Blue - Island

Vontobel Private Banking The magazine for private clients Winter Edition 2013

Island A World in Itself.

“How I really wished that there was an island out there for wise and benevolent people. Even I would have become a fervent patriot of such a place.”

Albert Einstein (1879 –1955), Physicist

Editorial

Dear readers, For many people, the word “island” conjures images of a tranquil, unspoilt paradise, perhaps in a distant and lonely corner of the world. However, it is in fact a multifaceted concept, and we have chosen it as the theme of this edition of “blue”. Accordingly, stories await you that are not only fascinating but surprising.

environment. Understanding and correctly assessing risks is a key part of what they do. This gives us the confidence to make sustainable investments and take advantage of opportunities as they arise. We work on making your assets grow, and keeping them safe, with clear processes and a high degree of discipline.

Of course, there are not only islands in the geographic sense, but also economic islands – and even investment themes that conceptually resemble islands. For example, our specialists’ contribution in the Opportunities section of “blue” is entitled “Gold – an island sanctuary despite not generating income”. An interesting perspective for your investments in the new year.

Enjoy reading the island stories that we have discovered for you!

In 2013, successful investing will require a solid understanding of the financial markets. In this regard, Vontobel calls upon an experienced team that is continuously analysing the market

On behalf of my colleagues at Vontobel and myself, I wish you all the best for 2013.

Cordially yours,

Georg Schubiger, Head of Private Banking

Would you also like to read “blue” on your iPad? To download the app, or get more information about it, visit www.vontobel. com/blue or go to the App Store directly.

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6 Where the world comes to an end.

Only the thousand or so permanent residents of the Baltic Sea island of Hiddensee experience its wild natural beauty in winter. One of them is Hubert Thürke, one of the last remaining Baltic fishermen.

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Islands – surprisingly diverse and always different.

The fascination of islands – fascinating facts.

Photo: Sandro Diener

Photo: Sandro Diener

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Photo: Sandro Diener

Content

12 Island-hoppers and adventurers.

A story about two people, who have embarked on an adventure. Following in the footsteps of explorers from the Arctic to the Antarctic – an island-by-island voyage of rediscovery.

16 The high-security island in an Alpine stronghold.

He envisaged a quite different island.

Dolf Wipfli, CEO of Swiss Data Safe, upgraded an Alpine stronghold into a high-security island.

Photo: Gallerystock Photo: Christian Grund

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Macro: Emerging economies – drivers of growth and political heavyweights.

Gaining political ground, healthy public finances, the potential to lower interest rates and free-spending populations – emerging economies providing assistance in times of need.

Switzerland – a sea of more than 3000 islands.

Their numbers increase from month to month and from year to year. Traffic islands in Switzerland – a mini voyage of discovery to such beauties and more.

Column: The island that we often visit.

Dr. phil. Manuel Bachmann describes the island that we often visit, a straightforward place with a particular boundary, full of yearning and secrets.

Blue Pages: News from the Vontobel Group.

A compilation of news from all our business areas.

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Photo: Getty Images

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Opportunities: Gold – an island sanctuary despite not generating income.

The Vontobel Guide: Tips for going out.

Vontobel teams from Hamburg, Dubai, Hong Kong and Basle, introduce you to some of their local highlights.

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Book Corner Atlas of Remote Islands – Fifty Islands I have Never Set Foot on and Never Will. blue 5

Interview: Urs Thaler // Photos: Sandro Diener

Hiddensee is small. 18 kilometres long, at its narrowest point it is just 300 metres wide and at its widest point 3 kilometres. A mere 1014 people live on this Baltic Sea island in the winter when the tourists have gone. One of them is Hubert Thürke. He is one of a dying breed – the Baltic fisherman – like his brother Michael and his father Johannes.

Theme: Baltic sea island

Where the world comes to an end.

Journeying to Hiddensee is admittedly rather complicated. Nowadays people living in Berlin, Frankfurt or Munich can get to the party island of Mallorca quicker than they can to Hiddensee, which is much closer. People can also reach the North Sea island of Sylt quicker, simply by conveniently loading their Porsche or Maybach onto the motor-rail train and taking it with them across the Hindenburgdamm onto the island.

Things are different in Hiddensee. There are no motor-rail or narrow-gauge services to this Baltic Sea island. There are also no scheduled flights or car ferries, just occasionally a passenger vessel. Admittedly a heliport was built just recently in the village of Vitte. Yet that is intended for medical emergencies and supply flights when the Baltic freezes or when the island is savaged by storm floods. Sylt and Hiddensee are like fire and water or like uproar and tranquillity.

Reunification and its Consequences In Germany there is still a divide between East and West some twenty years after reunification. Sometimes that divide is economic, sometimes it is psychological, sometimes it is social and sometimes just imagined. The divide resonates in many discussions – at federal government level, between the states and also right down at the level of everyday real life.

Sylt is in the West, whilst Hiddensee is in the East. The people in Mecklenburg-West Pomerania are very direct when trying to explain the differences between East and West. For they say, “People, who travel to Sylt want to see and be seen. Those who come to Hiddensee want peace and quiet.”

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Many visitors, who are familiar with the Baltic Sea region, say that Hiddensee is a paradise. Andreas Arendt is a Saxon, who migrated from Leipzig and who has some pertinent observations about the East-West divide. Maybe as an East German he is not entirely objective, but his statements are corroborated by other island inhabitants. For more than 20 years he has run the island’s bookshop at Kirchweg 19 in Kloster, where he gets chatting with many people.

Arendt has observed how many West Germans, particularly from Hamburg, have acquired property on Hiddensee since reunification. “Some“, says the bookseller, “sold their houses again after a few years.” They could not come to terms with the island and the islanders’ mentality. “On Hiddensee you can’t really swagger and show off”, he says. “You can’t even take the Bentley for a spin on this car-free island.” And because most roads and tracks consist of sand, earth and are unpaved, it is a good idea to leave the posh shoes at home in the first place. This is Arendt’s opinion. “Nobody could care less about posers here“, he says, “and you would have a real job finding a restaurant on Hiddensee, where you would pay more than 300 Euros for a meal for two.”

Business has taken a downturn Yes, reunification has left its mark on Hiddensee, even a positive one, there’s no doubt about that. Extensive, modern port facilities have been built in the island’s three villages, Neuendorf, Vitte and Kloster. There are many new homes in Vitte, which had large open spaces. Many buildings in Neuendorf, Kloster and Grieben have been refurbished. Even the Dornbusch Lighthouse, which is visible for miles around, flashes white and red again. The hideous GDR supermarket in Vitte (“On offer today – practically nothing”) has been demolished. What has changed most dramatically since reunification is the situation that Baltic fishermen find themselves in.

The Baltic fisherman, Hubert Thürke, on board his fishing smack, “Vit009”, off the island of Hiddensee.

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“Indeed there has been no improvement”, is an opinion shared

by Johannes and Hubert Thürke. Both fishermen are quick to draw their conclusions. In the GDR they obtained cheap diesel for their fishing smack and the purchase prices for the fish they caught were guaranteed. A litre of fuel cost the fisherman a paltry 13 pfennig, today they have to pay 80 or 90 cents, sometimes even 1 Euro. Fish prices have headed in precisely the opposite direction. In the GDR prices were stable and relatively high. Father Johannes Thürke (79) mentions sums of up to one mark for a kilo of fish. Nowadays his 54-year-old son only gets 20 to 30 cents for a kilo of herring, if he sells his catch to wholesalers. A bad deal all round.

No wonder that Hubert Thürke is the last professional fisherman left in Kloster. There are a few others in Neuendorf and Vitte, including Hubert Thürke’s younger brother Michael (52). Currently Hiddensee only has around a dozen professional fishermen in total. Three years ago they numbered 20. And prior to 1989 the Thürkes recall there being some 120 professional fishermen on the island during the really good years. Back then fishing was an important sector of the economy. Ancillary businesses, such as a salting plant, a smokehouse, restaurant, retail outlet, transport and maintenance businesses, were added to the value chain on the island, which created jobs for more people.

Opposition and Conformation During the 18th and 19th centuries fishing was usually conducted as a cooperative business on Hiddensee. In the Hiddensee dialect the expression used was “Tohoop fischen”, fishing in numbers. There were two reasons for that – an individual fisherman could hardly afford the money to invest in a boat, nets and fish traps. Furthermore many fishing methods required several men to work together as a team. There were fishing boat collectives comprising three to four fishermen and in the case of prawn boats with trawl nets, collectives of eight to twelve people existed. The fishing method involving chamber fish traps up to 500 metres long was very laborious. These were not set up in the Baltic but rather in the Bodden, the shallow body of water between Hiddensee and Rügen. The tubular fish traps were fastened to heavy stakes the length of telegraph poles. This required the efforts of several physically very strong fishermen.

