Posted on 02/03/2025 9:39:35 AM PST by delta7
Since 25 November when then US president elect Donald Trump first to impose import tariffs on Mexico, Canada and China ( see ““), gold markets in New York and London have been signalling fears that these tariffs would include gold and silver imports from Mexico and Canada.
These fears have now been fully confirmed, since on Saturday 1 February, Trump has gone ahead and imposing “a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China”, with the tariff impositions set to come into effect on Tuesday 4 February. Given that the only concession in these Executive Orders is a , and with no explicit exemptions for precious metals, it is presumed that a 25% import tariff applies to all gold and silver bullion imports coming from Mexico and Canada. That includes precious metals doré and precipitates, and refined bullion in the form of bullion bars and coins.
25% tariff on gold imported from Mexico or Canada will therefore add $700 per oz to the international gold price, assuming a $2800 gold price, and leave the final price post tariff at a staggering $3500 per oz. All of this is also taking place in an environment in which gold prices have yet again reached , with a highest daily close and a highest monthly close registered on the last day of January.
Market Reactions to Tariff Expectations
Before looking at the implications of what the import tariffs will mean for precious metals going forward, it’s instructive to look at what impact the “anticipation of tariffs" has already caused. While the below looks at COMEX gold, the situation is similar for COMEX silver.
Following Trump’s late November threats of tariffs, fears of higher import prices triggered a panicked rush to import physical gold into the US, with traders on COMEX bidding up gold futures prices to ensure they had exposure to sufficient gold deliverable in the US. This surge in price in turn forced short sellers to cover their positions, all of which drove COMEX prices higher than the LBMA London spot price. As the COMEX-London spread widened, London traders then also scrambled to transport more gold to New York so as to take advantage of the arbitrage opportunity.
Since late November 2024, nearly 400 tonnes of gold has flowed into the vaults of the COMEX in New York and surrounding areas, with total COMEX gold inventories rising from less than 20 million ozs to nearly 32 million ozs. Since Trump’s tariff threats were first made public, the COMEX-London gold price spread has widened on a number of occasions, first notably for a few weeks in early December, and then again significantly in January amid renewed concerns that the tariffs would be imposed by as early as 1 February. For example, , the COMEX April futures gold price was trading at $2862, a full $64 above the e of $2798.
Record gold deliveries on COMEX
To illustrate the current scramble for physical gold on COMEX, the most recent delivery data is eye opening, with the Exchange seeing the second highest ever number of contracts moving to delivery on a ‘first delivery date’ which was 2,962 million ozs, or 92 tonnes, for the February contract (first delivery is Monday 3 February). This means ownership of this metal changes hands between long contract holders (who take delivery) and short contract holders (who make delivery). Of that total, JP Morgan has to deliver 1,485 million ozs (46 tonnes) worth over $4 billion.
A record number of delivery transactions on first delivery date signals strong physical demand and a preference for physical metal over paper positions, since long holders have not rolled their contracts, but have decided to wait and get their filled via delivery. The surge in deliveries has also continued for “second delivery date” (4 February), with another 11,028 contracts moving to delivery. That’s 40,649 contracts in total just for the first 2 days of February, and represents 126 tonnes of gold worth $ 11.38 billion.
While gold imported into the US and entering the COMEX vaults is transparent to an extent since it shows up on CME gold vault reports, its important to remember that this is only part of the story, since other gold is being imported to the US into private vaults that is harder to track.
US importing gold directly from Switzerland and the UK
The US is now hoovering in staggering quantities of gold bullion from countries that it normally exports gold to, driven by – the now correct – expectation of tariff impositions on bullion.
While both Switzerland and the UK had been, up to recently, by far the two largest export markets for US gold bullion, now the flows are going in the opposite direction, and in far greater magnitudes. In December 2024, Swiss gold exports directly to the US surged to 64.5 tonnes, an 11 fold increase on the previous month, and the highest monthly total since March 2022. Likewise, Swiss gold is also getting routed to United Kingdom (which really means London) and then sent out from London to the US. In December, Swiss gold exports to London also surged 14.3 tonnes, from 1 tonne during the previous month.
