Golden Migration

There is a lot of opaque trading in gold going on at present.

The price has leapt higher over the last seven consecutive weeks and is trading at new all-time highs in most currencies.

The balances in ETFs has barely moved over that time which suggests that the big buyers are outside the regular investor.

It is much more likely that physical demand is driving the price.

The inventory of gold in Comex warehouses continues to increase. That reflects a clear demand for gold in the USA. Whether that is being parked to ensure it avoids tariffs or because it will be physically delivered remains to be seen.

The gold takes a circuitous rout to get to Comex. It starts off in London. Then it stops off in Switzerland to be recast. Then the gold is flown to the USA.

The reason for the stop off is the size of bars held in London is different from what is deliverable on Comex. Switzerland is where the majority of gold refining for bars occurs so that is where the melting and recasting occurs.

This process is pushing up the price of gold. However, it is not clear whether this migration of physical gold is primarily about avoiding tariffs or reflects a deeper demand growth story for physical metal.