During the GDR era, the state authorities applied great pressure in their attempt to force established fishing communities into line and to convert to production cooperatives. Yet the authorities had their work cut out trying to force the stubborn Hiddensee fisherman to conform. They defended their autonomy with unbelievable tenacity. The socialist state therefore only managed to establish its control over the means of production very slowly and force the fisherman into so-called FPGs (fishing cooperatives). Guaranteed sales and prices certainly helped to gradually soften the fishermen’s opposition. And once the fishermen were given the opportunity to sell those catches, which exceeded their delivery quotas, on the open market, they attained a relatively 8 blue Theme

crisis-free status – possibly for the first time in their entire history. It is likely that this economic safety net is what causes the fishermen to judge the GDR so benevolently. Johannes Thürke has another reason. His eyes still light up when he recounts that he managed to retain ownership of his powered fishing vessel throughout the GDR era.

Following reunification many of the fishing collectives broke up. It may well be that, thanks to increasing motorisation and mechanisation on board fishing vessels, fewer hands are now required than previously. It may well be that the trend towards working alone is impacting on fishermen as well. At any rate Hubert Thürke has put to sea alone for many years now.

Fishermen are early risers. Reveille is at 5 am or even earlier. Hubert Thürke wants to be out at sea on his fishing smack “Vit009” before it gets light. He is going to set up his gillnet in the “Libben”. It is 200 metres long and 5 metres deep. The net will stay out for 24 hours. How large will the catch be? The tall, sinewy man scratches his head, reflects for a moment and then says, “Maybe 20 crates at 25 kilos each.” Then he goes back to honing a seal on the workbench in front of his shed down at the harbour and says nothing. A few minutes later he mutters “Maybe even just ten crates. You can never predict it. It always depends on where the fish are drawn to.”

Ever since prices started to fall to such an extent, Hubert Thürke has self-marketed what he catches – direct to consumers. A few years ago he acquired a dilapidated barge in Ueckermünde on the Szczecin Lagoon and had it towed to Kloster. The 1930-built tender was originally called Cremon VIII and had accommodated the famous actor, Hans Albers, amongst others. Thürke reconditioned the boat, moored her permanently at his jetty in Kloster harbour, rechristened her “Willi” and has sold his catch from there both as smoked and fresh fish ever since. In the summer months when the tourists are there, he offers a wide range of products – herring salad, pickled herring, fried herring, fish rolls, rissoles, potato salad as well as coffee and cake. Initially his sister served the guests and helped to make the place hum. But since she married and moved to Berlin, the fisherman does it all on his own. He does not get lonely on the barge, even in winter. People are always dropping by. “Got any fresh herring?” – “Have you caught any cod?” – “What about eel with herbs?" – “How much do you need?”, the fisherman responds. “By when should I prepare it for you?” – “Yes you can pick up the fish tomorrow afternoon.”

The Miracle of Hiddensee Once the people have left again, Hubert Thürke digs out a photo album. He can put names to faces on every photo. He leafs from page to page until we get to the Miracle of Hiddensee. This is a true story, as the photos prove. It happened one weekend in 2006; Hubert Thürke was out on the water early in the morning as usual and had hauled in his net. The catch was disappoint-

ing. So he returned, moored “Vit009” in Kloster harbour and set about processing his modest catch. An hour later a woman came running along the jetty. She asked for cod, but Thürke had not caught a single one that morning. “Haven’t got any”, he said and offered herring and flounder as an alternative. But the woman was insistent. She really wanted cod and begged Hubert Thürke to go out once again for her benefit. “So I sailed right up the Libben again and trawled for four hours. The net got fuller and fuller. The cod were literally jumping onto the boat, in hundreds and thousands.” And all because a woman wanted two or three cod.

Hubert Thürke finally returned to Hiddensee with eight tonnes of cod. The pictures in the photo album show a bilge teaming with fish. As the fully laden boat entered the harbour, Hubert’s father Johannes was standing on the jetty. At first he thought the smack was sinking because she was so unusually low in the water.

Hubert Thürke’s Hiddensee Miracle remained a one-off event, which has never been repeated since. And not recently when the Hiddensee fisherman went out on Thursday morning to retrieve the gillnet that he had set up in the Libben the day before. Hubert Thürke did not return with the forecast 20 crates, not even with ten. All he returned with were two crates of herring, a few cod and a flounder. All in all a catch that would earn him a maximum of 120 Euros if he was able to sell it all direct to consumers.

If he were to sell it to a wholesaler, all he would have to show for almost two days’ work would be 10 to 14 Euros.

But who knows. Perhaps Madame Cod will show up again, or somebody else with an unusual request.

More on your iPad Video “Hiddensee nüchtern betrachtet” a travel tipp of the Hubert Thürke is already out at sea early in the morning, before it really gets

WDR German TV (german only)

light, to cast his gillnet.

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wide by

16 m

46 m long is the size of Bishop Rock, the world’s smallest built-on island. It is located at the western extremity of the Scilly Isles, which are part of the UK, and is regarded as Central Europe’s most westerly rock.

1512

is the year the Portuguese landed on the Moluccas, the so-called “Spice Islands”. There they established the first European trading post – with the objective of controlling the spice trade with Europe. The monopoly on trade in nutmeg, pepper and other fragrant treasures generated enormous wealth.

3.5 snakes/100 m2 live on Ilha da Queimada Grande, also known as the “Island of Death” or “Snake Island”. That makes 15,000 highly venomous Golden Lancehead Vipers in an area covering 430,000 m².

The island is located 33 kilometres off the south-eastern coast of Brazil and is a protected nature conservation area. Landing on the island and fishing within a one-kilometre radius are prohibited.

100 homes are located on the 1.2 ha island of Santa Cruz del Islote in Columbia. It is regarded as the world’s most densely populated island. Around 1,200 people live on it, which works out at a population density of 100,000 inhabitants per square kilometre.

The largest public space is the size of half a tennis court.

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45,000 £

270 km² is the size of Isla de Ometepe

is the price of the cheapest island

in Lake Nicaragua, the world’s largest volcanic island in a freshwater lake. It is located in the Republic of Nicaragua’s Departamento Rivas in Central America.

on the market. It is called “Eilean an Seamraig” and is located on the West Coast of Scotland. You can’t develop the land but have an area of 15,700 m² in which you can go walking.

10,250 m is the height of Mount Mauna Kea. It is located on Big Island, the largest of the Hawaiian islands and is at the same time the world’s highest mountain – if you don’t just count the 205 m that rise up out of the ocean, but measure the entire mountain from the ocean floor upwards.

Photos: 123RF, Shutterstock

3 years

is the lifespan of an artificial island

built of reeds by the Uru, an ethnic group in Peru. A total of some twenty such islands are afloat in Lake Titicaca off Puno; however they vary in number, given the perishability of the material. On the main islands there are two schools and two temples as well.

More on your iPad More facts, pictures and videos

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Theme: Island-hoppers

Island-hoppers and adventurers.

Text: Sara Osmani // Photo: Sandro Diener

The Swiss LÊonie Suter and the Australian Patrick Lewis are sailing halfway around the world – from the Arctic to the Antarctic. They are seven months into their adventure and have many more ahead of them. The two scientists want to know what the great explorers must have felt like on discovering islands that nobody had previously been to. And what has changed since.

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Soon they will be putting to sea again. The scientists LĂŠonie Suter and Patrick Lewis on the Cliffs of Moher in Ireland.

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1 Léonie Suter at the helm of “Widdershins” en route from Dublin to Wales.

2 80° North. “Widdershins” anchors at the north coast of Spitsbergen.

In 2008 Léonie Suter completed her Master’s in Biology at the Swiss Federal Institute of Technology (ETH) in Zurich. She then headed south and left the ETH’s island of knowledge behind her.

The native of Basle initially wanted to visit Australia and New Zealand and take a short break from the world of science. Several continents later, she met Patrick Lewis in Ushuaia, the most southerly city in Argentina. The Australian, also a young natural scientist, had just completed a season as a tourist guide in the Antarctic.

Meanwhile Léonie Suter should really have returned to the ETH, where she wanted to make a start on her doctoral thesis. Yet on the spur of the moment she obtained permission to extend her vacation and travelled for eight weeks with the Australian on his motorbike through South America. “It was very exciting” the native of Basle recalls with a laugh.

Thus began the story of two people, who met by chance and who inspired each other to undertake a second project that was to prove even more offbeat than the first. This is a journey from the far north down to the South Pole, and the objective is to explore the natural world, the wilderness and a large number of islands.

