Aug 19 (Reuters) - Britain's gold exports to Switzerland surged in the first half of this year, Australian bank Macquarie said on Monday, suggesting bullion being sold out of exchange-traded funds may be heading for Swiss refineries before being sold on in Asia.
The UK exported 240 tonnes of gold to Switzerland in May alone, while its exports over the first half of this year totalled 797 tonnes, Macquarie said in a note.
In contrast, Britain exported just 92 tonnes of bullion to Switzerland in the whole of last year, it said.
"The UK does not have gold mines, so where has it all come from? The obvious source is the gold exchange-traded funds (ETFs), most of which hold their gold holdings in London vaults, and which saw huge outflows in 1H 2013," Macquarie said.
"And why is it going to Switzerland? Two explanations make sense. One would be that investors have decided to switch their gold investments from ETFs to allocated deposit accounts, which are often held in Switzerland."
It added: "But a bigger factor, we think, is that the gold bars from ETFs have gone to Switzerland, where most of the worlds gold refining capacity is, to be remelted into different size bars and coins and then sold on end consumers, predominantly in Asia, specifically China and India."
Gold ETFs - popular investment vehicles which issue securities backed by physical gold - posted their biggest outflows of metal on record in the second quarter. Data from the World Gold Council showed outflows of 402.2 tonnes of bullion between April and June.
Holdings of the largest gold ETF, New York's SPDR Gold Shares, are held in allocated 400-ounce bars in the London vaults of HSBC, according to the fund's website.
