America is draining European gold reserves – analysis

The analysis was written by Kristóf Juhász

The Trump Tariff Trade is shaking up the gold market: gold and silver bullion are now being flown on business jets from vaults in London and Zurich to the New York Commodity Exchange. This surge in transatlantic shipments could trigger a gold shortage in Europe, with the first warning signs already appearing.

Physical gold deliveries on the COMEX futures exchange have surged to levels unseen in 25 years. In January alone, almost 3 million troy ounces (93,31 tonnes) of gold were shipped from London vaults to New York, bringing the total to 435 tonnes since Trump’s election in November, with an additional 4 million ounces (124,45 tonnes) already slated for delivery in February.

The volume of physically delivered gold (blue, right scale, 100 ounces) and gold price (yellow line, left scale, USD/ounce) on COMEX from 2000 to 2025

In January 2025, a record-breaking three million troy ounces (93,31 tonnes) of physical gold was delivered to the COMEX futures exchange’s public warehouses.

The surge in physical gold deliveries is driven by arbitrage opportunities created by the price gap between the New York and London gold markets, a direct consequence of Trump’s tariff war.

The anticipated 25% tariffs on gold and silver imports from Canada, Mexico, and possibly Europe have widened the futures market premium. Consequently, gold has risen to $50 per ounce and silver to $1 per ounce over the London spot market, creating an arbitrage opportunity of approximately 1.5–3%.

The premium difference between physical gold and silver bars between New York and London

Since Donald Trump’s election, the price spread between the London and New York precious metals markets has widened, reaching $1 per ounce for silver and $50 per ounce for gold.

This premium differential has created such a profitable arbitrage opportunity for investment banks handling multi-tonne lots that it is now more cost-effective to transport silver bullion—which is traditionally shipped by container vessel—on passenger planes from London to New York to mitigate the risks of a rapidly changing tariff landscape.

Given the weeks-long shipping time, there is a risk that the notoriously unpredictable Trump could change his stance on tariff implementation multiple times, potentially resulting in an immediate 25% loss for arbitrageurs.

According to market intelligence from Conclude Zrt – a major bullion gold dealer in Hungary – it has recently become common practice to transfer 400 oz Good Delivery gold bars from London to Zurich, where they are converted into 1 kg bars before being flown to New York to capitalize on the premium margin profit.

Dormant Frankfurt Vaults; London Running Out of Gold?

Europe’s gold trading hubs are already feeling the impact of rising U.S. gold demand. Stocks of the most popular investment gold bars and coins have been depleted in Frankfurt’s vaults, which supply EU gold traders. Meanwhile, Swiss refiners are experiencing longer production and delivery times, with some reporting pre-order waiting lists of up to 8 weeks for 1-kilo gold bars.

The LBMA responded to gold traders’ concerns about a significant decline in London’s bullion stocks with a concise statement, assuring market participants that there was “ample liquidity” to support the average daily OTC gold trading volume of $226 billion. However, this nonchalant stance contrasts with rumors, reported by Bloomberg, suggesting that gold deliveries from the Bank of England’s vaults are now delayed by several weeks.