London, gold hub for centuries, eyes delivery ‘around the world’
The London gold market will need to allow delivery outside of the city if the coronavirus pandemic leads to more stringent travel restrictions, the CEO of the London Bullion Market Association said.
The UK’s capital has been a key hub for global gold trading since at least 1732, when the Bank of England first established a vault in the city. As the coronavirus snarls global logistics, traders are being forced to consider what would happen if gold could no longer be shipped in and out of London.
A record of 8 326 t of gold were stored in London vaults by the end of December, and being able to move the metal is crucial for the global market.
“What about if you had airports closing, or further restrictions in terms of travel?” Ruth Crowell said by phone. “We’ve started conversations about other key financial centers and having cooperation when it comes to settlements in vaults around the world.”
Any decision on delivery is ultimately down to the bullion banks who are the LBMA’s core members, she said.
“There’s a lot of things that have to be taken into consideration in terms of tax regimes, legal questions. It’s not something you can just switch on,” Crowell said.
Clearing companies and their partners have to gauge both the current situation and how they will work when the market returns to some level of normality. “Making sure that if you are reducing risk in one part you are not adding more risk to the overall infrastructure,”she said.
The global gold market has been tested in the past month as lockdowns to contain the spread of the virus have shut or slowed some metal producers and cut travel at a time when demand for bullion has surged. The historic disruption has fueled volatility, with prices in key hubs moving apart.
There have been no reported Covid-19 cases in London vaults so far, according to Crowell. Vault providers have an agreement to support each other if a storage facility were to go down.
While global travel remains disrupted, logistics problems are easing as suppliers turn to chartered flights, and insurance companies are covering those flights to carry the metal, Crowell said. The supply situation has also improved after three major Swiss refineries restarted after a shut down early April.
Some parts of the world, notably China, are coming back to work. That adds “more enthusiasm and optimism about getting back to the business that we all had prior to this crisis,” she said.
Comments
The
content
you are trying to access is only available to subscribers.
If you are already a subscriber, you can Login Here.
If you are not a subscriber, you can subscribe now, by selecting one of the below options.
For more information or assistance, please contact us at subscriptions@creamermedia.co.za.
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation