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Gold bars flying 11k miles to NY to ease supply squeeze

Scorpio

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#1
Gold bars flying 11k miles to NY to ease supply squeeze

Bloomberg News | April 24, 2020 | 8:37 am Intelligence Africa Australia Europe USA Gold


The Angel of Independence in Mexico City, Mexico. (Adobe Stock)
Australia’s largest gold refinery has ramped up production of one kilogram bars to ease the supply squeeze in the U.S. that helped propel a surge in the premium for New York futures.
The collapse in air travel that’s grounded passenger jets — frequently used to transport gold products — and virus-related disruptions to some refining capacity has tightened availability of the rectangular bars, typically used to settle the Comex futures contracts.
“We’re producing as many kilobars as we can, we’re probably churning out seven and a half tonnes of them a week at the moment and we are forward sold well into May,” Richard Hayes, chief executive officer of the Perth Mint, said in an interview. “A very large portion of those kilobars are ending up as Comex deliveries.”
In a chaotic couple of days in late March, the premium for New York futures over the London spot price rose above $70 — the highest in four decades​
In a chaotic couple of days in late March, the premium for New York futures over the London spot price rose above $70 — the highest in four decades. The spread has narrowed to about $21, yet that still compares with just a few dollars in normal times.
The mint, which reopened a kilobar production line in response to the supply crunch, expects elevated demand to prove to be only a short-term issue.
“Arbitrage issues around the Comex will be short lived and I don’t see them lasting for months and months,” Hayes said. “This is an unusual situation where you’ve got plenty of physical metal, it’s just in the wrong form and in the wrong place.”
While London’s gold market trades large 400-ounce bars, historically New York contracts have been settled with 100-ounce bars and kilobars.

A separate outcome of the coronavirus pandemic has been an acceleration of the refinery’s work to source additional raw material from beyond traditional suppliers in Australia and neighboring nations including Papua New Guinea.
New contracts
The Perth Mint has struck new contracts with some North American gold producers and operations in West Africa in the past 12 months to process their mined material, known as dore. Since supply chains have been disrupted by the virus, more global mining companies have been seeking pacts with the refiner, according to Hayes.
“We’ve certainly won some additional volumes out of Africa, and we’ve got another three or four contracts that are in the final stages of negotiation now,” he said.
The facility is also continuing to see strong retail demand for precious metals products in the U.S. and Europe, prompted by investor concern over the potential economic impact of the current crisis, Hayes said.
“For every coin we make, be it gold or silver, we could probably sell five or six of them,” he said. “That strong demand will be a little longer-lasting, I expect, as people have been quite badly frightened by this whole covid disaster.”
(By David Stringer)


https://www.mining.com/web/gold-bars-flying-11k-miles-to-ny-to-ease-supply-squeeze/
 

southfork

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#2
Dang, didnt know gold could fly, its kind of heavy
 

Buck

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#3
is the US Mint open?
 

oldgaranddad

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Hmmm.... could all those gold bars be confiscated off-shore Chinese gold? Who in China is going to report their secret stash was stolen? Chalk one up for the bankers. If true, it only reinforces the saying: if you don't hold it. you don't own it.
 

Goldhedge

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#6
11k miles... I wonder if they're gonna include the cost of transportation to the price of that gold?
 

WillA2

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#7
11k miles... I wonder if they're gonna include the cost of transportation to the price of that gold?
Might cause higher premiums. The banks would find a way to pass the costs on to the buyers, even if they owe them the gold.
 

oldgaranddad

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#9
No gold supply "shortages" in Perth?
Interesting...
I still say somebody is missing some gold or got an IOU under duress.
 

dacrunch

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#10
"fractionals" are much more discreet at the TSA scanner when I fly... ;)
 

gnome

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#11