These young researchers aim to compare their experiences with those of the great explorers of the 16th century, e.g. Columbus, Cook, Magellan, Munk, Ocampo, Pereira, Saavedra, Schouten and many more.

Jan Mayen, the exceptional island In June 2012 Léonie Suter and Patrick Lewis put to sea in their sailing ship “Widdershins”. Starting from Tromsø in the north of Norway they headed for Spitsbergen, a group of islands north of the Arctic Circle, which they explored extensively for about a month.

From there they sailed to Jan Mayen, an island, which was actually intended to serve just as a staging post between Spitsbergen and Greenland. “Jan Mayen conveys the impression of being at the ends of the earth”, is how the young scientist recalls this volcanic island. Far away from anywhere and totally different to any14 blue Theme

3 Diving with jellyfish in icy seawater.

4 Léonie Suter explores an ice cave in Norway not far from the Arctic Circle.

Pictures: Léonie Suter und Patrick Lewis.

thing she had seen before. The island consists of little more than the Beerenberg volcano. At the foot of the mountain there are bizarre rock formations surrounded by black sand. “It seemed”, says Léonie Suter, “as if we were entering a totally different world – a world where nobody had previously set foot. Yes, we felt like explorers on that particular day.”

Exciting discoveries are a part of their journey, so are mishaps. As the couple arrived in Iceland at the beginning of September 2012, their engine packed up. The autumn storms took hold earlier than expected and so they had to change course completely. A threeweek sea crossing to Newfoundland would have been too risky. It rained non-stop, the heating stopped working and dampness penetrated into the cabin. The two of them had to sit tight in the north of Iceland for nearly two weeks in disagreeable conditions, until their engine had been repaired with the help of some locals. After spending a dry night in the guest room in the home of their generous Icelandic mechanic‘s family, they put to sea once again and reached Scotland via the Faroe islands. Reaching Scotland meant that they had also achieved their first intermediate target – they had covered 5000 nautical miles, equivalent to 9260 kilometres.

Nautical tradition requires that people have a swallow tattooed between thumb and index finger to signify they have sailed 5000 nautical miles. However this couple opted to take a different course of symbolic action. They adopted a Jack Russell puppy and called him Sparrow. They derived this name from another seafarer, from the pirate Jack Sparrow, star of the film, “Pirates of the Carib-

bean”. Sparrow became the third crew member on board “Widdershins”. The trio then headed for Ireland and England and from there to the Canaries via Spain and Portugal. Unlike Patrick Lewis, our native of Basle had to date had little time to look at chronicles and logs written by earlier explorers. However she is not unhappy about that. She can therefore re-explore each island with an open mind. Crossing the Atlantic is next on the agenda after a stopover in the Cape Verde Islands. The first leg is due to be completed in the Caribbean in February 2013. After an interval, during which everything is to be spruced up, the plan is to head south more or less along the east coast of Central and South America. Léonie Suter and Patrick Lewis want to have reached the Antarctic by no later than January 2014.

At sea this well-established team takes turns every four hours to perform specific tasks. One person sails, whilst the other takes a rest or prepares a meal on the paraffin stove. The four hours at the helm either whizz by or just drag on and on.

Sometimes a kind of disorientation, a lack of feeling for time, sets in. This was particularly the case in the summer months in the Arctic, when it was light 24 hours a day. Was it still Sunday or was it Monday already? No idea. But actually this wasn’t important, because the rhythm of life was as regular as the action of the ocean waves. Sailing, sleeping, sailing, sleeping, sailing, sleeping. It was only when both mariners went ashore again, did they realise how long they had been at sea for. “You arrive somewhere and have no idea what day it is.” Sometimes they arrived on an island at 2 o’clock in the morning and were so hyper that they didn’t want to wait till morning to explore their surroundings, but headed out there and then. It was light anyway.

As researchers they are interested in sharing information When they are not exploring the countryside on the islands they visit, they are collecting data on seabed biodiversity as part of the www.reeflivesurvey.com project. They went diving in environments that have not yet been logged and gathered data about the occurrence and prevalence of fish and invertebrates. The data is collected worldwide using a standardised method and aggregated in a central database, where it can be retrieved for use in other scientific studies. The project organisers donated some of the couple’s diving equipment. Both scientists regard “Reef Life Survey” as an ancillary project. The motivation for the “Two in the blue” lies elsewhere.

The idea was born back in 2008 on their trek through South America. Yet it is easy to dream about something, but not follow up with actions. It is always quick and easy to find reasons for not undertaking such an adventure – too expensive, no time, too many risks, too little courage. Yet things were different as far as this SwissAustralian couple was concerned. And they knew, as soon as they had invested all their savings in a sailing ship in Norway, that from that point on there was no turning back. And this is what in fact happened. Léonie Suter has not had a permanent address, neither

in Switzerland nor anywhere else, since June 2012. For the next few months her home is this sailing ship.

Patrick Lewis summarises this motivation in one sentence. “We want to see the world.” And get as many people as possible to reflect on life and the natural world, on the past and future of our planet. Both are keeping a diary during the expedition. They plan to combine their impressions in a book at a later stage. The couple keep their friends, relations and others taking an interest in what they are doing up to date about the North-South expedition in their “Two in the blue” blog. The blog is a kind of link with the “rest of the world” and of course also helps to raise money. Both of them always welcome sponsors and one-off donations, so that their project does not run aground financially.

Far, far into the blue yonder Sometimes life spent travelling is lonely and arduous “We then have to remind ourselves why on earth we are doing this.” Léonie has pictures of her niece and nephew with her. Patrick took the registration plate of the motorbike they used during their first trek through South America with him. En route they buy books and DVDs. “It does you good to do something normal occasionally, like watch a film”, says the native of Basle.

Every time they arrive on a new island both of them know exactly why they are undertaking this ordeal. “You go ashore, there is not a soul in sight, you are excited and experience an unbelievable sense of freedom.” At such moments they feel like genuine explorers – even though others have already set foot on the island before them. At such moments they forget every exertion and every hardship. That indescribable feeling of freedom gives them the strength to continue – to continue with their journey far, far into the blue yonder.

Léonie Suter (30) grew up in Allschwil near Basle. She studied Biology at the Swiss Federal Institute of Technology (ETH) in Zurich and completed her doctorate at the Institute for Integrative Biology in 2012. She has been sailing from the Arctic to the Antarctic together with her partner Patrick Lewis (32) on board “Widdershins” since June 2012. Once the expedition has been completed in January 2014, both want to settle in Australia.

Further information: www.twointheblue.com

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Interview: Angela Obrist // Photos: Sandro Diener

Extensive bunker systems are located in the heart of Switzerland, deep inside the Uri Alps. In the event of war the Federal Council would have governed the country from here, back in 1939 as the destruction of Europe was getting underway. Yet as far as the bunker was concerned, the emergency occurred much later – when Swiss Data Safe acquired this Alpine stronghold and upgraded it into a high-security island. For clients, whose assets are to be protected against all kinds of global turbulence – in secrecy and with discretion.

Theme: Island in the alps

The high-security island in an Alpine stronghold.

There are a large number of islands in the Swiss Alps that are shrouded in secrecy and serve the country’s security – fortresses, bunkers and redoubt facilities. Before and during the Second World War the Swiss Army built a series of complex fortifications deep inside the Alps stretching all the way from Grisons via Central Switzerland into Valais and the Bernese Highlands. One of them is the Brindlistollen fortress near Amsteg. Although the former Federal Council bunker, which the Swiss government would have occupied in the event of war, has now been decommissioned, it still safeguards a large amount of valuable assets at a maximum level of security. Swiss Data Safe has converted these caverns in the Uri Alps into an in-mountain high-security island, featuring plenty of high-tech. “We offer companies and private individuals with significant security requirements the opportunity to store electronic and physical assets securely”, explains Dolf Wipfli with the due restrain of a discreet businessman. He is CEO of the company established in 2001 that is providing this highsecurity island service, for which there is increasing demand.

Double and triple security It is a highly discreet business that Swiss Data Safe is conducting inside the mountain. Dolf Wipfli’s visitor can already tell this from the nondescript steel door that seals the entrance to the bunker located behind a rock face near Amsteg. Dolf Wipfli guides his visitor onto the premises, which, then as now, only a few people are permitted to access. We initially walk through a short tunnel.

Broad-shouldered Wipfli is standing in front of the first of three 16 blue Theme

solid, electronically guarded steel doors. He secretly keys in a number combination. For a moment all one can hear are the electronic beeps. What does it actually look like inside a highsecurity bunker? What is likely to be revealed on the inside?

