in their trade statistics, while Eurostat does.
  • In 2013, private investors from the UK sold net (!) 1464 tons of physical gold for a value of 44.3 billion EUR. That equals 1,464,000 kilograms at the current price of 30,254 EUR per kilo.
  • This inflated the British trade balance recorded at Eurostat; it reduced the British trade deficit from 128 bn to 84 bln EUR.
  • The temporary weakening of the Swiss franc in 2013 can be (partially) explained with these big gold purchases, Swiss investors sold CHF to buy GBP and therewith the gold.

Our critique

In our view, the inclusion of physical gold in the Eurostat trade balance figures is manipulation of the key economic indicator “trade balance.“

When, for example, Germany sells machines or Spain sells orange juice, these figures are included in the trade balance of goods. With the sales of these goods, German or Spanish firms have typically achieved a certain profit because production costs and imports of preliminary goods were typically less expensive than sales. Production and sales usually happen in the same year.

The trade balance contains goods that are sold against money, and they are typically sold in the same year of production.

If more goods are imported than exported then the trade balance moves into negative territory. Since the goods need to be paid in monetary items, the net international investment position and consequently wealth is reduced.  Therefore the difference between exports and imports, the trade balance, is a measure of profitability of the country.

As opposed to typical goods in the trade balance, physical gold is a storage of wealth and often acquired many years before the sales. Certainly, a certain profit or loss might be associated with the gold transactions, but bringing just the sales transaction into the trade balance (of 2013) without recognizing the purchase (possibly many years ago) is a manipulation of the trade balance figure.

Moreover it is misleading to mix physical gold with items like machines or fruit, the latter being no storage of value like gold or currency. For this reason, Eurostat excludes the sales of gold ETFs from the trade balance, and certainly it excludes the sales of currency, the exchange of money.

Physical gold is money and not goods. Including money against money transactions in a trade balance is as misleading as including spot exchange of dollars against euros.

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