➡ The Arcadia Economics channel talks about how the U.S. government has decided to impose tariffs on imported gold bars, causing a significant difference in gold prices between New York and international markets. This decision has led to a surge in New York gold futures, while causing uncertainty in the gold industry. The tariffs disrupt the usual trade process, where London gold is refined into U.S. formats in Switzerland. This could potentially lead to a shift in refining capacity from Switzerland to the U.S. if the tariffs remain in place.

➡ The gold trade between London, the United States, and Switzerland is facing potential disruption due to issues with physical supply and demand. This could lead to a more fragmented global trade, with each deal negotiated separately. The situation could change quickly, depending on various factors, including possible revaluation of gold and securing payment and supply chains. The implications are significant, but the outcome is still uncertain.

U.S. Customs and Border Protection has ruled that one kilogram and 100 ounce gold bars are subject to import tariffs, triggering sharp price dislocations between New York futures and international spot markets. Welcome to the Morning Markets and Metals with Vince Lancey, where each morning Vince brings you the financial and precious metals news to get you ready for your day. And now, here’s Vince. Good morning. My name is Vince Lancey. This is the Golf Fix Market Rundown. We have one topic to discuss today, and that’s front and center. Gold futures spiked to $35.34 last night.

Tariff shop triggers historic gold market dislocation. We’re going to go through the facts here. Let’s start with the markets first. Ten-year yields are $4.26 up one basis point. The dollar is $98.25 up 20 basis points. The S&P 500 is $63.62 and change up 14. The VIX is $16.26 down 32. COMEX December gold futures are $34.74 up $20.50 with a five-minute lag. Gold spot is $33.87 down $8.57 in real time. So silver, similarly but not as aggressively, silver futures are $38.53 up 23.5 cents. Spot silver is $38.26 up almost three cents. Copper is $4.38 up a little less than a penny.

U.S. copper futures are $4.3820, $4.42 up over two cents. WTI is $64.56 up 30. Natural gas is $3.01 down four. Bitcoin down $700. Ethereum you can see that. Palladium down 32. Platinum down 10. Gold silver slightly lower. And grains which are partly off your screen are all slightly lower. If you’re not familiar with the news yesterday, the news yesterday will explain why we’re putting futures up here now. The differential between gold futures and gold spot which is almost always a function of cost of carry which is spot plus the differential over time and money has widened last night because of a news item.

The same thing has happened to silver to a lesser extent because of fears it could happen and copper has reasserted itself mildly. Essentially precious metals are bifurcating in the west hopefully temporarily between Europe and the U.S. or London specifically. Here’s the story to start off. As reported here last night we have more detail in this post here. Certainly we can discuss this more but for now here is the whole story as reported by the FT and Bloomberg and curated by this publication. We will be putting out more on this topic later today and zero heads also a very important part of the reporting on that.

U.S. customs and border protection has ruled that one kilogram and 100 ounce gold bars are subject to import tariffs triggering sharp price dislocations between New York futures and international spot markets. The U.S. government has moved to impose tariffs on deliverable gold bars reversing previous expectations that bullion imports would remain exempt under President Trump’s reciprocal tariff structure. A July 31st CBP that’s the tariff organization letter reclassified the bars as semi-manufactured making them subject to duties under code 7108.13.5500. This decision sparked a surge in New York gold futures where December contracts traded over 125 dollars above London’s spot before easing back into what you see there.

Switzerland the largest exporter of kilo bars to the U.S. faces heightened trade pressures following a 39% country specific tariff. Refiners in Asia have also paused shipments as uncertainty spreads. Industry experts warned the move could destabilize the gold futures markets pricing function with UBS and BMP para bar strategists questioning whether the ruling was an error or a fundamental policy change. To put a little bit of color on the mechanics of what is going on and why this is affecting the market the way it has before giving you a very simple big picture overview.

London deals mainly in 400 ounce bars. U.S. contracts are for one kilogram or 100 ounce bars. During COVID the problem that’s happening right now also arose when there is demand for U.S. delivery. London bars are sent to Switzerland to be rerefined or refabricated into U.S. formats. London has been a default physical hub for gold for decades while the U.S. has focused on making a more robust futures market. Dealers in London are typically long metal in their vaults in London and hedged by being short U.S. futures through the EFP carry trade. They are long London gold 400 ounce bars and short U.S.

gold 100 ounce bars. If U.S. delivery is called which has starkly is rare because the COMEX is a paper market and everybody knows that you should want to get your metal from London, they would take the metal that they have their 400 ounce bar, send it to Switzerland where the refineries are, have the Swiss break down the 400 ounce bar into four 100 ounce bars, changing the format satisfying U.S. rules. The new tariffs disrupt that trade. A London trader long gold and short U.S. gold long London gold and short U.S. gold now faces a choice.

