#587
A Transatlantic Gold Rush

In a plot twist that would spark the envy of action screenwriters, bullion is boarding commercial flights from London to New York—to outrun an unlikely enemy: tariffs. Thanks to a perfect storm brewed by President Trump's ongoing tariff uncertainty and a rare transatlantic price dislocation, the world’s largest banks have become treasure hunters. Banks such as JP Morgan and HSBC are flying billions of dollars in gold across the pond, seeking arbitrage opportunities as Comex futures premium has ballooned to as much as $50 per ounce over London spot prices.

Of course, this isn’t just a matter of slinging 400-ounce London bars onto the next Delta flight. Because the Comex prefers its bullion bite-sized (in 100-ounce or 1-kilo formats), every bar must first make a detour to a Swiss refinery. This logistical bottleneck—compounded by refinery wait times and limited vault staff at the Bank of England—has turned the business of moving gold into an elaborate waltz involving molten metal, armored trucks, and a race against looming tariffs. If you think it sounds complicated, remember: this is the simple part of international finance these days.

Wall Street isn’t the only actor cashing in, however. Central banks have been quietly gobbling up gold for years, wary of sanctions risks after Russia’s financial isolation in 2022. In fact, 2024 marked the third consecutive year of central banks buying over 1,000 tons of gold. The once-dismissed metal now anchors diversified reserves around the globe, sending prices soaring and giving Goldman Sachs the confidence to peg $3,100 as its year-end target. While traders chase premiums, central banks are playing the long game—one gold bar at a time.

Meanwhile, Wall Street whispers are heightening about the US revaluing its gold reserves, a move that would turn a dusty $11b book value into a glimmering fortune at today’s prices. Treasury Secretary Scott Bessent insists it’s not on the agenda—but this can be taken with a pinch of salt in an economy where the unbelievable routinely becomes the new normal.