(Kitco News) - The ongoing crisis in the Middle East continues to wreak havoc on the global supply chain. Although the physical precious metals market hasn’t been directly impacted by the war in Iran, the volatility in global financial markets demonstrates that it is not completely immune to these risks.
Proposed U.S. federal legislation aims to mitigate these potential supply-chain risks as it seeks to expand the nation’s precious metals storage framework and reduce systemic risks within U.S. financial markets.
On Thursday, Rep. Russ Fulcher (R-ID) and Rep. Mark Harris (R-NC) introduced the “System Integrity through Licensed Vault Expansion and Resilience Act” (SILVER Act), which seeks to adjust and broaden geographic limitations on approved depositories for precious metals tied to regulated futures markets.
According to the bill, under current legislation, exchange-approved precious metals vaults must be located within roughly 150 miles of New York City, creating what lawmakers and industry participants describe as a concentration risk with implications for market stability, national security, liquidity, and investor access.
Fulcher said in a statement that having approved vaults in other parts of the country could strengthen the market’s supply chain.
“Having metal depositories located in more than one region in the United States will provide Americans across the country with affordable access to metal exchanges and safeguard assets in the event of a national emergency or extreme weather event,” he said. “I’m proud to introduce the SILVER Act, which requires the approval of at least two depositories in the Eastern, Central, Mountain, and Pacific time zones, strengthening system integrity and resiliency.”
Proponents of the legislation also see the benefit of a diversified vaulting network as gold and silver continue to be recognized as important monetary assets in global financial markets. Some supporters, including the Sound Money Defense League, have said that having secure depositories in other regions—particularly in the Western United States, where much of the nation’s mining and refining activity occurs—would improve market resiliency and access.
Industry stakeholders note that expanding the network of approved depositories could increase storage capacity, improve liquidity, and make it easier for investors, producers, and institutions to participate in the market without incurring unnecessary transportation and storage costs.
“Greater access to qualified storage facilities across the country will enhance efficiency and reduce barriers to entry,” said Stefan Gleason, CEO of Money Metals Depository, one of the largest commercial gold and silver vaults in North America. “This is not just about de-risking the financial system given the monetary and strategic roles of gold and silver; it’s also about aligning market infrastructure with real-world supply chains.”
