The coronavirus triggered an unprecedented flight to fill US gold safes

May 7, 2021 0 Comments

In recent months, large quantities of gold bars have arrived in New York, in what was one of the largest physical transfers of precious metal ever made, reports Bloomberg.

“Deliveries to New York are unprecedented,” said Allan Finn, director of logistics and security services at Malca-Amit. The company’s New York teams worked 24 hours a day to meet the demand, in the context of quarantine, flight interruptions and social distance.

As of the end of March, about 550 tons of gold, worth $ 30 billion at current prices and the equivalent of the entire production of gold mines in the same period, has arrived in the warehouses of the Comex Stock Exchange in New York. , and hundreds of tons of this quantity were imported.

Even though tens of billions of dollars of gold in financial markets pass from one owner to another every day when it comes to physical transfers of precious metal, a much smaller amount moves between the safes of London, Zurich and New York .

But that situation began to change after the Covid-19 crisis disrupted the gold supply chain. When planes were stranded and gold refineries in Switzerland closed in late March, traders were worried they would not be able to bring gold to New York on time in return for futures contracts. This situation has led to an increase in gold futures, which normally move in parallel with spot prices on the London market, up to a premium of $ 70 an ounce of spot prices.

This situation created an opportunity for inventive traders to buy gold from other parts of the world at spot prices and then sell it in the form of futures contracts, benefiting from the price premium created by bringing the precious metal to New York.

According to official data, Switzerland’s gold exports to the United States exploded to 111.7 tons in April, the highest value ever. Even gold refineries in Australia have increased their production of bullion to be delivered to New York.

For Brink’s Ltd. director Mark Woolley, the increase in demand for gold delivery in New York has been unprecedented in the last 20 years on the market. “The amount of gold I successfully moved to New York is quite important. It’s probably close to the amount of metal that was extracted from me during that time,” Mark Woolley told a webinar hosted by London Bullion Market. Association.

All this amount of gold that had to be transported to New York was good news, but also a challenge for logistics companies. Not only have passenger planes, with which gold is normally transported, been stranded on the ground, but even New York City, where many of Comex’s warehouses are located, has been one of the areas most affected by coronavirus.

To meet the demand, Loomis International UK opened new safes and Malca-Amita looked into using the airports in Boston and Philadelphia, but eventually did not need them.

This favorable period for those who carry precious metals could last for a while. The large quantities delivered so far have made futures quotations with delivery in June fall below spot prices on the Comex exchange, but futures contracts with delivery at a later date still give a premium over spot prices. In addition, with increasing investor interest in other precious metals, the first of futures quotes and spot prices for silver and platinum increased.

Source: Agerpres

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