The London Bullion Market Association (LBMA) has reported a decline in gold and silver vault holdings in London, though the market remains resilient, particularly for gold.
As of the end of January, London vaults held 8,535 tonnes of gold, reflecting a 1.77% decrease from December. Valued at $771.6 billion, the gold held in London represents approximately 682,772 gold bars. Despite the outflow of metal from London to New York, the LBMA emphasized that the London market remains robust. The 151-tonne drop in January was expected, as the flow of gold to New York continues to reflect current market dynamics, driven in part by ongoing geopolitical concerns.
“Despite the outflow, the data shows that the London market is robust,” the LBMA noted. “The monthly decline in gold stocks reflects the well-documented market dynamics at present.”
This flow of gold to the U.S. has intensified since the election of President Donald Trump, with analysts attributing the trend to concerns over potential tariff-induced disruptions. The shift has been particularly pronounced in recent weeks, with bullion banks building their gold and silver reserves in anticipation of economic uncertainty. However, with a recent announcement of a 30-day delay in implementing tariffs on Canada and Mexico, analysts believe the market is beginning to normalize.
While the LBMA assures that there is ample gold to meet investor demand, it noted that temporary disruptions in the supply chain could occur due to misalignments in the form and location of metal. These physical supply issues, although not uncommon, can lead to fluctuations in premiums or discounts. The situation is different from the New York market, where gold futures contracts are typically rolled or cash-settled.
“Premiums (or discounts) can occur when a market doesn’t have the right form of metal in the right location at the right time,” the LBMA explained. “At some point, physical metal can be expected to return to London.”
While London’s gold market remains strong, the silver market is experiencing more significant challenges. The LBMA reported that London vaults held 23,528 tonnes of silver at the end of January, a sharp 8.6% decrease from December. This silver is valued at $23.9 billion, equivalent to approximately 784,282 silver bars.
The drop in silver holdings marks the largest monthly decline since the LBMA began recording vault data in 2016. Like gold, silver’s outflows are attributed to concerns over global tariffs, with silver seeing an even more pronounced shift to New York. As silver is closely tied to industrial demand, analysts warn that above-ground stocks may continue to deplete as demand outstrips supply from mines.
“The decline in silver stocks is the largest monthly decline since LBMA records began in July 2016,” the LBMA said. “For silver, participants continue to closely watch blanket U.S. tariff threats on key producing nations with concern.”
With supply and demand imbalances in silver expected to persist, analysts predict that gold prices will rise through 2025, with silver potentially outperforming gold in the long term. Silver is still in a favorable position despite trading below all-time highs, and the continued industrial demand is expected to drive further growth in the metal’s value.
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