Capital is unsafe in Europe as the war drums beat louder by the day. Looming tariffs have many questioning if they will spread to precious metals and smart money has selected the USA as its safe haven. Moreover, gold is selling at a premium in the US leading to an uptick in arbitrage. Gold has been on the rise since the outbreak of the Ukrainian war and we’ve seen a 10% rise in the past year alone. Now, the Bank of England is working quickly to move a large portion of its gold reserves from London to New York.
Gold prices have been about $20 lower per troy oz in London compared to New York. J.P. Morgan, for example, moved $4 billion in gold reserves from London to NYC this February. The central bank is especially eager to send its reserves off to America. London’s largest gold reserve currently holds 310 tonnes of gold or 420,000 gold bars. England only owns 5.4% of its gold holdings with major banking institutions and foreign central banks accounting for the bulk.
The London Bullion Market Associated stated that 150 tonnes of gold were shipped out to the Big Apple in January alone, with 100 tonnes of that coming directly from the Bank of England’s massive vaults. Transporting tangible assets is no easy feat, even for a central bank. The Bank of England stockpiles massive gold bars weighing 400 troy oz each. New York’s gold exchange only accepts smaller ingots of 100 oz, so the bullion must be sent to Swiss refiners to be melted and recast.
There is a rush to get gold out amid war and geopolitical tensions. Swiss exports of gold to the US reached a 13-year high this January and has no signs of slowing. The risk of war in Europe is very real and that can take gold prices up dramatically. Banks are often severely restricted during times of war and it certainly would not be as simple to move precious metals across the Atlantic.
In both world World Wars, capital fled Europe for the US, strengthening the dollar and driving up gold demand as a hedge against uncertainty. Gold doesn’t necessarily move with inflation but reacts to geopolitical instability and loss of trust in institutions. If conflict escalates in Europe, capital outflows could once again drive gold higher, similar to historical patterns. There is a reason we are witnessing a mass exodus of gold into the US. As far as a matter of confidence is concerned, DOGE’s search into Fort Knox could have many questioning if gold is indeed safe in the US. We are certainly living in a time of mass political uncertainty.