As the door opens, one is surprised at how bright and modern the place looks. After passing through the first security controls, we continue down a long, sterile-looking corridor, lined by a large number of doors. The client rooms are located behind all these locked doors. Inside the mountain there is a high-security data processing centre that provides clients with housing- and hosting-related IT services. Swiss Data Safe is partnering with TÜV Trust IT to meet clients’ constantly increasing security requirements and quality standards. This not only involves certified data processing centres but also high-security services, such as “secure workspace” and self-contained data rooms on a TÜV Trusted Platform.

Swiss Data Safe literally provides its clients with nuclear-bombproof facilities with all the necessary redundant systems and can even operate entire server systems on behalf of clients. “A company must ensure in an emergency that none of its data is lost.

After an incident a company must be able to work with statusquo-ante data as quickly as possible. Therefore companies usually have two independent server systems at their disposal – one at the company itself and one at an external provider, such as us”, Wipfli explains.

Dolf Wipfli, CEO of Swiss Data Safe, in the historic section of his high-tech bunker in the Swiss Alps.

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What can be revealed about the assets that have been entrusted into Swiss Data Safe’s care deep inside the mountain? Here too Wipfli remains cautious. All he is willing to say is that files and archives, which can amount to as much as 20,000 box files per client, are stored in the bunker. An upgraded former strongroom from the Swiss National Bank serves as secure storage for bullion and works of art. “In many cases the current economic, political and financial difficulties in many countries have eroded the trust that people have in financial and other institutions. During such periods people seek peace of mind by investing in physical assets”, says Dolf Wipfli. Therefore a range of different assets are safely deposited in the bunker. As with the banks, the principle of “know your customer” also applies at Swiss Data Safe. Wipfli explains what is meant by that. “To protect both ourselves and our clients we do not accept black-box deposits. We always know exactly what is deposited in our bunker.”

of time”, says Dolf Wipfli as he leads his guest into that section of the facility that still looks like it did during the Second World War. Dolf Wipfli opens a door. Behind it there is a long dark tunnel driven into the rock. The walls show the tell-tale signs of the arduous work performed long ago by the bunker builders – so in contrast to the state-of-the-art section of the facility. Water drips relentlessly from the rock walls in the historic section. Wipfli’s visitor realises for the first time that “we are deep inside the mountain. Above our heads there are millions upon millions of tonnes of rock. It is a somewhat daunting feeling. And yet this impenetrable stone mantle plays a key role in the company’s success formula. The security that we can offer here in this rock environment is the absolute maximum. Any event that occurs in the outside world, be it power failures, flooding or terrorist attacks, has no impact on the systems in here. No other data processing centre in Switzerland can offer a comparable degree of protection”, says Wipfli. The bunker’s island characteristics would be of absolute benefit, especially in an emergency. Isolated from the outside world, fully autonomous operation would be feasible for an extended period of time.

“The less people know about our

business, the less vulnerable we are to attack.”

How it all started The electrical engineer already started developing his unusual business idea around 20 years ago. Back then the Swiss Army announced that it wanted to reduce its real estate portfolio. After graduating from university, Wipfli had worked for a Swiss high-security business for several years and so had raised his awareness of the issue of security. “Why not use such a facility for the purpose for which it was built?”, he asked himself. These fortifications served the country‘s security. “Could one not utilise this facility for security purposes in the civilian economy?”, the native of Uri asked himself. When the Army finally opted to sell the bunker, Dolf Wipfli’s bid was accepted. “To describe it as love at first sight would be exaggerating, but a certain fascination was there right from the start.” It took another four years before this Alpine stronghold could be used for private-sector purposes. This huge facility, which features 2,500 square metres of usable space, needed to go through countless licencing procedures. It was the first privatization of its kind. As it turned out, an underground special commercial zone had to be specifically created for the intended type of use.

When the bunker was built in 1941, such licences were not necessary. The facility served the country’s interests, was regarded as a secret location and was built by the Federal Government without regard to building and zoning regulations. Whilst the local Uri inhabitants knew of its existence inside the mountain, only a small handful was aware of the fortress’ purpose. These massive caverns were dynamited and drilled into the granite of the Saint Gotthard Massif well away from the public gaze. “I have enormous respect for what the engineers and miners achieved back then, in managing to create this extensive bunker facility against the odds with only modest resources and in such a short period 18 blue Theme

Other facilities in portfolio Swiss Data Safe has achieved continuous growth during the past twelve years. Today the company owns two larger fortified facilities in the region, to go with the Federal Council bunker near Amsteg. Demand for security solutions is evidently increasing. Yet who uses such exclusive services? “Our clients include individuals and corporate entities from Switzerland and abroad, who have major security needs for data and/or physical assets and require the highest degree of protection available”, Dolf Wipfli explains.

Quoted companies, financial institutions, investment companies, asset managers and family offices are what Wipfli’s visitor has in mind. And of course she pictures the gold bullion that may be stored behind the one or other door. Yet naturally the CEO of Swiss Data Safe is not prepared to divulge any details – neither about the assets held in trust nor about the company’s client base. Security is one key issue for clients. The other issue to which they attach just as much importance is discretion. “Trust in our discretion and in our infrastructure is the foundation upon which our business is built”, says Wipfli. “Without trust we cannot attract any new clients at all. And if we cannot offer discretion we cannot engender trust. In our business discretion must therefore be an integral part of the approach we take.”

Wipfli goes back through the tunnel and opens another door.

Here is the next surprise in store. A Swiss-pine-panelled stairwell leads up to the centrepiece of the facility, to the living accommodation of the Federal Government. There are long corridors here

too; however these are much more comfortable surroundings in a typically Swiss country chalet style. Signs indicate the way to the toilets and the emergency exits. Dolf Wipfli shows his visitor a bedroom with a camp bed and a small washbasin. “That must have been rather luxurious back then”, he remarks. Then we continue through the dining room into the kitchen. There we encounter a pastel-yellow country house style, which could easily be back en vogue today. A machine sits enthroned on a shelf. It is a huge mincer, which certainly would have been able to feed an entire army. In the adjoining pantry there is a remarkable piece of kit that looks like a pot on legs. It is an automatic potato-peeler dating from 1941. Then we proceed to the lounge. This room with its rustic wooden table and colourful pictures on the wall conveys a very cosy impression. You could imagine being in the nearest country inn or in an attractive holiday home in the mountains – if it were not for the missing windows. There is a well-dented tin of candles on the table with a yellowed label stating “Wartime Reserves. Only open in the event of war.”

Dolf Wipfli is CEO of Swiss Data Safe AG, which was established in 2001. He is a graduate electrical and industrial engineer and has a Swiss marketing management qualification plus he completed an apprenticeship as a mechanic. Prior to commencing his current business activities Wipfli worked as a development engineer for a Swiss company offering high-security solutions.

“We have left this section of the facility as it would have been back then”, says Wipfli. “Everything was prepared to enable people to live here for months on end”, Wipfli recounts. Little is known about what happened in the bunker during the Second World War. After all the Army was no less secretive than the current owner is now. Nevertheless Wipfli’s visitor still manages to coax a historical anecdote out of him. “The Federal Council is reputed to have visited the bunker once for a few hours in 1945 after the war.

The Hotel Stern und Post in Amsteg provided the catering and delivered lunch to the bunker door, from where the orderlies took it to the dining room of the Federal Council bunker. Following an afternoon round of jass, the Federal Councillors then soon made their way back to Bern”, Dolf Wipfli recounts with a grin.

The tour is over We now proceed down a flight of stairs back into the modern section of the facility. This is where another stage of the upgrade is currently being turned into reality. “We are upgrading the bunker step by step”, says Wipfli. “This enables us to cater for any new requirements that our clients may have in an optimum manner.” The company will soon be able to provide private strongrooms with 25 square metres of space for the sole use of specific clients. “Here too we have opted for the standard that delivers the maximum level of security”, says the CEO. The steel door to such a strongroom alone weighs around 2.5 tonnes. The entire room has been conceived as a closed-loop system and weighs around 60 tonnes – an island within an island.

It really would appear that Brindlistollen near Amsteg is set to remain the high-security island in the Swiss Alps for a long time to come.

More on your iPad More pictures about the Alpine

Dolf Wipfli opens a steel door at the entrance to the bunker (above).

Stronghold of Swiss Data Safe

Historic kitchen in the Federal Council bunker, dating from 1941 (below). blue Theme 19

Text: Marlies Keck and Urs Thaler // Photos: Christian Grund

Topic: Islands

A sea of over 3000 islands Switzerland is landlocked, that’s no secret. What is less wellknown is that there are hundreds of islands hidden away inland. Their numbers are increasing from month to month and from year to year. There are currently well over 3000 traffic islands, also known as roundabouts, in existence. No federal authority knows the exact number. Many cantons don’t know either. But one thing is clear – the islands include a number of absolute beauties and more besides. We would like to take you on a small voyage of discovery.

