The Concentration Nobody Talks About
Gold trading is a globally distributed activity. Gold refining is not. Roughly 70 refineries worldwide hold LBMA Good Delivery accreditation, and their distribution is heavily skewed toward a small number of countries. Four Swiss refineries alone process a substantial share of the physical gold that moves between wholesale markets. Add a handful of Asian and Middle Eastern refineries and you have covered most of the visible flow.
This concentration is not accidental — it reflects capital, skill, regulatory environment, and historical accumulation of the physical infrastructure needed to convert doré and re-refine existing bars at scale. The concentration also has real consequences: when refining capacity is disrupted in one location, the physical flow between markets that depends on that location becomes stressed. Understanding the geography is the first step to understanding why premiums move the way they do during supply disruptions.
The Swiss Cluster
Switzerland hosts four of the world's most important LBMA-accredited refineries: Argor-Heraeus, Metalor, PAMP (Produits Artistiques Métaux Précieux), and Valcambi. Together, these four refineries process a significant fraction of the world's annual refined gold. The Swiss cluster's dominance is not new; several of these refineries have been operating for decades or over a century, and they have accumulated the specialized knowledge required to handle both mine doré and recycled gold at the highest purity levels.
Switzerland's role is specifically as an intermediary. Doré arriving from African, South American, and Central Asian mines is refined into Good Delivery bars in Switzerland, then shipped to London for wholesale settlement or to Asia for further conversion. Recycled jewelry and industrial scrap from Europe and elsewhere is processed here. And critically, Swiss refineries specialize in converting between formats: taking a 400-ounce LBMA Good Delivery bar and re-refining it into 1-kilogram SGE-compatible bars for the Chinese market, or vice versa.
This last function — format conversion — is what makes the Swiss cluster central. When physical gold needs to move from London to Shanghai, it usually stops in Switzerland first. When gold flows the other direction, it also stops in Switzerland. During the March 2020 COVID lockdowns, when Swiss refineries closed for two weeks, the format conversion channel effectively broke. This is a large part of the explanation for the concurrent COMEX-London EFP blowout.
The Asian Growth Story
The Swiss cluster's dominance is not eroding, but Asian refining capacity has grown substantially and now serves as a real complement. Two shifts stand out.
India: MMTC-PAMP
MMTC-PAMP, an Indian joint venture with the Swiss PAMP, was accredited by LBMA in 2013 and has scaled to become one of the largest LBMA-accredited refineries by volume. It processes Indian and international doré as well as recycled Indian jewelry (which represents a significant volume given India's cultural gold accumulation). MMTC-PAMP's growth has increased the refined-gold options available to Indian domestic buyers and reduced some of India's dependence on imported refined bars.
China: increasing domestic accreditation
China now hosts multiple LBMA-accredited refineries, including several large operations serving the domestic Chinese market. Their primary function is converting doré and recycled gold into SGE-compatible kilo bars for Chinese consumption. Chinese accredited refineries have grown in both number and capacity over the 2015-2024 window, reducing (though not eliminating) China's dependence on Swiss format conversion.
The wider Asian and Middle Eastern presence
Japan (several refineries with historical importance), South Korea, Malaysia, Singapore, Turkey, and the UAE all host at least one LBMA-accredited refinery. The Dubai refineries in particular process significant volumes of Middle Eastern and East African doré. This distributed Asian and Middle Eastern presence provides regional processing capability that reduces round-trip shipping to Europe for certain flows.
What This Means for Cross-Market Flow
đź“Š Typical routing paths
- African mine doré → Swiss refining → London vault → LBMA-market circulation. The historical mainstream flow, still dominant.
- London 400-oz bars → Swiss re-refining to 1kg → Chinese market via SGE. The physical mechanism by which "gold going to China" actually happens.
- Chinese scrap → Chinese domestic refining → SGE circulation. Increasingly common and reduces China's dependence on Swiss intermediation.
- Indian mine doré and recycled → MMTC-PAMP or other Indian refineries → MCX / domestic circulation. Reduces some of India's need for imported refined bars.
- Middle Eastern doré → Dubai refining → circulation. Local processing reduces round-trip cost to Europe.
Where the Concentration Still Bites
Despite the Asian growth, three specific flows remain heavily Swiss-dependent, and disruptions in Switzerland still show up in wholesale premiums.
Format conversion between 400-oz and 1-kg bars
This is the flow that broke in March 2020. Chinese and other Asian refineries can and do convert format, but Switzerland still handles a large share of the London-side flow. If Switzerland is disrupted for an extended period, physical delivery of 1-kg product into Asian markets slows.
High-purity finishing
Most LBMA Good Delivery gold is 99.5% pure minimum. Chinese-market gold typically requires 99.99% purity. The upgrading step from Good Delivery to Au9999 requires Wohlwill electrolytic refining, which Swiss refineries handle at large scale. Asian refineries can and do handle Wohlwill work, but the Swiss capacity remains a significant share of the total.
Specialty and industrial gold
Five-nine (99.999%) gold for electronics and other industrial uses is largely produced at a handful of specialized facilities, including some Swiss operations. This is a small share of total gold flow but disproportionately important for certain end-uses.
The Risk Profile
⚠️ Concentration risks worth watching
- Swiss labor and regulatory changes. Any policy change in Switzerland affecting refining licenses, emission standards, or labor availability directly affects the world's largest cluster of Good Delivery capacity.
- Energy availability. Refining is energy-intensive. Europe's energy volatility since 2022 has real implications for Swiss and broader European refining costs and reliability.
- Pandemic-style disruption. The 2020 lockdown showed that concentrated refining capacity is a single point of failure. A similar disruption would produce similar market effects.
- Trade policy. Any change to European gold import/export rules affects Swiss throughput significantly. Some Swiss capacity depends on doré arriving from Africa via specific supply chains.
How to Read Refinery News
Refinery-side news items — a refinery being added to the LBMA list, an existing refinery being delisted or placed on transitional status, a facility fire or labor action — usually do not immediately move premium data. The effect is delayed by weeks because the flows they affect are themselves multi-week processes. However, when the news accumulates (multiple simultaneous disruptions, or a large facility going offline for an extended period), premium effects follow within one to three months.
Watching refinery news is complementary to watching premium data. The news gives leading indicators of potential future premium moves; the premium data confirms whether the leading indicator produced actual market impact.
What Our Data Shows
The LBMA reading on our dashboard is not the Swiss refinery capacity — it is the London OTC spot quote for LBMA Good Delivery-accepted gold. However, the Good Delivery specification and the refinery accreditation regime described above are what underwrite that market. Sustained disruption at Swiss refineries would show up in our LBMA-COMEX and SGE-COMEX premium series as a widening of format-conversion-related pressure, most likely visible in the SGE side because that is where the Asian pull demands the format conversion.
đź“Ś Key Takeaways
- Roughly 70 LBMA-accredited refineries operate globally, but four Swiss refineries (Argor-Heraeus, Metalor, PAMP, Valcambi) process a large share of the physical gold moving between wholesale markets.
- Switzerland's specific role is as intermediary and format converter — 400-oz Good Delivery bars re-refined to 1-kg SGE-compatible bars.
- Asian capacity (India's MMTC-PAMP, China's domestic refineries, various others) has grown substantially since 2013 but has not displaced the Swiss cluster from wholesale intermediation.
- The 2020 COVID Swiss shutdown showed that concentration is a single point of failure; similar disruptions would produce similar cross-market premium effects.
- Refinery news is a leading indicator; premium effects typically lag by weeks to months and appear most visibly in the SGE-COMEX series when format conversion is stressed.
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