Gold has long been a safe haven asset in times of uncertainty, with investors turning to the precious metal amidst political and economic turbulence. In 2025, gold has reached new record highs, with US prices climbing even more due to fears of being affected by President Donald Trump’s trade policies, particularly tariffs on imported goods.
This concern has sparked a gold rush as investors shift bullion from London’s vaults to New York to take advantage of a significant price gap. Typically, prices in London and New York move in tandem, but this year, gold futures on the Comex in New York have traded more than $50 per ounce higher than London spot prices. This price differential has created an opportunity for dealers to profit from moving gold to the US, with Comex inventories growing by over 20 million ounces since the 2024 US election.
Why London?
London has long been the world’s largest hub for physical gold, with the London Bullion Market Association reporting over 8,500 metric tons stored there. The Bank of England holds significant reserves, making it a key player in global gold storage. However, the risk of tariffs has led to increased withdrawals from these vaults, with January seeing the largest outflows from the Bank of England since 2012.
Despite the outflows, London still holds vast reserves, and the Bank of England remains the second-largest custodian of gold globally. However, logistical challenges, including lengthy withdrawal times and limited staff, have made it harder to keep up with demand.
Transporting Gold
While gold can be moved relatively easily, it must be transported in specific sizes. London typically uses 400-ounce bars, but New York’s Comex requires 100-ounce or 1-kilogram bars. This necessitates sending the gold to refineries in Switzerland for re-melting and recasting before it can be moved to the US. The surge in demand has led to delays at refineries, adding to the logistical challenges.
Gold’s Price Surge and the Role of Central Banks
Gold’s price rally in 2024 was not solely due to trade fears. Central banks, particularly in emerging markets, have been buying large quantities of gold as a hedge against currency devaluation and geopolitical risks, such as the freezing of Russia’s foreign reserves following its invasion of Ukraine. As a result, central banks bought over 1,000 tons of gold for the third consecutive year in 2024.
Silver has also seen increased demand, with traders transporting it to the US to take advantage of New York’s premium, although it is typically less cost-effective to ship silver via air.
Speculation on US Gold Reserves
The surge in gold prices has sparked speculation that the US could revalue its gold reserves. Although Treasury Secretary Scott Bessent dismissed the idea, some believe a revaluation could boost the US’s gold reserves to hundreds of billions of dollars. However, this would require approval from Congress and is unlikely to happen in the near future.
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