In a dramatic turn of events, physical gold is flooding out of London and into New York at a surprising pace. This situation goes beyond a reaction to potential tariffs on gold (though that is certainly a factor). It also involves a volatile blend of market forces, including arbitrage opportunities, central bank hoarding, and short-selling risks. As these forces collide, the gold market may be signaling a shift that could send shockwaves through the global economy.

The Surge in Gold Shipments to the U.S.

Since the U.S. election in November, gold traders and financial institutions have moved an eye-popping 393 metric tons of gold into New York’s Comex vaults. This massive influx has pushed Comex inventory up by nearly 75%, hitting a record 926 tons—the most since August 2022. And it's value? A staggering $82 billion.¹

Gold’s mass exodus to the U.S. is throwing the London market into chaos. The Bank of England’s vaults are considered the main place for various financial institutions and central banks to store their gold. Now, withdrawal wait times have jumped from a few days to a staggering four to eight weeks. The result? Liquidity in London’s market has practically dried up.

The Bank of England is downplaying the whole situation, still insisting London’s the go-to trading hub. But these logistical headaches are a clear sign that the gold market is under serious strain. It’s starting to look a lot like the frenzy we saw during the COVID-19 pandemic when supply chain chaos sent gold stockpiling through the roof.

Reasons for the Rush

The gold rush is largely driven by fears that Trump might put a 25% tariff on raw materials—gold included—along with potential tariffs on imports from Mexico, Canada, and China. And that’s got traders and investors panicked. They are racing to lock down as much gold as they can before any new tariffs hit.

But it’s not just about the tariffs—traders are jumping on the price gap between New York’s futures prices and London’s spot prices. The whole arbitrage play is driving gold to stream across the Atlantic. By late January 2025, the April Comex futures shot up to a record-breaking $2,853.20 per ounce. That’s a $20+ per ounce spread between February’s Comex contract and London’s spot price, and you better believe traders are all over it, shipping gold into New York to cash in on the premium. ²

Big players are diving headfirst into this gold rush. JPMorgan Chase, the biggest bullion dealer on the planet, is set to deliver over $4 billion worth of gold bullion in February, fulfilling about half of the total deliveries tied to New York futures contracts. And they're not alone—Deutsche Bank, Morgan Stanley, Goldman Sachs, and other major institutions are all jumping in, moving serious gold around to capitalize on the action.³

The Role of Central Banks

Central banks are pushing gold demand through the roof. After the U.S. weaponized the dollar in the wake of the Ukraine war, countries across the globe have been loading up on gold. It's their hedge against financial instability and a way to cut ties with the U.S. dollar. China’s leading the charge, buying gold at a breakneck pace, and not just publicly. They been purchasing tons of gold secretly, often thru Switzerland.  The yellow metal plays a vital role in fulfilling China's long term economic and political ambitions.

A Gold Squeeze?

Logistical constraints have raised concerns about a potential 'gold squeeze' in London as traders rush to secure supplies. As physical gold becomes increasingly scarce, short sellers—who bet against rising gold prices—are finding themselves in a dangerous position. As the gold runs out, they have no choice but to buy it back at sky-high prices to cover their positions, only pushing prices even higher. It’s a classic feedback loop that could trigger wild price swings, especially if gold stays in short supply.

Conclusion

The global gold market is in flux, spurred by a volatile mix of tariff fears, arbitrage opportunities, and central bank hoarding. While the looming threat of new U.S. tariffs has certainly stoked the fire, the real surge is likely being driven by a broader set of market forces.

Everyday Americans can take advantage of this 'physical gold rush' before prices soar even higher. Long term security and potential wealth building can be gained by holding physical precious metals in a Gold IRA. To learn more about how a Gold IRA can help you maximize your retirement funds, call American Hartford Gold at 800-462-0071.

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Max Baecker is the President of American Hartford Gold (AHG), the nation’s largest retailer of precious metals. He leads American Hartford Gold’s mission to help clients achieve long-term financial security with physical gold and silver.

Under his guidance, American Hartford Gold has delivered billions of dollars’ worth of precious metals to thousands of satisfied clients.

Max's dedication to upholding American Hartford Gold's industry-leading standards is reflected in its accolades. American Hartford Gold has made numerous high-ranking appearances on the prestigious Inc. 5000 List of America’s Fastest-Growing Private Companies. AHG holds an A+ Rating from the BBB and a 5-Star Rating on Trustpilot from thousands of American Hartford Gold reviews. American Hartford Gold is the only precious metals company trusted and recommended by Bill O’Reilly.

AHG offers investment-grade gold and silver coins and bars at competitive prices. Clients also benefit from its buy-back commitment with no back-end fees. To learn more, visit American Hartford Gold.

Notes:

1. https://www.ft.com/content/86a5fafd-603e-4ee1-9620-39b5f4465f53

2. https://www.marketwatch.com/story/why-theres-now-incredible-demand-for-physical-gold-in-new-york-markets-7c914e00

3. https://www.bloomberg.com/news/articles/2025-01-31/jpmorgan-plans-4-billion-gold-delivery-in-us-amid-tariff-fears?srnd=homepage-americas&embedded-checkout=true