Rethink the Hype Around France’s “Goldfund Frankreich”

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When most Swiss investors think “gold,” they picture Swiss vaults and Zurich’s Bahnhofstrasse. Yet in recent years, “Goldfund Frankreich” – particularly physically backed exchange-traded commodities (ETCs) like Amundi Physical Gold ETC (C) – has attracted considerable attention. The prevailing narrative holds that French gold products offer both liquidity and safety. Here, I’d like to argue the opposite: French gold funds are overrated. This contrarian viewpoint may be unwelcome, but it deserves scrutiny—especially for a Swiss readership that prides itself on deep expertise in precious-metals investing.

1. The Allure of French Gold ETCs

France’s gold-custody credentials are impeccable. The Banque de France safeguards some 2,436.8 tonnes of gold in its famed Souterraine vault, making it the world’s fourth-largest holder after the U.S., Germany, and Italy. Meanwhile, products like Amundi Physical Gold ETC (C) (ISIN FR0013416716) promise direct exposure to allocated bullion, trading on European exchanges with competitive spreads. With TERs as low as 0.12% p.a., they appear cost-effective too.

No wonder headline-seeking brokers tout them as the “Euro-denominated gateway to gold.” But that very euro-denomination introduces currency risk, eroding one of gold’s primary roles: a hedge against currency debasement.

2. Currency Risk: A Hidden Tax

Most French gold ETCs are denominated in euros. Thus, when you buy Amundi’s ETC as a Swiss franc (CHF) investor, you incur an implicit currency exposure: you’re betting both on gold and on the euro’s stability versus the franc. During periods of franc strength—such as flight-to-safety episodes—you may underperform a Swiss-denominated gold holding.

For instance, from January to May 2023, the euro fell nearly 5% against the franc, wiping out a comparable slice of your paper gains in euro-ETCs. Had you held a CHF-hedged product or physical allocated bars in Switzerland, your return would have been sturdier. While some issuers offer hedged share classes, the hedging costs (roll yield, counterparty fees) often exceed the purported benefits.

3. The Illusion of Allocated Gold

“Physically backed” conjures images of bullion tucked away in France’s Souterraine, ringed by NATO-grade defenses. Yet many ETCs employ pooled custodial models. Investors own undifferentiated ounces within a collective vault, not serial-numbered bars locked in private accounts. Redemption—while theoretically possible—is cumbersome: minimum parcels, administrative fees, and prohibitive delivery costs apply. In practice, the “physical” aspect is more marketing than reality.

By contrast, Swiss allocates like PAMP, Valcambi, or private-bank vaulted storage grant you the right to segregated bars. You see your bar’s assayer stamp; you can take delivery, or lend it via a bullion-backed securities program. That tangible control—a cornerstone of Swiss confidence—is absent in pooled ETCs domiciled in France.

4. Regulatory and Tax Complexities

French ETCs fall under EU directives and French tax law. While Swiss investors enjoy a relatively straightforward precious-metals regime, cross-border ETC holders face a labyrinth of with-holding taxes on any distributions (even if minimal) and unclear VAT treatments on redemptions. The dark corners of the French Code général des impôts can catch the unwary.

In Switzerland, purchasing physical gold from a local dealer is VAT-exempt—making it more cost-efficient. Even Swiss gold ETFs, like those domiciled in Jersey or Luxembourg, often offer simpler tax profiles for Swiss-resident investors.

5. Expense Ratios Tell Only Half the Story

At first glance, Amundi’s 0.12% TER seems competitive. But that figure omits the “all-in” custody costs baked into the ETC’s structure: insurance premiums, vault fees, audit expenses, and issuer profit margins. According to justETF’s comprehensive ETF/ETC comparison, total expense ratios for gold ETCs range as high as 0.59% p.a. before hidden charges. Meanwhile, Swiss-vaulted products can be secured for storage fees as low as 0.1% of asset value (and often decremented on volume), with no ongoing management fee.

