Flored trade in gold bars

The furnaces are wasted 24 hours a day at the Argor-Hereus refinery in southern Switzerland, interspersed with the crossbar from a newly pillaged golden strip that falls from its template.

The refinery was never more preoccupied, according to co -director Robin Colinbach, and the cable has been working around the clock since December to keep pace with the tremendous demand for 1 kg gold Babs in New York.

“The demand has increased slightly,” said Colvbach. The peak demand period usually lasts for a week or two. But the peak demand as we have at the present time, which lasted for more than three months, is very unusual. “

Since December, fears have been made that US President Donald Trump could slap the customs tariff for gold imports – and the price of gold has helped at the highest record at more than $ 3000 per ounce on Friday. More than 61 billion dollars were poured into alloys in the United States, where merchants rushed to avoid potential fees, distort trade data in the country A shortage of LondonThe largest gold center in the world.

The American Gold Rush Kolvenbach has kept very busy, thanks to Quirk in the global bombing markets: the two markets use different sized bars. In London, most trading in 400 troop bars are tired, each with a weight of about 12.5 kg and brick size.

On the contrary, the Exchange Comex in New York uses 1 kg bars the size of smartphones as their standard. This means that the bars heading across the Atlantic should stop first in Switzerland – the home of the largest golden refineries in the world – to melt and reformulate.

In a world where financial transactions around the world are in a small part of a second, the prosperous triple trade confirms the dependence of the gold market on mineral blocks. In normal times, claims of billions of dollars are traded without bars leaving a basement.

But the distortions created by Trump’s radical policies have strained the system. Although Trump did not mention the bombardment tariff at all, the simple opportunity that this might do was sufficient to send the price of golden futures in the United States higher than it was in London, creating an opportunity to arbitrate for merchants who want to transport minerals across the Atlantic Ocean.

The last time I opened a large gap in the price during the early stages of the epidemic. But the biopsy in New York has now exceeded until its previous record, which dates back to the Kofid era.

“The physical nature of gold is something that is underestimated, especially by a group of financial people who trade in Bloombergs throughout the day,” said John Reedy, the chief market expert in the World Gold Council. “Gold has financial properties, but it is also a material asset.”

Liquidity

The golden bars journey that usually flows to New York underground begins in one of nine golden cellar below the bank of England in the heart of London.

When an application is submitted to withdraw the gold bars, the worker will go to the basement and “withdraw” the required gold, which can often include a shift around other bars to determine the specified bars in the arrangement. Since London is based on clay, the soft foundations of the BOE building means that gold can only be stacked to the height of the shoulder.

This process takes a long time, and has led to the largest bottleneck in the supply chain of 1 kg. Employees who dig gold, carefully coaches, and strong enough to raise gold bars throughout the day-so it is not possible to quickly increase employment levels to meet the demand for the short term.

The first signs of the rise appeared in early December, when industrial figures gathered at a dinner hosted by the London Market Association (LBMA) at the National Exhibition, and discussed the increasing demand coming out of the United States.

When traders raced to transfer gold from London to New York, the BOE waiting list soon spread to more than four weeks, causing the liquidity crisis in the alloys market in London.

The short -term rental rates Standard levels Last month, while traders for their hands fought on physical minerals, and increased the costs of working capital for companies such as refineries and jewelry makers.

“There was a strong demand for the delivery openings,” England’s deputy governor Dave Ramsden admitted at a press conference in February, in which he admitted that he was detained by a truck in the alloys scene as he arrived at the building earlier in the day. “Gold is material origin, so there are real logistical restrictions and security restrictions.”

The Bank of England carries alloys on behalf of dozens of central banks, as well as commercial banks. Only 6 percent of gold in its large cellar belongs to the UK Treasury.

The position of prominent London in the material gold markets-despite the inadequity described by Rameson and the role of New York as the main trading center for futures contracts-partially reflects the low fees that Boy Bank receives compared to competing commercials. But he also emphasizes the tremendous importance of confidence in the gold market: Central investors and bankers are happy to stop gold under Threadneedle due to centuries -old restrictions.

“London has a historical feature, goes down, and returns to the golden standard, which has been working very well, from the end of the Napoleon war, until the First World War,” said Jim Steel, chief of precious metal analyst at HSBC. “There is a long legacy of golden operations that come out of the United Kingdom and England Bank.”

“Black Swan”

Once they leave BOE’s acceptance, bars are usually loaded in an armored truck, driven to Heathrow Airport and transported to Zurich in the belly of the passenger plane. For insurance reasons, passengers carry only 5 tons of gold at one time.

From Zurich, gold is transferred to a colander, where it is melted and reformulated, before returning to the United States. The cost of this entire trip between London and New York – including transportation and reformulation – is about $ 3 to $ 5 an ounce, according to the World Gold Council.

Inside the Argor-Heeus refinery, which is located in the Swiss city of Mendrisio near the Italian border, large gold bars are dissolved and fixed in a long strip inside the “continuous casting” machine. Since 400 ounce bars are already “great gold”-in reference to 99.99 percent purity requirements for investment alloys-do not need more improvement, just reshape them.

To do this, the gold tape is cut from the casting machine to one kilo pieces. After adjusting the weight, it is dissolved again, poured into one kilo of a kilo-bar-then cooling, sealing and polished.

Kolvenbach wanders around the mascara floor, where two kilograms of kilograms pour a kilo bars in the neighboring ovens – the operation operates 24 hours a day, to meet the high demand.

The refinery does much more than reformulate. It also takes rough bars from mines and distracts them to gold, silver and other minerals – as well as manufactured jewelry and mint operation that seals smaller golden bars. Kolvenbach explains that some of the most important works in the building happens inside its laboratory, which accurately tests each tape that reaches the facility.

Here inside the refinery, the liquidity crisis in the broader gold market had a painful impact, by raising the rental rates of borrowed gold in the short term. To reduce working capital requirements and avoid exposure to gold prices fluctuations, refineries usually rent most of the gold they are working on while in the factory. The sudden increase in rental rates this spring has increased significantly from operating costs in Argor-EHraeus and other refineries.

Kolvenbach said it was a “black black event” mainly the cost base. He said: “Certainly, the pain was for the entire industry, because in the end everyone is affected.” Although rental rates have decreased from their peak in February, they are still three times higher than normal levels.

People in the industry provide various explanations about the reason for the continued use of New York and London in different gold bars for their contracts.

“Is it logical? To be honest, I did not find an appropriate explanation. “

Comex tried to launch a future contract for large tapes of 400 ounces during the epidemic, but it did not take off.

Ruth Crown, CEO of LBMA, said the markets will perfectly use the same bar size in the future. “I would like to think after that, we can all agree that London and New York should look at the shape and size of bars,” she added.

However, the system continues to a large extent due to stagnation, as it argues with reading.

He said: “It is certain that it creates financial opportunities for all the participants in this process, whether it is my birds, whether it is a truck, whether it is people ready to buy Kilo bars and ship them to New York.”

Today, as golden tariff fears drop, the gold flow to New York slows down. If Trump’s protective batch has moved away from precious metals, merchants expect the flow to be reflected, as holders of the cheaper storage costs in Gold London.

When this happens, Swiss golden ovens will be launched around the clock again.