The first ever traffic island was built in the USA – in 1904 at New York’s Columbus Circle. In 1907 the traffic island was exported to Europe, to France to be precise. Because in France the world always begins in Paris, the first “rond-point” was built at the Place de l’Étoile (known nowadays as Place Charles de Gaulle).

The French always know how to make an urban planning impact and got things right from the start. This roundabout has a diameter of 240 metres; twelve roads converge radially on the island, in the middle of which stands the famous Arc de Triomphe.

There is no doubt that Paris has the world’s finest roundabout.

The Brits also showed a penchant for “roundabouts” early on.

However the UK success story did not begin in London, but in the provinces – in Letchworth Garden City, a town in Hertfordshire, where the first roundabout was built in 1909. Germany was very much a straggler as far as building traffic islands was concerned. Roundabouts only really caught on in Germany after the Second World War. Switzerland clung to its islandless existence for even longer. In 1985 the small Fribourg municipality of Vuisternens-en-Ogoz built the country’s first roundabout.

How many traffic islands exist in Switzerland today? Nobody seems to know the exact answer to that question. There are unfortunately no national statistics, according to the Federal Roads Office. Officials there refer enquirers to the cantons, which may be able to provide information by phone. Yet a random survey of cantonal building departments quickly showed that they do not keep tabs on the numbers either. Any building departments that do have figures have to aggregate these first. And that takes time.

The cantons’ lack of awareness on this issue is linked to the Swiss federal system. The cantons are not the only administrative bodies that build traffic islands; municipalities are also very active in this respect. Switzerland currently consists of 2485 municipalities. So only a tiny minority are unlikely to have these round traffic islands within their jurisdictions. And so it is clear that estimates by ETH Zurich’s Institute for Transport Planning and 20 blue Theme

Systems are way too low. The Institute estimates there to be just over 2000 roundabouts. Other experts from the federal government and transport organisations reckon there are about 3500 traffic islands in existence.

What is allowed? What is not allowed?

In Switzerland the design and construction of traffic islands are subject to a raft of rules and regulations. Because there are 26 cantons, there are 26 sets of rules. The federal government has only issued one standard, which applies throughout Switzerland.

This states that drivers must not be able to see through or across the roundabout when they are approaching it. That means that the roundabout has to feature a raised central island and should not distract the driver. Yet the way this has been implemented shows that this regulation has not been universally adhered to in full. As blog and Internet posts clearly reveal, there are drivers, who drive around a roundabout several times, because it appeals to them so much. There are also people, who stop and get out of their vehicles in order to walk on the traffic island or quickly take a photo of it.

The world of Swiss traffic islands is colourful and diverse. This so-called “Heidi” roundabout features pretty frequently in tourist resorts and mountain regions. Roundabout researchers define such roundabouts as featuring rock combinations or flowers in the form of crests, lettering or similar. Rural municipalities like to deposit tangible monuments, such as animal sculptures, relics from the local museum and more besides, on their islands. Towns and cities and municipalities with greater financial resources (or those with wealthy sponsors) tend to go for more abstract island design in the form of designer or work-of-art roundabouts. Here are a few examples from the world of Swiss islands.

Frauenfeld: the abys(s)mally expensive island The world’s first underground traffic island is located in the capital of the Canton of Thurgau. Built in 1999, this roundabout quickly advanced to become Frauenfeld’s new landmark. The solid red central barrel-shaped buttress and the blue guidance strip-lighting prevent possible tunnel madness. 120,000 cubic metres of earth were excavated and 22,000 cubic metres of concrete and 2300 tonnes of reinforcement steel were used to build this facility, which is located at around 4 metres below groundwater level.

This traffic-related exclusivity came at a hefty price of 27 million Francs. Pedestrians are constantly standing amidst the traffic to admire and photograph this unique structure. By all accounts the visitors are usually architecture fans, who travel a long way just to take a look at this abys(s)mally expensive roundabout. Christian

Frauenfeld, Canton of Thurgau

Rothrist, Canton of Aargau

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B端tzberg. Canton of Bern

Otelfingen, Canton of Zurich

22 blue Theme

Column: Dr. phil. Manuel Bachmann

The island that we often visit.

Köpfer has the odd tale to tell. Playing the role of roundabout bard and city character, he caused a stir in the region by singing his hymn in praise of the structure.

Rothrist: Gourmet Island An oversized beaker, featuring three coloured straws each with lips attached and located on the Grüth roundabout, catches the eye in Rothrist in the Canton of Aargau. This traffic island unambiguously promotes the beverage that is produced here. This work-of-art island in the three “thirst-quenching colours” of red, blue and green is a striking advertisement for Rivella. To mark the company’s “50 years of Rivella – for a colourful Switzerland” anniversary, it donated the chromium-nickel steel sculpture. When it was unveiled in 2002, the mayor, Felix Schönle, praised the sculpture, named “Rondo spettacolo”, calling it a “well-rounded affair”, thus very aptly describing the roundabout’s essence. Incidentally design of the roundabout was put out to tender in the form of an artists’ ideas contest. Two Aargau artists won the race – metal designer Martin Hufschmid and sculptor Alex Schaufelbühl.

Bützberg: Aesthetic Island Drivers can experience a particular kind of encounter at the entrance to Bützberg, a neighbourhood in the Bern municipality of Thunstetten. Here they approach an elegantly curved, 7-metretall steel/glass sculpture, which provides a particularly impressive experience at dawn/dusk or at night. “Encounter” is the name of this work of art by the Greek artist and professor of architecture, Costas Varotsos. Both steel arms on the substantial concrete foundations are studded with 1500 glass triangles, the individual breaklines of which give the sculpture its structure and lightness and conjure up a fascinating light show at certain times of the day. This work of art also has a local sponsor – Glas Trösch. The company’s apprentices hand-crafted the individual pieces of glass and bonded them to the steel supports, in accordance with the artist’s designs.

Otelfingen: the golfing wild boar The ruling family of Otelfingen in the Canton of Zurich has always had a wild boar in its coat of arms. This is an older tradition to which the wild boar on the Otelfingen roundabout can be attributed. However the remarkable thing about this traffic island is that this fearsome boar is standing upright and holding a golf club in its front trotters. The piece of sports kit can be explained by the Zurich municipality’s more recent traditions. The wild boar, which is about to tee off using an oversized golf ball, is supposedly pointing the way to the nearby golf course. This impressive creature, which stands at over 3 metres tall, is likely to be one of the largest specimens of its kind worldwide. In May 2012 the 800+ kg sculpture was hoisted by crane onto the centre of the traffic island. Whether brawls on the golf course have since become more frequent is not known.

For other examples, see www.kreiselkunst.ch

The island that we often visit is an ephemeral place, although we often picture it in our mind’s eye. And it is not the lonely desert island that not just the travel agencies would have us dream about.

The island that we often visit is similar to a real island in the middle of the ocean. Its beach is its natural boundary, which we can toy with if we take possession not only of the island but also of the ocean that surrounds it. It is an appealing place, because it epitomises to the full what such places mean to us – unique, straightforward and traversable spaces, surrounded by a particular boundary, the never-ending ocean. Therefore this boundary is not just a mountain range or a threshold, but rather a shift of dimension, which stirs feelings of yearning.

Finding this mysterious island or escaping from it again across the sea to return to the big wide world.

However the island that we often visit is not modeled on the natural world. It resembles the island of the beautiful nymph Calypso, where Odysseus was stranded. Its beach is a state of tension between offensive and defensive, between enjoyment, captivity and returning home. And yet it still has some similarity with the lonely desert island – people who set foot on it are entering a place where their character is pivotal.

We are all familiar with the island that we often visit. Finding it is easy, given the huge technical resources available, ranging from SMS to online portals. This island is namely the “date”, the rendezvous, the engagement.

The date is therefore an island because it enables otherwise independent beings to come into contact in a particular place.

Like Odysseus we yearn to reach this place but want to leave again soon. Like every island the date is a one-off, it occurs suddenly – a specific opportunity that will never be repeated.

It releases us from our routine, and remains a moment that does not get lost in that ocean of memories. We are never lonely on this island, but it entails a risk – we can be bewitched, like Odysseus.

Dr. phil. Manuel Bachmann is research director of the Swiss Engineering Institute in Zurich and the author of the e-magazine for decision makers “absolutum”. twitter.com/ManuelBachmann.

blue Column 23

24 blue Macro Photo: Gallerystock

Text: Christophe Bernard, Chief Strategist, and Dr. Sven Schubert, Currency Strategist

Macro:

Emerging economies – drivers of growth and political heavyweights.

