US banks are rushing to move billions of dollars worth of gold from London to New York, fueled by fears of a world trade war caused by President Donald Trump’s tariff threats on Europe. This massive influx of gold has more than doubled US gold inventory since Election Day, with the US currently holding about $100 billion in gold, starting with the $50 billion on November 5th.
The gold rush is driven primarily by the threat of Trump’s tariffs, with London’s gold prices down about $20 since December. Traders are also worried that Trump might impose tariffs on gold, prompting a surge in US demand for precious metals.
Major banks like JPMorgan and HSBC fly gold across the Atlantic to cover losses in short positions. Many gold landings in New York City are now worth more than London, the Wall Street Journal reported. This development has resulted in a significant shortage of gold in London, increasing delivery times from days to 4-8 weeks.
Last week, Trump announced a 25% import tax on steel and aluminum, promoting fear that Trump would impose tariffs on gold.
Deputy Governor Dave Ramsden said the Bank of England (BOE) is flooded with demand due to a large price difference between London’s cash prices and New York’s futures market prices, Telegraph reported. New York gold futures rose 11% this year to reach a troy ounce of $2,935, with some analysts predicting a record high of $3,000. As a result, about 8,000 gold bars, rated at about 2% of the BOE’s total gold reserves, have been moved from the safe over the past few months.
Banks are now taking advantage of the price gap by withdrawing substantial amounts from London safes and Swiss refineries. The gold is then transported to the US, where it is delivered to futures contracts, allowing banks to enjoy the higher price benefits of New York.
JPMorgan is leading the fees with plans to provide $4 billion worth of gold this month alone.
How is gold transported?
To transport gold, logistics companies use the most cost-effective method: freight holds for commercial flights. Here is a breakdown of the transportation process:
1. Ground Transport: High strength and safe van shuttles gold to the airport. Recast: The gold will be sent to a Swiss refiner and recast to various bar sizes as requested by Comex Contracts.3. Air Transport: Recast Gold is then loaded into commercial flights and uses freight holdings to transport valuable goods to the United States.
