JPMorgan Chase to Deliver $4 Billion in Gold Bullion Against Futures Contracts
JPMorgan Chase will deliver gold bullion valued at more than US$4 billion against futures contracts in New York in February, at a time when surging prices and the threat of import tariffs are fueling a worldwide dash to ship metal to the US.
Bulk Delivery of Gold Bullion
The bank, which is by far the world’s biggest bullion dealer, was one of several institutions to declare plans on Thursday (Jan 30) to deliver bullion against contracts traded on CME Group’s Comex that will expire in February. The delivery notices – which total 30 million troy ounces of gold – were the second largest ever in bourse data going back to 1994.
Fear of Tariffs Drives Gold Prices
Fears of imminent tariffs on imports following the election of US President Donald Trump have caused prices for gold futures on Comex to surge over spot prices in London. Spot prices shot to record highs this week, but the additional premium on Comex has created a lucrative arbitrage opportunity for the handful of banks that can quickly fly bullion between key trading hubs.
Bulk Transport of Silver as Well
Similar pricing dynamics have emerged in other Comex contracts too, and the disparity has become so large that traders have started flying silver into the country. The precious metal is usually too cheap and bulky to justify the cost of airfreight, and one industry veteran said it’s the first time they’ve seen it happen.
Physical Delivery Rare
While millions of ounces of gold trade on Comex every day, typically only a small fraction of that goes to physical delivery, with most long positions being rolled over or closed out before they expire.
JPMorgan Chase Delivery Notice
JPMorgan issued delivery notices for 1.485 million ounces of gold to meet physical delivery for the February gold 100-ounce contract, with deliveries on Feb 3. That accounted for roughly half the total to be delivered, with Deutsche Bank, Morgan Stanley, and Goldman Sachs Group making up the bulk of the rest.
Conclusion
JPMorgan Chase’s decision to deliver gold bullion valued at more than US$4 billion against futures contracts in New York is a significant move in a market where prices are surging and the threat of import tariffs is fueling a worldwide dash to ship metal to the US.
FAQs
Q: Why is JPMorgan Chase delivering gold bullion?
A: JPMorgan Chase is delivering gold bullion to take advantage of an arbitrage opportunity created by the surge in gold prices and the threat of import tariffs.
Q: How much gold will be delivered?
A: JPMorgan Chase will deliver 1.485 million ounces of gold to meet physical delivery for the February gold 100-ounce contract.
Q: Who else is delivering gold?
A: Deutsche Bank, Morgan Stanley, and Goldman Sachs Group are also delivering gold to meet physical delivery for the February gold 100-ounce contract.
Q: Why is the price of gold surging?
A: The price of gold is surging due to fears of imminent tariffs on imports following the election of US President Donald Trump.