The global economy is likely to pick up moderately next year, thanks in particular to emerging markets. These countries, which in most cases benefit from healthy public finances, freespending populations and the potential to lower interest rates, are only too glad to play a major role in driving the global economy forward. They are also gaining ground in the political arena.

Do you know the answer to the question – which was the largest country to go bankrupt during the 20th century? People, who reckon it was an emerging economy, are wrong. The largest “debt transgressor” was Germany. Both world wars left a colossal legacy of unrepayable debt. Subsequently Germany’s creditors, which also included Greece, cancelled a sizeable portion of the country’s debt (a “haircut” in technical jargon), thus paving the way for Germany’s “Economic Miracle” of the 1950s. More recently there was still a possibility of sovereign default by Germany. The treaties agreed at the London Nine-Power Conference in 1954, which paved the way in the 1950s for Germany to rejoin the international community, provided for payment of reparations in the event that the two German states were reunified. In actual fact however only a fraction of this money was ever paid.

ing those industrial countries with liquidity problems. Yet these emerging economies are not only helpers in times of financial need. They are increasingly making their presence felt in the global political arena. The balance of power and influence on the world stage has recently shifted away from summits of the seven most important industrialised countries (G7) to the wider G20 organisation, in which emerging economies account for half the membership.

This development can be attributed to the increasing importance of these emerging economies to the global economy. In the past few years they have contributed more and more to global economic growth. Whilst this proportion amounted to around 30% in 1980, it now amounts to 50% and is likely to increase further.

The following chart illustrates the global economy’s increasing dependence on emerging economies. The IMF anticipates that emerging economies will generate around 70% of the approximately 4% growth forecast for the next few years (see illustration on page 26).

The countries that were debtors and creditors in Europe back then have now swapped sides. Greece is at risk of being completely overwhelmed by its huge debt burden, whilst Germany has taken on the role of a creditor this time around. The so-called Troika, which represents the interests of creditors in negotiations with the southern European country, consists of two European institutions and the International Monetary Fund (IMF). Whilst the IMF views a haircut as inevitable, the European Union (EU) is opposed to such action. It remains to be seen whether the IMF bows to political pressure and quits the Troika or whether the EU accepts a haircut for Greece.

Chinese dragon in the ascendancy Given the industrialised countries’ bleak economic outlook in 2013 – the Eurozone is likely to grow by a mere 0.5%, and Japan only by 0.9% – it is therefore down to the emerging economies to facilitate a recovery in the global economy. China, on which international investors are increasingly focusing, will have a particularly important role to play. At a share of 14% of global economic output, the Middle Kingdom is already the world’s second largest economy and, according to IMF estimates, could still rise to number one during the course of this decade. Whilst growth rates of more than 9%, as were achieved in the past, are unlikely, impressive growth of 8% is however feasible in our opinion. After the Chinese economy cooled off during the first two quarters of 2012, the autumn of this year yielded the first signs of a bottoming out.

Emerging economies as providers of assistance in times of need However the EU certainly has a major interest in keeping the IMF on board. For the IMF is after all supported by sovereign investors with considerable financial resources, including a large number of emerging economies, which are at least co-financ-

In September 2012 we advised investors to add Chinese equities to their already diversified portfolios. In our opinion the latest rally by Chinese equities has not yet ended, although the Chinese economic recovery is likely to have a positive impact on other countries in the region and on China’s Latin American suppliers. blue Macro 25

Percentage change compared with previous year, weighted according to purchasing power parity Source: IWF, Datastream, Bank Vontobel

7 6 5 4 3 2 1 0 –1 –2 –3 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Industrialised Countries

Emerging Economies

World

Domestic consumption in many emerging economies is also playing an increasingly important role. We therefore assume that weak growth, for example in Europe, will not block moderate economic recovery in many emerging economies. Therefore we currently see greater potential in emerging-economy equities than in those of corporates from industrialised countries.

Lessons learned from previous crises To complement any investment in emerging-economy equities, we also regard government bonds from this region, both in local as well as in hard currencies (US Dollars), as attractive. From a portfolio structure perspective in particular, we believe that the importance of this asset category will continue to grow in the future and that it will increasingly appeal to investors. For emerging economies seemed to have learned from mistakes made in the past, which were manifested, for example, in the debt and currency crises in Latin America and Asia in the 1980s and 1990s or the turmoil in Eastern Europe following the break-up of the Soviet Union. The level of debt declined in many countries (it is on average lower than in industrialised countries), banking regulation has been brought up to western standards in many places and the credibility of many emerging-economy central banks has been enhanced considerably during the past few years. This progress has delivered major reductions in inflation and more robust economic growth. This has significantly improved planning security for the corporate sector, which in turn has attracted a great deal of – sometimes even too much – capital. Some countries, like Brazil, have had to take action to limit substantial speculative inflows.

26 blue Macro

Demand for emerging-economy investments is growing at the same rate as problems in industrialised countries increase. Most of the “major” central banks, like the US Fed or the European Central Bank are attempting to kick-start their respective economies by pumping in vast amounts of liquidity. In January 2013 the USA, for example, could ring in a fourth round of nonscheduled liquidity injections, also known as quantitative easing.

Such action has a tendency to exert devaluatory pressure on the particular currency, in this case the US Dollar. Flooding the markets with liquidity generally increases demand for asset categories, such as equities and bonds. In our opinion this effect results in falling rates of return not only in the industrialised countries themselves, but also in emerging economies.

Credit ratings improved, thanks to sound finances These positive trends in many emerging economies are manifested, for example, in high growth potential, sound debt positions and inflation rates that are tending to decline. Interest rates and risk premiums decrease as a consequence and credit ratings improve. The countries thereby gain room for manoeuvre – Brazil, for example, was able to cut its base rate from over 30% to a record low of currently 7.25% within a few years.

The so-called BRIC countries (Brazil, Russia, India and China) already attained coveted “Investment Grade” status some time ago, as the chart below illustrates. And other countries are following suit. Turkey, for example, recently gained promotion to the borrowers’ premier league. Industrialised countries on the other hand are also at a disadvantage in this respect. For years

Moody’s rating Source: Bloomberg, Moody's, Bank Vontobel

B1

Non-Investment Ba2

Baa3

Baa1

A2

Aa3

Aa1

Investment Grade 1999 2001 2003 2005 2007 2009 2011 BRIC

Portugal, Italy, Greece and Spain

Photo: Sandro Diener

the rating agencies have been downgrading countries such as Greece, Italy, Portugal and Spain on account of their fiscal policies and economic weakness. Given this trend, investors will in future no longer be able to avoid emerging economies, when they factor credit rating issues into their calculations.

Added to that is an interest rate advantage, because emergingeconomy government bonds continue to offer attractive rates of return. This contrasts with historically low bond yields in industrialised countries, such as Switzerland or Germany. Here yields on short-term (2-year) bonds were even negative recently, since investors were looking for “safe havens” given fears about a collapse of the Eurozone. The bottom line is that even if massive inflows of capital into emerging-economy government bonds mean that profit-taking is risky, this asset category should remain a “buy” in the medium to longer term. The positive trend in emerging-economy fundamentals in the last few years has helped to substantially lower the risks of holding emergingeconomy government bonds in diversified portfolios. Coupled with our optimistic outlook for 2013, emerging-economy government will therefore play an important role in our investment strategy. They should be regarded as an alternative to industrialised country government bonds. The days when emergingeconomy government bonds were only regarded as being of secondary importance should be consigned to history.

Christophe Bernard is the Chief Strategist of the Vontobel Group and chairs the Investment Committee. blue Macro 27

Text: Dr. Walter Metzler, Senior Investment Advisor

Opportunities:

Gold – an island sanctuary despite not generating income.

Gold is in many respects unique – malleable but extremely heavy, rare but prevalent in the form of jewelry and coins, regarded for a long time as an unappealing asset category, yet in recent years back in the big time.

The yellow metal’s characteristics include the fact that it does not earn interest, i.e. generate income. Nevertheless it remains a valuable commodity and even appreciates in value. During periods of uncertainty gold is for the most part a popular asset because its value retains its stability. If central banks start printing money – as is currently the case – rising concerns about inflation boost demand for gold (Chart 1). Recently the gold price has appeared to react with equal volatility to current events as equities, for example. On the day of US President Barack Obama’s re-election in November 2012, the price of gold rocketed, whilst the US equity market eased off.

