Gold Bullion Delivery to US Amid Price Surge and Import Tariffs
Key Points:
* JPMorgan will deliver over $4 billion worth of gold bullion in New York in February.
* The deliveries are the second largest in CME Group's data since 1994.
* Concerns over import tariffs have driven up gold futures prices on Comex.
* Similar dynamics have led to silver being flown into the US, an unusual practice.
* JPM's delivery notices account for half of the total February gold deliveries.
Details:
JPMorgan Chase & Co., the world's largest bullion dealer, has issued delivery notices for 1.485 million troy ounces of gold to be delivered in New York in February. This represents approximately half of the total 3 million troy ounces to be delivered against expiring CME Group Comex gold futures contracts.
The surge in gold deliveries is attributed to rising prices and the threat of import tariffs imposed by the Trump administration. The elevated Comex futures prices compared to spot prices in London have created an arbitrage opportunity for banks to ship bullion between hubs.
This disparity has also extended to other Comex contracts, resulting in the influx of silver into the US via airfreight.
While Comex typically sees a high volume of daily gold trading, only a small percentage usually results in physical deliveries. However, since the US election, physical inventories in Comex depositories have increased by 13 million ounces, or approximately $38 billion worth of gold.
It is not clear whether JPMorgan or other banks are taking advantage of the arbitrage opportunity or exiting short positions through these deliveries. JPMorgan and CME Group declined to comment.
Deutsche Bank, Morgan Stanley, and Goldman Sachs also issued delivery notices, accounting for the majority of the remaining gold to be delivered.