Swiss Central Bank Moved Its Gold From Berne to a Federal Bunker in Kandersteg ~ July 18, 2022

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Written by Jan Nieuwenhuijs, originally published at Gainesville Coins.

In Switzerland it’s a state secret where the central bank stores its gold domestically. From all the information I could gather I conclude the Swiss central bank primarily stores its gold—and that of foreign central banks and the Bank for International Settlements—on Bundesplatz 1 in the capital Berne.

This vault may be one of the largest globally. However, due to a renovation the vault is now empty. The metal has temporarily been transferred to a federal bunker near Kandersteg, deep in the Swiss mountains.

Written by Jan Nieuwenhuijs, originally published at Gainesville Coins.

In Switzerland it’s a state secret where the central bank stores its gold domestically. From all the information I could gather I conclude the Swiss central bank primarily stores its gold—and that of foreign central banks and the Bank for International Settlements—on Bundesplatz 1 in the capital Berne.

This vault may be one of the largest globally. However, due to a renovation the vault is now empty. The metal has temporarily been transferred to a federal bunker near Kandersteg, deep in the Swiss mountains.

What led me to research this topic is a multi-year delay of a gold shipment by the Austrian central bank (OeNB) from London to Switzerland. From reading my previous article on this subject, some could be tempted to think OeNB’s gold is gone, or that the Bank Of England is obstructing the transfer. According to my analysis, though, London isn’t the problem. OeNB’s shipment was supposed to be in Berne by now, but due to a delay in the renovation of the vault the gold hasn’t been transferred yet.

To get to the bottom of this we will examine the vaults of the Swiss central bank in this article. In a following article I will present more proof of OeNB postponing to ship metal to the vault in Berne.

The first two chapters serve as an introduction. If you are short on time you can skip to the third.

The Swiss Have Been Digging Caves for Centuries

If there is one country that excels in building tunnels and caverns, it’s Switzerland. Berne was founded around 1200 on a peninsula in the river Aare. The peninsula is shaped as a hill due to the wear of the water. Enclosed by the Aare, the Old City could be easily defended by a wall at the West. The safety within this natural fortress allowed the city to flourish.

Many of the early inhabitants of Berne had vineyards outside of the city. Already in the 13th century cellars were being constructed below the buildings in the city, for more room and the right climate to preserve wine. The soil in Berne, consisting mostly of gravel and sand put there by glaciers during the last Ice Age, is well suited for constructing cellars. The weight of the ice caused the soil to compress*. Today, many of the cellars are being used as bars, restaurants, shops, and more.

Since 1983 the Old City of Berne is UNESCO world heritage site for its exceptionally coherent planning concept. Berne has always retained its historical character, presenting variations of the late Baroque period and Late Middle Ages. The Old City continues to be a place for living, working and commerce.

The first tunnel in Switzerland was built in 1707 to ease the passage over the Gotthard Massif Mountain in the Alps. Ever since, more road, railway, waterway, and maintenance tunnels have been built, by now totaling an astonishing 2,000 kilometers in length.

In the 1880s the Swiss started to build a line of fortifications in the Alps for the army to retreat and defend their country against a foreign invasion. In the Second World War a network of military tunnels and bunkers was added.

During the Cold War, in 1963, Switzerland undertook to provide bunkers for all citizen to take shelter in case of a nuclear attack. At one point, there were an estimated 300,000 fallout shelters. After the Cold War many of the bunkers in the Alps were considered obsolete. Some were reopened as hotels and museums, or found other uses.

Switzerland’s Vast Gold Market

Switzerland is one of the largest physical gold markets globally. Not very much is known about it though, because discretion is one of the services that make this market attractive.

Before the 1930s banking secrecy was an unwritten rule in Switzerland. This rule was enshrined in legislation in 1935, which, together with political neutrality, made Swiss banks attractive for foreigner capital: currency, bank deposits, and gold.

When in 1968 the Gold Pool collapsed and the London Bullion Market closed for two weeks, Swiss banks reacted aggressively by trying to take over market share from London. Refining capacity began shifting from London to Switzerland. Currently, there are no London Bullion Market Association (LBMA) accredited refineries left in the U.K., while in Switzerland there are four giants: Valcambi, PAMP, Argor-Heraeus, and Metalor.

Every year roughly 2,000 tonnes of gold moves through the Swiss refineries, measured by non-monetary gold import and export.

Next to the vaults of the refineries, there are vaults of commercial banks**, secure logistics companies (Brinks, Loomis, Malca-Amit, etc.), and the Swiss central bank. In addition, after the Cold War several military bunkers in the Alps have been sold to niche vaulting companies that built storage rooms for precious metals and other valuables in the deep caverns.

There is no centralized gold exchange in Switzerland, so all trade is done over-the-counter. Because a few large Swiss bullion banks have their head office in the center of Zurich, an often used short-hand reference to the Swiss gold market is, “Zurich.” However, this can be misleading as not all physical trading is concentrated in Zurich. For example:

• There are refineries in the far South of Switzerland and in the West.
• Brinks has gold vaults in Zurich, Geneva, and Chiasso. Malca-Amit has vaults in Zurich and Geneva. Loomis told me it “can store gold all over Switzerland.”
• Numerous other vaults can be found in old military bunkers in the Alps across the South.
• Retail dealers and safety deposit boxes are all over the country.
• Many watchmakers are in the West.

And, as we will see below, monetary gold is (normally) stored in Berne.

Officially, the domestic gold storage locations of the Swiss central bank (Schweizerische National Bank, SNB) are a state secret. In April 2013, SNB revealed 20% of its 1,040 tonnes of gold is stored at the Bank of England, 10% is at the Bank of Canada, and 70% is held domestically “in its own vaults.” Questions in parliament about the domestic storage locations are not answered for security reasons. Regardless of the locations of the vaults, SNB does confirm it stores gold for foreign central banks.

The Swiss Central Bank’s Main Gold Vault Is in Berne

There is a considerable amount of evidence that most of SNB’s gold has always been stored in Berne. An important source I have used for my research is a book published by SNB in 2012, celebrating the 100th anniversary of their head office in Berne. The title of the book is, “Die Schweizerische Nationalbank in Bern Eine illustrierte Chronik” (DSN hereafter).

When SNB was erected in 1907, it was decided to build two head offices to distribute the balance of power. One in Berne, the political center and capital of Switzerland, and one in Zurich, the financial center. SNB was divided into three departments of which Department I and III settled in Zurich. Department II in Berne took responsibility for all issues relating bank notes, the management of gold reserves (the receipt, dispatch and storage of gold bars and coins), and dealings with the federal administration.

The head office in Berne at Bundesplatz 1, with its gold vault in the basement, was completed in 1912. It’s located in the Old City next to the Federal Palace that houses the Federal Parliament and Federal Council.