Gold has been appreciating in value for 11 years. Today the price of gold is around four times higher than it was six years ago. An equally interesting fact is that although gold does not earn interest, the yellow metal posted a real, i.e. inflation-adjusted rate of return of 15% per annum during the last inflationary period between 1973 and 1981. The upward trend in the gold price, which has intensified since the start of the financial crisis, can be attributed to the US Dollar’s tendency to weaken. On the one hand a weak US currency makes gold cheaper for buyers from other currency zones, which in turn increases demand. On the other hand sellers of gold will cause the Dollar price of gold to rise, in order to offset the lower Dollar equivalent in other currencies. By the same token a strong Swiss Franc compared to a weaker Dollar curbs Swiss Franc price increases (Chart 2).

Gold benefits equally from the current very low level of interest rates caused by the financial and economic crisis. This leads to the “costs” of holding gold being low. Or put another way, the lost earnings, for example from government bonds, are no longer so painful. Gold has for years been immensely popular with investors for another reason as well. During political crises investors seek sanctuary in gold. Uncertainties relating to the debt mountains in the USA and in Europe also nurture a steady positive performance in the price of gold. Therefore investors’ increasing concerns about the reliability of the financial system, for example in tandem with a possible escalation of the Euro crisis, triggered a switch to safe assets, such as gold and the Swiss Franc.

28 blue Opportunities

Gold is immune to fluctuations in economic activity Furthermore a major benefit of gold to investors is that investments in gold and securities mostly head in opposite directions.

If, for example, equity prices fall, the gold price tends to rise and vice versa. Furthermore a major percentage of demand for gold remains constant, regardless of what stage the economic cycle is at, yet more than 60% of global production is supplied to the jewellery industry. In comparison silver and platinum are significantly more sensitive to fluctuations in economic activity. Thus the vehicle manufacturing industry accounts for more than 50% of platinum demand, since platinum is an important component of catalytic converters. And last but not least, gold’s storage capability and divisibility into smaller units also makes it attractive to retail investors. Furthermore this precious metal exerts a fascination all of its own. Since time immemorial myths have surrounded this precious yellow metal, ranging from the Nibelungen Treasure sunk in the Rhine through to the fabled land of gold, El Dorado, in South America. Therefore quite a number of retail savers in industrialised countries stockpile gold coins, such as the “Goldvreneli” (Switzerland), “American Gold Eagle”, “American Buffalo” (both USA), “Maple Leaf” (Canada), “Vienna Philharmonic” (Austria), “Britannia” (United Kingdom), “Panda” (China), “Australian Kangaroo” (Australia) or “Krugerrand” (South Africa), at home.

Rising demand from China Yet gold is a popular investment not only in industrialised countries. Private and institutional investors from emerging countries, such as China and India, have been buying increasing quantities of gold for years. Whilst demand in India soars during each wedding season, demand for gold in China is noticeably associated with the growth of the middle classes. So it is not surprising that China is set to overtake India in 2012 for the first time as the world’s most important buyer of gold. For a couple of years now buyers have also included numerous central banks. Thus countries, such as Russia, China, Mexico or Kazakhstan, have increased their inventories during the past few years. At the same time gold producers have hardly been able to substantially increase their production. That’s because increasingly less gold per tonne of rock is mined from the gold mines operated worldwide.

So global gold production has amounted to between 2,500 and 2,800 tonnes per annum for several years now.

Photo: David Muir, Masterfile

Vigorous money creation causes the gold price to rise Source: Datastream

3000

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2000 1500

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500 0

0 1975 1980 1985 1991 1995 2000 2005 2010

Federal Reserve System Balance of Accounts in USD bn Gold price per troy ounce in USD (right-hand scale)

Strong Franc curbs CHF-denominated price increases Index-linked performance, Start of 2009 = 100 Source: Datastream

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Gold: troy ounce in USD

Gold: troy ounce in CHF

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Blue Pages:

News from the Vontobel Group.

European Award for Vontobel as “Best Swiss Derivatives House” The respected UK specialist magazine “Structured Products” has awarded Bank Vontobel the “Best Swiss Derivatives House” accolade for the fourth time. Its outstanding capability to innovate enabled Vontobel to differentiate itself successfully from its competitors. In addition to its extensive range of listed structured products and broad range of services, the Vontobel deritrade® issue platform, which is being upgraded to a multi-issuer platform, was singled out for special mention. You can find out more at www.derinet.ch/Awards

New – a “Leader” in the Range of “Sustainable” Funds Vontobel Asset Management’s range of sustainable funds is being enhanced by adding a “leader” product. The fund invests in global companies that boast the historical highest return on investment in their respective industries and satisfy the stringent sustainability criteria. Other requirements include strong competitive positioning, prospects for profitable, long-term growth and the ability to generate substantial cashflows. The fund resulted from the amalgamation of several regionally focused products.

PIN. Gala 2012 “Let’s Party for a Piece of Art” is the motto of the PIN. Gala, which took place on 24 November in Munich. This motto says it all. Avowed art enthusiasts and experts met up in an informal atmosphere to raise money by holding a charity auction. This money is to be used to purchase two works by the well-known German artist, Georg Baselitz. For the last 10 years, PIN. (Freundeskreis der Pinakothek der Moderne) and its annual gala have helped to maintain and expand the Pinakothek’s collection of contemporary art. What makes PIN. so special is the interaction of public-sector organisations with private-sector commitment.

Bank Vontobel has been a main sponsor of the PIN. Gala for several years now and has thus played a major role in promoting the arts in Germany.

A Day Spent with the “Adults” – National Future Day 2012 On 8 November at 8:30 am, 68 fifth to seventh grade children were waiting in the auditorium in eager anticipation of an eventful day spent with “adults” at their place of work. During the presentation about the bank, the children listened attentively, made lots of notes and asked plenty of questions.

30 blue Blue Pages

After the mid-morning snack break, the young visitors went on a tour and got to see the trading floor, the security service and the logistics section live and understand just how varied adult professions are. Operating four computer screens with a single mouse, picking up the phone and speaking Chinese at the same time – now that really was impressive. Weekly paper consumption in just a single building was also illustrated in the warehouse.

Current Monograph from the Vontobel Foundation Series Court jesters – this topic generates a range of diverse associations. We think of peculiar fellows, who are prepared to lark about, dress up in colourful costumes, wear cap and bells on their heads and transform the ruler’s court into a stage of frivolous activity. Most are of short stature, often remarkably corpulent, some have a hunchback or a very protruding nose. Jesters used to be able to get away with almost anything. The sharpness of their tongue knew almost no bounds and rulers took it on the chin. What’s more, rulers kept these colourful characters close by in order to be entertained by them, and they were permitted to utter truths, which would have entailed at least imprisonment possibly even execution if anybody else expressed such views.

Entitled “Hofnarren” (Court Jesters), Dirk Schümer’s work about Martial Leiter is packed with illustrations. Can be ordered free of charge and now also as a PDF at www.vontobel-stiftung.ch

Best Asset Manager for Sustainable Investments Vontobel Asset Management was voted Best Asset Manager in the sustainable investments segment by the TBLI Group. What is so special about Vontobel’s investment process is that, in addition to factoring in financial criteria, corporate sustainabilityrelated performance has an impact very early on. When evaluating possible candidates for the various funds, Vontobel focuses on environmental and social compatibility as well as responsible corporate governance – generally known by the abbreviation ESG (environmental, social, governance).

Consideration of sustainability issues at an early stage in the investment process and proprietary analysis differentiate Vontobel Asset Management from most other providers.

7th Edition of the “FiD – Familienunternehmen im Dialog” Conference Around 130 owners of family-run businesses met in Bad Ragaz on 9 and 10 November to gather useful information and to network. The “FiD – Familienunternehmen im Dialog” Conference has been a key communication platform for family-run businesses from Switzerland and Germany for years. The conference appeals because it is of direct practical relevance and facilitates informal communication between attendees. “FiD – Familienunternehmen im Dialog” is organised by Bank Vontobel in cooperation with the Center for Family Business at the University of St. Gallen. The Swiss Association of Privately Held Companies (VPAG) and the Family Business Network (FBN) are also partners.

blue Blue Pages 31

The Vontobel Guide to:

Hamburg

Dubai

Restaurant

Restaurant

Prinz Frederik in the Hotel “Abtei” Abteistrasse 14, 20149 Hamburg, Germany +49(0)40/44 29 05, www.abtei-hotel.de This restaurant provides a wonderfully innovative treat for the taste buds in a magnificent setting. The ingenious culinary skills of Jochen Kempf make for a superlative experience. An ingenious blend of aromas turns what is already a sheer feast for the eyes into a culinary sensation for both tongue and palate. The chef de cuisine was again awarded a Michelin star in 2012 for his tours de force. Rumour has it that the restaurant will close sometime in May 2013, so you are recommended to visit before then.

