JPMorgan Chase, JPM, will deliver gold bullion valued at more than $4 billion against futures contracts in New York in February
JPMorgan Chase & Co. will deliver more than $4 billion worth of gold bullion against futures contracts in New York this February, as soaring prices and the threat of import tariffs drive a global rush to ship metal to the U.S.
The bank, the world’s largest bullion dealer, was one of several institutions that announced on Thursday their plans to deliver bullion for contracts traded on CME Group’s Comex that expire in February. Delivery notices for a total of 3 million troy ounces of gold were issued—the second-largest volume ever recorded in bourse data dating back to 1994. On Friday, traders declared their intent to deliver an additional 1.1 million troy ounces on Tuesday, according to the latest notice from CME Group.
Concerns about possible tariffs on imports following the election of U.S. President Donald Trump have pushed Comex gold futures prices higher than spot prices in London. Spot prices hit record highs last week, but the added premium on Comex has created a profitable arbitrage opportunity for banks capable of quickly flying bullion between major trading hubs.
Similar pricing disparities have appeared in other Comex contracts, with the gap growing so wide that traders have started airfreighting silver to the U.S.—a rare move, given that silver is generally too inexpensive and bulky to transport by air. According to an industry veteran, it’s the first time they’ve witnessed this happening.
While millions of ounces of gold are traded on Comex daily, only a small percentage is typically delivered physically, as most long positions are rolled over or closed out before expiration.
The Comex exchange is often used to hedge positions in London, the world’s largest trading hub, with banks balancing long positions there with short paper positions in New York. Since the U.S. election, however, physical inventories at Comex depositories have surged by 14 million ounces, representing around $39 billion in gold.
It remains unclear whether JPMorgan and other banks are physically delivering bullion to capitalize on the arbitrage or merely using the deliveries to close out short positions. Both JPMorgan and CME Group declined to comment.
JPMorgan issued delivery notices for 1.485 million ounces of gold to fulfill physical delivery for the February gold 100-ounce contract, with deliveries on February 3. That accounted for nearly half of the total delivery, while Deutsche Bank AG, Morgan Stanley, and Goldman Sachs Group Inc. were responsible for most of the remainder.