London Gold Shortage
On Wednesday 29 January, the London Financial Times (FT) broke the news that there is a shortage of gold in the London market. In an article titled “” , the FT revealed that the threat of US tariffs and the arbitrage opportunity on COMEX has created an extreme gold shortage where “the wait to withdraw bullion stored in the Bank of England’s vaults has risen from a few days to between four and eight weeks”. What this really means is that bullion bank members of the London Bullion Market Association (LBMA) are struggling to a) borrow enough gold from central banks, and b) withdraw this gold from the Bank of England so as to ocean to New York.
According to an anonymous gold sector executive quoted by the FT, “people can’t get their hands on gold because so much has been shipped to New York, and the rest is stuck in the queue. Liquidity in the London market has been diminished.”
Liquidity here is a euphemism for availability of gold. Diminished liquidity really means diminished availability, i.e. a shortage of gold in London. But why would there even be a queue if the gold in the London market is allocated and has only 1 owner for each ounce? The answer of course is that it is not 1 owner per ounce. The entire system is a fractional-reserve system of synthetic gold credit.
Even in normal times, what little physical gold that is in the London is ‘spoken for’ in terms of central bank and ETF holdings, and there is a very small ‘float of gold’ available for ‘liquidity’ purposes. And in abnormal times, such as now in an environment of heightened physical demand, that gold float is even smaller.
Not surprisingly, the Bank of England and the LBMA are trying to pretend there is no problem, and are trying to pass off the London gold shortage as logistical bottlenecks. According to a Bank of England spokesperson “there is no shortage of gold”. There are just “longer than usual wait times to get gold transferred out of the Bank of England vaults” due to higher demand. Do the Bank of England clients actually fall for these excuses?
The same article quotes a spokesperson from LBMA member Bullionvault (a frequent LBMA apologist), who tries to convince anyone who will buy it that “digging out physical bullion bars from large vaulted stockpiles takes time, manpower, trucks and transport”. How come this wasn’t a problem when countries such as Venezuela, Poland, Hungary, Serbia, India and Turkey withdrew 100s of tonnes of gold from the Bank of England in recent years and repatriated it to their home countries?
The Bank of England governor Andew Bailey also got in on the denial act, and shockingly, this was in front of the UK Treasury Select Committee on Wednesday 29 January (). When asked about US $ 82 billion of gold flowing from London to New York in recent months, Bailey disingenuously avoided the question and responded that “It’s not a big thing really … gold doesn’t play the role it used to play”, before saying “I don’t want to dramatize this story”. However, Bailey’s attempt at downplaying the situation fell flat – his unconvincing performance in his testimony on the gold crisis was a case of amateur dramatics, and he really needs to go to a better acting school. See clip …….
The LBMA and Comex paper exchanges are running dry, and China has been draining them due to the price fixing downwards by our government.
In other words, the Chinese outsmarted the Western Gold markets….the LBMA, Comex manipulated prices down through paper contracts and China loaded up the truck of physical ( took delivery) at artificially low prices.
$5K t/oz after attaining $3K t/oz…..paper currencies are dying. Just one “failure to deliver” event on Comex sends PM’s to the moon.
We are finally returning to a financial system of “ equal weights and measures “, Amen.
I forgot to mention Silver, it has been in deficit for four years at least. Same, same with “ the world’s most undervalued asset”. Silver. It is a steal at today’s prices.
If you don’t hold it, you don’t own it ( a warning to Bitcoiners). Honest money is coming back.
In 2014 You predicted that gold price in 2015 would go to $5000. Why was Socrates so wrong?
I only post Armstrong’s work. You will do well to listen to yet two more financial interviews with Armstrong. He is becoming quite popular, his Socrates computer is phenomenal.
For your enjoyment:
https://www.armstrongeconomics.com/armstrong-in-the-media/interview-shaun-newman-podcast-786/
Enjoy!
Armstrong looks like death warmed over.
Most Gold IRA firms will store the metals for you in a depository under your name, and must stay there until you withdraw just like any other IRA (and you will get taxed on it as income).
You are correct.
$100 is neutral. Above $100 shows USD strength. Below $100 shows USD weakness.
Previous USD highs...
June 2022 - $112
March 2001 - $120
You, sir, are absolutely correct.
Is Armstrong Q’s brother?
He is becoming quite popular, his Socrates computer is phenomenal.Not true.
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