Spot gold trades above $2800

A Comex exchange-for-physical crisis is in progress, repeating the disruption during covid. The media story blames Trump’s potential tariffs. But is this the real reason gold is hitting new highs?

Gold and silver rose further this week, driven by continuing premiums on Comex futures over London spot. In European trading this morning, spot gold was $2794, up a further $24 from last Friday’s close. And silver was $31.60, up $1.25. The gold/silver ratio fell from 91.7 on Monday morning to 88.4. While silver is still well below recent highs, it has outperformed gold since the New Year as our headline chart shows.

The premiums on Comex futures are dragging the spot price higher and have generated a massive arbitrage, whereby gold futures are being sold through the exchange-for-physical facility. Bullion to settle is being airfreighted to New York from London. Since 1 January, Comex warehouse gold stocks have risen over 282 tonnes, and in addition it is certain that there have been inflows into JPMorgan’s and HSBC’s private vaults in New York.

Naturally, these flows have drained LBMA vaults of their liquidity, even forcing withdrawals from the Bank of England’s Threadneedle Street vault leading to a wait for delivery of up to eight weeks, according to a Financial Times article on Thursday. The last time a dislocation of this sort occurred was during the covid crisis, when gold rose from $1460 to $2073, then an all-time high, a rise of 42%.

So what’s driving this new exchange-for-physical crisis? Are stories that Trump might bring in tariffs on gold and silver really credible?