Why is Gold Being Flown From London to New York?

Why is gold being moved?

UK prices started rising several weeks ago as banks and wealthy investors began moving physical gold across the Atlantic to prevent any effects tariffs may have later on. This caused some investors to fear shortages of physical metal stored in vaults across the UK, including those associated with the Bank of England.

Overall, 151 metric tons of gold were moved out of London vaults in January, destined for New York City, the highest ever recorded.

In a press release, The Gold Bullion Company’s Managing Director Rick Kanda said, “Buyers do not need to be too concerned, as the movements between the Bank of England and the US are very unlikely to have a much direct impact on supplies. These moves are primarily institutional repositioning of vaulted metal.”

He explained that the moves are due to increased demand for physical metal in the US when settling paper gold contracts instead of traditional cash settlements, which don’t involve buyers and sellers exchanging gold.

This is due to the difference in trades that occur between London and New York. Because the vast amount of gold held in Bank of England vaults is stored by other central banks and similar institutions, London is a hub for physical gold trades.

“The timing may also be strategically linked to potential future tariff considerations, with Trump’s tariffs causing uncertainty across the globe,” Kanda said.

Although the Trump administration has not indicated that tariffs will be applied to gold imports, this hasn’t stopped investors from acquiring physical gold.

Stockpiles in London have seen steep declines since the start of 2025 as banks and speculators have worked to take advantage of a US$20 per ounce price gap between London markets and Comex futures contracts.

Typically, the exchange-for-physical price differential is only a few dollars per ounce, but it spiked to US$50 per ounce in January due to the Trump administration's threat of tariffs.

As this has happened, US Banks and traders have spurred the movement as they attempt to exploit the price differential and maximize the value of physical metal trades.

US investors have been increasingly seeking physical gold as the Trump administration has created chaos not only within global financial markets but also uncertainty resulting from its involvement in Ukraine and the Middle East.

What does it mean for investors?

The short answer is not a lot.

For US investors looking to acquire physical gold, the price will be a little higher than what it would cost to take physical delivery of gold in London.

However, for those looking to buy and store their gold in the UK, another problem is coming into view. As stockpiles of bullion become tighter, the waiting time to exchange paper contracts for physical gold has become longer.

Normally, these exchanges would only take a few days, but traders are now needing to borrow bullion from Bank of England vaults, which has pushed the waiting time to as much as six weeks and has pushed the price of gold US$5 per ounce below spot prices.

Gold prices have risen sharply since the start of the year, and many analysts including Kanda are predicting gold to continue its upward trajectory and surpass the US$3,000 mark. He suggests that gold will continue to rise on continued central bank buying and increasing geopolitical tensions.

However, those looking to obtain physical gold may be required to pay a little higher premium to do so.