Pair that with spreads: liquidity in German or French trading venues can be thin outside major sessions, widening bid-ask spreads to 0.5% or more. Compare this to the sub-0.1% spreads for high-volume Swiss gold ETFs on the SIX Swiss Exchange.

6. Political and Sovereign Risk

France’s gold custodian, the Banque de France, has a sterling reputation. Yet it remains subject to French law, EU regulations, and occasional political whims. In 2009, France sold approximately 225 tonnes of gold, sparking market jitters. While the central bank has since eschewed further sales, the episode underscores the possibility of policy U-turns.

Swiss investors seeking refuge in “politically neutral” assets should note that domiciliation matters. In the unlikely event of a dispute—sanctions, capital controls, or deposit freezes—a French ETC might fall under enforcement actions, litigation, or bank holiday risks. Holding physical gold in Switzerland, under Swiss jurisdiction, remains the safest legal bulwark.

7. Alternatives That Outshine French Gold ETCs

1. Swiss-Domiciled Gold ETFs
   Products such as ZKB Gold ETF (CHF-hedged) or Swisscanto Physical Gold ETF combine physical allocation with Swiss regulatory clarity. TERs hover around 0.4% but include all costs, and redemptions beyond 5,000 ounces grant segregated storage.

2. Allocated Bullion Accounts
   Banks like UBS, Credit Suisse, or private vaults (e.g., SICPA, Swiss Vault) allow account holders to own discrete bars. Insurance and storage fees are transparent, and delivery options extend to major Swiss airports.

3. Precious-Metals SECURITIES
   For those who prefer securities, gold-mining equity funds (e.g., R-co Gold Mining by Rothschild & Co) offer thematic exposure with value-added upside on exploration success—albeit with higher volatility.

4. Diversified Commodity ETFs
   Bloomberg Commodity Index ETFs include gold alongside a basket of other commodities. In inflationary environments, this approach can smooth returns and mitigate single-commodity risk.

8. An Unpopular, Yet Necessary Reminder

I concede that French gold funds have their merits: euro liquidity, DC-level reporting, and marketing sheen. For European investors domiciled in the eurozone, they are a logical choice. However, Swiss investors should pause before conforming to the herd. Our unique financial environment—strong currency, robust vaulting infrastructure, favourable tax treatment—demands solutions tailored to Swiss realities, not pan-European mass products.

Moreover, when gold’s raison d’être is asymmetry (protection during systemic stress), adding layers of currency, custody, and regulatory risk defeats its purpose. Gold must sit outside the very system it hedges; placing it under another central bank’s legal radar creates a form of tethering.

9. Key Takeaways for Swiss Investors

• Beware Euro Exposure: A French-domiciled gold ETC means dual-currency bets.

• Segregated vs. Pooled: Demand serial-numbered bars or segregated vault allocation.

• All-In Cost Matters: Compare TERs plus custody spreads against Swiss storage fees.

• Jurisdiction Is King: Swiss-jurisdiction holds trump over EU-regulated products in crises.

• Consider Alternatives: Swiss ETFs, allocated accounts, or mining equities may serve better.

10. Conclusion

“Goldfund Frankreich” may carry the cachet of France’s venerable vaults and the imprimatur of top ETF issuers. Yet for a Swiss investor, these products are at best redundant and at worst risky. A truly diversified precious-metals position in Switzerland should lean on domestic custody, CHF-denominated vehicles, and transparent, low-cost structures.

Admittedly, this view runs counter to mainstream financial marketing. But if gold’s promise is to stand apart from fiat, political, and systemic risks, then our holdings must sit beyond those same risks—not under another country’s vault door. In Switzerland, we are fortunate to possess world-class infrastructure and regulatory clarity for precious metals. Let us leverage that advantage rather than chase cross-border ETCs that dilute gold’s core value proposition.

Note: All figures and fund details are sourced from publicly available data as of May 2025.