Certainly their is the well shelter par excellence. But normally investments are made "in paper“, based on the prices. Instead, what is happening is completely unusual: the The hunt is now for physical gold.
The explanations that link the jump in the prices of the yellow metal, which rose to new peak near $3.000 the ounce, to fears of duties of Trump, leave unsatisfied most analysts.
It may be worth considering that an increase in duties could lead to inflation.Less likely that Trump will consider imposing tariffs on gold itself.
Physical delivery of gold is the real novelty
But there is more to it than just the search for a safe haven. The Comex, the most important gold and silver market, has recorded over 19.000 contracts in the last month, futures for delivery that is immediate delivery of gold for a value of 5,5 billion dollars, +450% on the same month last year. If it is only to have a safe haven, it is purchased "on paper" and left where it was to avoid transportation, security, and insurance costs.
Central banks are the most active
Le central banks are among the most active in this movement, for other reasons. The recent strengthening of the dollar has caused the Currencies of the markets above all Asian and those of emerging countries. So the central banks of those countries “covered” themselves with gold reserves in case they were to intervene to support their currencies. According to the international industry organization, the World Gold Council, since the beginning of 2022 The monetary authorities of China, Türkiye and India bought 316, 198 and 95 respectively tons of gold. THE central banks they mostly accumulate physical gold and make sure they have it at hand. To these factors, now we also add Beijing's latest decision. For the first time, the Chinese Government This week prompted the country's insurers to invest 1% of their total assets in gold. The amount of these purchases could reach 200 billion yuan, or $24,7 billion.
Not just Central Banks
But the main commercial banks are also moving. JP Morgan, the world's largest private holder of physical gold, has issued warnings delivery of ingots against derivative contracts expiring in February traded on the Comex Exchange in New York for an amount of 30 million troy ounces. Almost a thousand tons: more than a third of the gold reserves of Bankitalia, almost two thirds of those of Russia, double those of the European Central Bank, to give you an idea. The same idea came to Hsbc.
Building your own vaults to store your ingots
But where do I put all this physical gold? Some of it, some media point out, has been shipped to the United States, to protect it from Trump's hypothetical duties. It should be remembered that the US physical gold market offers a premium compared to the London one. And that operators try to gain advantages from this differential.
But what is most surprising is that theaccumulation of physical gold has pushed for the construction of new large warehouses di storage. It is happening in the US and there are large short-term fund companies that are financing the creation of new deposits. But also in Europe: some media report that Ireland and France are building their own vaults to store physical gold in a protected way. But Germany and Holland are also on the same path. The basis is the fear that gold could remain blocked in another country: what happened to Russia with the fines.
Basel 3 considers investment in physical gold as zero risk
The change was also triggered by a regulatory piece important part of the package of rules on capital requirements of banks, Basel 3: the Net Stable Funding Ratio (NSFR), introduced as a key criterion for financial stability that requires the “coverage” in the balance sheet of every asset considered risky. And this is where gold comes into play. The European Banking Authority (EBA), responsible for the classification, has included the yellow metal in the category of the most liquid and therefore less risky assets (Tier 1) only in the case in which it is held in physical form and directly attributable to a single owner: the so-called “allocated” gold.
In all other cases, gold – like other precious metals – becomes Tier 3, a high-risk asset category, for which a reserve of 85% of the value is imposed, a reserve identical to that required for shares of unlisted companies. Thus with Basel 3 holding paper gold has become expensiveUnallocated bullion, also called “paper gold”, is that held in Comex warehouses against futures, but bank vaults are also full of it and each of them can be used multiple times as collateral or as underlying for financial products.
Why does gold rise if stocks also rise and bond yields fall?
La central bank demand, who invest for security reasons, helps explain why the Gold's relationship with interest rates it stopped. Usually when yields on safer bonds are low, gold tends to rise. Since late 2021, however, the price of gold has risen even as real yields on ten-year U.S. Treasuries have risen from less than 1% to 1,8%. The last time real yields were this high, gold was worth about $XNUMX an ounce, nearly two-thirds less than its current price. What's more, gold is considered a safe haven when stock markets are falling; instead, these days, stock market listings they are always breaking new records.
The bet is: will the system hold up?
If the tendency to ask for physical gold should remain at these levels or even grow, the bet is to see the system tightness to the wave of ransom demands? The Central Bank of the United Kingdom and the City of London have noticed a significant increase in withdrawals of bullion and other forms of physical gold for weeks. According to the Financial Times, the value of gold drained from London vaults since November is 82 billion dollars. The Bank of England has confirmed that it has received strong demand for the withdrawal of physical gold in recent weeks and that this has determined theextension of delivery times, given the implicit length of these procedures. But he denied rumors that the institution had exhausted its reserves of the precious metal. "We have the second largest reserves of gold in the world and our stock is down about 2%," assured Deputy Governor Dave Ramsden. But those who work on futures contracts know it well: the amount of futures contracts issued is much greater in quantity than the gold available, precisely because no one has ever asked for it physically back.
Zimbabwe gold coins also targeted
For the first time since they were introduced almost three years ago, the Zimbabwe gold coins were sold for more than $3.000, while the price of bullion soared. The 22-carat gold “Mosi-Oa-Tunya” coins, named after Victoria Falls, were listed at $3.018,38, according to data on the website of the Reserve Bank of Zimbabwe.
