(Kitco News) - The global gold market is fracturing into competing geopolitical blocs, forcing a historic migration of physical metal away from its traditional hub in London, the founder of a leading precious metals mint warned Tuesday.
Josh Phair, Founder and CEO of Scottsdale Mint, said that the world is "bifurcating", where trade lines are becoming stressed and the free flow of metal can no longer be guaranteed. This is leading to a "push for a decentralization away from London," a city he now believes is no longer the premier location for storing physical bullion.
"Jurisdiction matters," Phair said in an exclusive interview with Kitco News. "I don't think London is the top jurisdiction to hold your metal in anymore".
The comments come after a chaotic period for the market following a surprise U.S. Customs ruling on August 7 threatening to apply a 39% tariff to Swiss gold bars, a move that President Donald Trump later reversed via social media. Phair, who predicted the tariff issue in a February interview with Kitco News, revealed the episode caused an immediate seizure in the physical market.
"A lot of the trade desks actually pulled all gold sales... pulled completely all offers off the table," Phair said, adding that the incident has "permanently changed how people source their metal.”
As of Tuesday morning, spot gold was trading near $3,375 an ounce.
The Phair said the pressure on physical supply is set to intensify as new large-scale buyers enter the market. During the interview, it was noted that India's market regulator is considering allowing the country's $177 billion pension system to buy gold ETFs, a move that could unleash 17 tons of new demand from a 1% allocation alone.
This massive Eastern demand highlights what Phair described as a structural mismatch with the Western market's infrastructure, particularly the inefficiency of re-refining London's 400-ounce bars into the one-kilo bars Asia demands.
The structural shift is even more pronounced in the silver market, which is facing a forecasted supply deficit of over 200 million ounces for the fifth consecutive year. Phair argued that the investment thesis for silver has permanently changed, as its role as a "critical mineral" for military, AI, and green energy applications has created a new, non-discretionary demand floor.
"You have to secure your future," Phair stated, noting that China has been more aggressive in securing minerals than the West. "I think now the United States is scrambling to try to catch up.”
He believes the real market pressure will come when a future liquidity event from central banks awakens the retail sector, which has been relatively quiet. "When you have banks, governments, industrial players, and retail all clamoring for the same asset class at the same time, that's when you see fireworks," he warned.
Phair, who predicted an "explosive decade" in his February interview, clarified that the explosion so far has been less about price and more about the "complexity and fragility of the underlying market structure itself.” He concluded that the ultimate crisis for investors may be less about price and more about securing access to the physical metal as the market becomes increasingly controlled and politicized.
For the full in-depth conversation with Josh Phair, watch the complete interview with Kitco News' Jeremy Szafron above.