Question 31 from UPSC CSE 2023 - Economics

Question

Consider the following statements:
Statement-I: Switzerland is one of the leading exporters of gold in terms of value.
Statement-II: Switzerland has the second largest gold reserves in the world.
Which one of the following is correct in respect of the above statements?

Accepted Answer

Correct Option: C. Statement-I is correct but Statement-II is incorrect

Strategy: - Analyze Statement I by connecting Switzerland's role as a global gold trading hub and major re-exporter, distinguishing it from domestic production. The term 'leading exporters of gold in terms of value' refers to trading activity, not gold reserves.
- Identify Statement II as incorrect, since Switzerland's gold reserves are modest and not among the largest globally. The USA and Germany, for instance, hold significantly larger official reserves.
- Conclude that only Statement I is correct.

Key Info: ## Switzerland's Gold Trading and Refining
Switzerland is the world's largest exporter of gold by value, primarily due to its sophisticated refining industry. The nation imports, refines, and re-exports gold, collaborating with major gold producers and industrial economies. Globally significant refiners like Valcambi, PAMP, and Metalor, located in Switzerland, manage a substantial portion of global gold flows.

## Official Gold Reserves
Official gold reserves are holdings by central banks and sovereign institutions. The largest official gold reserves are held by:
- **United States:** Over 8,000 tonnes
- **Germany, Italy, France, Russia:** Follow in descending order

Switzerland holds approximately 1,040 tonnes, which does not rank it among the top two globally. Australia possesses significant gold mine reserves but is not a leading holder of official monetary reserves. Therefore, Switzerland's prominence in gold relates to its role as a trading center, not as a top holder of bullion reserves.

## Factors Facilitating Swiss Gold Trade
Switzerland's extensive gold trade is supported by:
- Favorable logistics
- A stable banking system
- A rich history of precious metal expertise

The country's function as a physical gold hub is often mistaken for high national gold reserves, but its central bank's holdings are modest compared to major reserve holders.

Answer

Option A: Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

Answer

Option B: Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

Answer

Option D: Statement-I is incorrect but Statement-II is correct

Consider the following statements: Statement-I: Switzerland is one of the leading exporters of gold in terms of value. Statement-II: Switzerland has the second largest gold reserves in the world. Which one of the following is correct in respect of the above statements?

Consider the following statements:
Statement-I: Switzerland is one of the leading exporters of gold in terms of value.
Statement-II: Switzerland has the second largest gold reserves in the world.
Which one of the following is correct in respect of the above statements?