(Kitco News) - While the gold market has seen significant flows from London into New York vaults, the London Bullion Market Association (LBMA) said it still has plenty of the precious metal to fulfill over-the-counter investment demand.
On Friday, the LBMA published updated vault holdings, stating that as of the end of January, London vaults held 8,535 tonnes of gold, a 1.77% decrease from December. The gold held in London was valued at $771.6 billion, which equates to approximately 682,772 gold bars.
“Despite the outflow, the data shows that the London market is robust,” the LBMA said in the report. “The monthly decline in gold stocks reflects the well-documented market dynamics at present. Given the flow of metal from London to New York, a 151-tonne decline in stocks in January is unsurprising. Indeed, the pace of the outflow reflects market functionality, albeit with delays.”
Analysts have noted that since President Donald Trump’s election victory in November, there has been a steady flow of gold into the U.S. That flow has ramped up in the last few weeks as Trump has threatened the global economy with tariffs. Bullion banks have been stockpiling gold and silver ahead of any potential tariff-induced disruptions.
However, analysts note that the market is starting to normalize as fears of a trade war diminish. On Monday, Trump announced a 30-day delay in implementing 25% tariffs on Canada and Mexico; however, he continues to threaten the European Union with trade measures.
The LBMA noted that while there is plenty of gold available for investors, the marketplace can experience some supply disruptions as the metal is not always in the right place or in the right form for delivery.
“The gold market has many unique nuances, and temporary physical demand/supply bottlenecks and imbalances aren’t new. Premiums (or discounts) can occur when a market doesn’t have the right form of metal in the right location at the right time. Granted, this is unusual for the NY market, where gold futures contracts typically roll or are cash-settled. At some point, physical metal can be expected to return to London,” the LBMA said.
While gold holdings remain robust in London, the same cannot be said for silver, as the metal is experiencing even more significant outflows. The LBMA reported that as of the end of last month, London vaults held 23,528 tonnes of silver, an 8.6% decrease from December. The silver held is valued at $23.9 billion, which equates to approximately 784,282 silver bars.
“The decline in silver stocks is the largest monthly decline since LBMA records began in July 2016,” the LBMA said. “Like gold, silver’s outflow is directly linked to the movement of metal from London to NY due to tariff concerns. For silver, participants continue to closely watch blanket U.S. tariff threats on key producing nations with concern.”
Silver holdings in LBMA vaults are no longer at record levels. Analysts have said that above-ground stocks will continue to be depleted as unprecedented industrial demand outstrips mine supply.
Analysts also believe this significant supply/demand imbalance should drive gold prices higher through 2025. There are also expectations that silver will ultimately outperform gold, which is already trading at all-time highs.
