Gold On A Plane Or Perhaps Not
Gold On A Plane Or Perhaps Not by Rory for The Daily Coin
It seems the limited number of global airline flights is beginning to create a new choke point for the precious metals. With demand for physical gold at record highs we are not surprised. Mints, refineries and gold mines have either been shuttered or operating at limited capacity for the past several weeks. Only a few have begun coming back online, once again, at far less levels than full capacity. Gold has been the issue, not so much, at this point, for silver or the other white metals, but gold, the shiny yellow metal, it seems is struggling to secure a “seat” on the limited flight schedules.
COMEX / LBMA must be in serious, serious trouble. If flights are having to make decisions about which load of cargo to haul and the choice is PPE / Coronavirus kits or other life saving equipment or carrying gold it seems that wouldn’t even be a conversation. Why would gold be that important that someone has to decided to make space on a plane between one or the other?
Would central banks require that much space to fly that volume of gold around the world? The few coins required at the retail level, according to some analyst, wouldn’t even take up the room of one passenger, much less be fighting for space in the hull of a plane!! Could those analyst be dead wrong about the volume of retail precious metals impacting the overall market? Yeah, I think it is likely retail demand, combined with central bank and settling platforms are all vying for the same space on the limited airplanes that are still flying.
Swiss refiner Valcambi SA tried for five straight days last month to move a shipment of gold out of Hong Kong. Twice the metal was packed carefully onto a plane, only to be offloaded again.
After daily attempts and numerous arguments, the gold suddenly arrived in Switzerland without warning, said Chief Executive Officer Michael Mesaric. “We had not even asked for a slot.”
The coronavirus crisis has shone a light on a corner of precious metals markets that usually draws little attention: the logistics of transporting gold, silver and other metals across the world. The business is dominated by companies including Brink’s Co., G4S Plc, Loomis AB and Malca-Amit, which link miners and refiners with gold trading and consumption hubs around the world.
In normal times, gold bars worth millions of dollars travel the world in the cargo holds of commercial planes, just a few meters from the feet of passengers, before being whisked in armored trucks to refineries and vaults. But the grounding of flights has had a chaotic effect on an industry that’s used to relying on instantaneous delivery: prices in key markets have diverged dramatically, and the London gold market has even started talking about allowing delivery in other cities around the world.
Now, with global travel at a standstill, the precious metals industry is scrambling for alternative ways to keep the market moving. It’s a world of logistical headaches: even when space can be found on a plane, packages are often turned away if essentials like medical supplies need to travel instead. Continue Reading / The Peninsula Qatar
Whatever the reason, we have now entered the next level of choke points for the precious metals. This one, may take a minute to sort out. Yet more stress and strain in already over burdened market that is vital to wealth preservation and, presumably, global commerce since gold is a Tier 1 asset on central banks balance sheets.