At.mosphere Burj Khalifa Tower, Downtown, Dubai, UAE +971 (4) 888 3444, reservations@atmosphereburjikhalifa.com www.atmosphereburjkhalifa.com A dedicated express lift takes guests up to the 123rd floor where they enter the breathtaking atrium before descending the flight of stairs into “At.mosphere”. This all-round glazed restaurant is located at a height of 442 metres in the world’s tallest building, “Burj Khalifa”. Guests can enjoy the fascinatingly magnificent view of the skyline from any table. Its ambiance and excellent cuisine make “At.mosphere” a magnet for gourmets from all over the world.

Photo: PD

“Kontorhäuser” – Facades and Hidden Facts Tour season: 1 April – 31 October +49 (0)700 21 44 21 44, www.hamburger-gaestefuehrer.de When strolling along the Neuer Wall admiring the luxury boutiques, you should “stick your nose up in the air”. Impressive Kontorhaus (Hanseatic trading company office buildings) facades cause you to glance upwards. Urban planning after the Great Fire of 1842 has transformed the city centre into an office building landscape during the last 100 years. What surprises you is not only the wide range of entrances, ornaments, the colourfulness of the flagging and embellishments, but also the stories that you hear when taking a walk around the buildings.

32 blue The Vontobel Guide to

Photo: PD

Attraction

Attraction Gold-Souk Deira Sikkat Al-Khail Rd, Deira, Dubai, Open: Saturday to Thursday from 10 am to 10 pm, Friday from 4 pm to 10 pm http://www.emirates.com/de/german/destinations_offers/dis coverdubai/dubaishopping/dubaigoldmarket.aspx It sparkles everywhere in Dubai. But you are only really dazzled in the Gold Souk in the district of Deira. This souk has quite rightly earned the sobriquet “City of Gold”, because everything on display here is pure gold and indeed present in such quantities that the visitor is thoroughly overwhelmed by it all. It is estimated that around ten tonnes of gold are on sale in the market.

Buying gold is one thing, but the souk itself is quite another. It has a really spacious layout and is so vibrant.

Restaurant

Bar

Lung King Heen 8 Finance Street, Central, Hong Kong, China +(852) 3196-8888, Fax +(852) 3196-8899 www.fourseasons.com/hongkong/dining/restaurants/lung_ king_heen/ Seafood and dim sum (in English, “touch your heart”) are the specialities served in this exclusive Cantonese restaurant. The chef, Chan Yan Tak, is the world’s first Chinese chef de cuisine to have earned three Michelin stars. He combines texture and aromas with surprisingly creative presentation and just keeps on amazing his guests. Silver and glass accentuation in the restaurant enhance your experience, whilst you watch Hong Kong’s skyline and the harbour lights.

consum Bar Rheingasse 19, 4058 Basle, Switzerland +41 61 690 91 35, www.consumbasel.ch As the first Konsum (today Coop) store in Kleinbasel (Basle Minor), Rheingasse 19 has always been a venue where people could both do their daily shopping and socialise at the same time. This shop idea has been retained in the current concept and in the layout of the consum Bar. The bar with its large, inviting windows is well-known for miles around for its salami and cheese specialities and serves more than 100 different wines. It is located in the centre of Kleinbasel’s Old Town.

Attraction

Photo: PD

Chinese New Year Celebrations’ Night-time Parade Tsim Sha Tsui District, Hong Kong, China, 10 February 2013 www.discoverhongkong.com, info@discoverhongkong.com The fusion of ancient and modern customs is what makes Chinese New Year celebrations in Hong Kong so wonderfully appealing. The celebrations last several days and kick off with the night-time parade, which transforms the main roads in Tsim Sha Tsui into a giant stage amidst a mass of fully decorated skyscrapers. Magnificently decorated floats as well as a large number of international and local artists, dancers and musicians provide fireworks for the senses.

Photo: PD

Basle

Photo: PD

Hong Kong

Attraction “Basler Fasnacht” Monday, 18. February to Wednesday, 21. February 2013 Basler Fasnacht is Switzerland’s largest carnival. Basle’s inhabitants describe it as the “drey scheenschte Dääg” (three best days) of the year. It begins at 4 am on the Monday after Ash Wednesday with the “Morgestraich” (morning stroke) and ends at 4 am on the Thursday with the “Endstraich” (final stroke).

During this time magnificent lanterns, elaborate face masks and costumes are paraded around the city to the sound of ten thousand whistles, drums and Guggen music.

In each edition of “blue”, different Vontobel teams will present a selection of local highlights.

blue The Vontobel Guide to 33

Book Corner

Locations

Judith Schalansky ATLAS OF REMOTE ISLANDS Fifty Islands I Have Never Set Foot on and Never Will

Bank Vontobel AG Gotthardstrasse 43, CH-8022 Zurich Telephone +41 (0)58 283 71 11

Nowadays we cannot imagine that there are still places in this world that are difficult to reach. Judith Schalansky has compiled an anthology about 50 remote islands that are far away in every respect – far removed from the mainland, from people, from airports and travel brochures.

Based on historical events and scientific reports, the author tells bizarre tales about rare animals and strange people on each of the 50 islands.

Title: ATLAS OF REMOTE ISLANDS Author: Judith Schalansky Publisher: Particular Books Year of Publication: 2010 Language: English 114 pages, 50 maps ISBN: 978-1-84614348-9

Vontobel Swiss Wealth Advisors AG Tödistrasse 17, CH-8022 Zurich Telephone +41 (0)44 287 81 11 Bank Vontobel AG St. Alban-Anlage 58, CH-4052 Basle Telephone +41 (0)58 283 21 11 Bank Vontobel AG Spitalgasse 40, CH-3011 Berne Telephone +41 (0)58 283 22 11 Bank Vontobel AG Schweizerhofquai 3a, Postfach 2265, CH-6002 Lucerne Telephone +41 (0)41 249 31 11 Banque Vontobel SA Rue du Rhône 31, CH-1204 Genève Telephone +41 (0)58 283 25 00 Bank Vontobel Europe AG, Frankfurt am Main Branch WestendDuo, Bockenheimer Landstrasse 24 D-60323 Frankfurt am Main Telephone +49 (0)69 695 996 300 Bank Vontobel Europe AG, Hamburg Branch Sudanhaus, Grosse Bäckerstrasse 13, D-20095 Hamburg Telephone +49 (0)40 638 587 0 Bank Vontobel Europe AG, Cologne Branch Auf dem Berlich 1, D-50667 Cologne Telephone +49 (0)221 20 30 00 Bank Vontobel Europe AG Alter Hof 5, D-80331 Munich Telephone +49 (0)89 411 890 0, Telefax +49 (0)89 411 890 30 Bank Vontobel Österreich AG Kärntner Strasse 51, A-1010 Vienna Telephone +43 (0)1 513 76 40 Bank Vontobel Österreich AG Rathausplatz 4, A-5020 Salzburg Telephone +43 (0)662 8104 0 Vontobel Europe SA, Milan Branch Piazza degli Affari, 3, I-20123 Milan Telephone +39 02 6367 3411

34 blue Book Corner

Masthead Bank Vontobel (Liechtenstein) AG Pflugstrasse 20, FL-9490 Vaduz Telephone +423 236 41 11 Vontobel Asia Pacific Ltd. Suites 3601 & 3615-16, 36th Floor, Two IFC 8 Finance Street, Central Hong Kong Telephone +852 3655 3990 Bank Vontobel (Middle East) Ltd. Liberty House, Office 913, P.O. Box 506814 Dubai, United Arab Emirates Telephone +971 (0)4 703 85 00

Editor Bank Vontobel AG Marketing Private Banking (M. Rose, R. Fäh) Gotthardstrasse 43, CH-8022 Zurich Telephone +41 (0)58 283 71 11 Contact blue@vontobel.com Layout Identica AG, Zug Printing Climate-neutral printing by Schellenberg Druck AG. Published four times per year in German and English. Reproduction, in part or in whole, is strictly prohibited without written permission from Bank Vontobel AG. Page 30: Georg Baselitz, Pauls Hund (Remix), 2008: copyright Georg Baselitz Illustration page 31: Martial Leiter Front and back cover: The Scottish Hebrides, Plainpicture English version James Wade, Hurst & Freelancers

neutral Printed Matter No. 01-12-802424 – www.myclimate.org © myclimate – The Climate Protection Partnership

Disclaimer This brochure is for information purposes only and does not constitute an offer of any kind. The services described in this brochure are supplied under the agreement signed with the service recipient. The nature, scope and prices of services and products may vary from one country to another and are subject to change without notice. Certain services and products are not available worldwide or from all companies of the Vontobel Group. In addition, they may be subject to legal restrictions in certain countries.

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Telephone +41 (0)58 283 71 11