First of all London traders have been doing this for years. They’re long the physical and they sell futures against it legitimately to carry the differential. It’s kind of like lending money out. Gold is money and they get comfortable doing that and it gets gets to be a crowded trade. It gets to be a lopsided trade and so they have these large legacy positions that they’re always massaging. But when news like this comes out and you can’t take your 400 ounce bar and put it into four 100 ounce bars to ship it to New York if someone ever wants the physical you have a problem.

You can find another refiner not possible overnight. I wouldn’t give you any. Squeeze the shit out of you. Excuse me. You could do nothing and die a painful death or you can buy back the U.S. contract quickly. So they’re short the U.S. and they’re long London so they buy the U.S. contract quickly and then they decide whether or not to sell the London contract. So it’s a regulatory contract issue. If somebody in the U.S. were to say I want the gold as they have as we have been doing well then you would have to get the gold.

The driving behind the price higher is this covering or this unwinding of the EFP which is really just a spread between London and New York. This is this exposes the weak link in the triangle of trade. London London acts as an intermediary but problems in metals markets over the last five years gold silver and nickel for example and copper have been venue or fungibility problems again very similar to what happened during Covid. Supply chains that are too long are being shortened. Now to zoom out went a little bit of a big picture thing here because this is all part and parcel of what’s been going on over the last three years.

The big picture here is about supply chains, reshoring, onshoring and French shoring. Supply chains are about physical commodities, natural resources and finished goods that they end up leading into. Gold however is unique. It is both a commodity with physicality to it so it has supply chain. It’s also money and because it’s money it’s actually another way to say money is I frequently call it a payment chain. Supply chain is the gold moving through the system from the ground to the vault. The payment chain is when gold is used to pay for other things so every time you do a transaction you use gold to pay for it not every time but it’s monetary and because of that because it’s called a commodity but they wink at you when they treat it as money gold flows internationally across borders untariffed because you can’t tariff money.

So gold is unique it is both a commodity and money that gives it a physical supply chain which I just described mining refining smelting selling and a payment chain because it moves across borders as a form of settlement. What is being tariffed here is the refining and smelting part of that supply chain. What is suffering is the monetary carry trades of the payment chain that the London bullion traders have on. If President Trump intended this move assuming it was not an error then he is playing chicken with the swiss. You may remember that I will say things like you don’t tariff what you want to come to you you tariff what you don’t want to come to you and this seems again it could be an error it could be a bluff but this seems kind of backwards why would you tariff gold if you wanted to come to you ah because when you’re negotiating with a trade partner who you feel is weak and you can outlast them you tariff the thing that you need because they need to sell it more than you need to buy it and what happens is they fold so the swiss ostensibly folded offering to move their refineries to the US but that’s neither here nor there.

If Trump wins refining capacity couldn’t move from Switzerland to the United States big picture still right if he loses the gold Switzerland refines will continue flowing east because the east will accept it. In that case we will have priced ourselves out of the market by effectively embargoing those formats. COMEX futures rally similar to what happened with copper earlier London spot prices were largely unaffected and are now lower this reflects the weakest link in the triangular gold trade between London and the United States as I just said. Moving on to the immediate potential effects if the move is intentional it is a game of chicken with the potential to disrupt the gold market at the financial side substantially the negotiation is with Switzerland but it highlights that western gold’s trade weak point is physical supply in while western demand is increasingly in the US pulling the gold over here the supply chain must shorten because gold is also money restricting its movement is weaponizing our payment chain.

If unresolved quickly this will push market participants into their own corners taking their kickballs and going home but more aggressively make global trade more fragmented and bilateral with every deal negotiated separately. If Trump meant to do this he could still adjust course as he recently did with copper depending on the reaction the Swiss have already offered as we said at least verbally to consider moving refining capacity to the US it is unclear how serious that is if it was unintentional and the result of a classification error or Trump just bluffing to see how they react the decision could be reversed within days for now given the opportunity this is effectively a coin flip traders might use this as a point to close positions winning or losing until there is clarity the implications are significant but the core story is here.

Related posts by the way that full story is in tariff shop triggers historic gold market location the link is there related post last night we put it out US imposes tariffs on Swiss gold bars yesterday we also put out UBS raises the 2025 demand roof suspicious no founder special fed death gold industry coming to America as we thought what happened Swiss offer us its gold industry and trade talks and the must watch report from yesterday. Okay we have a little note here we just want to say that isn’t it interesting I won’t say the word suspicious that within days of each other the Fed weighs in on gold revaluation the LBMA is exposed as a weak link while we’re trying to repatriate our own gold supply industry these things point to potential revaluation of gold they point to a deepening of they definitely point to a deepening and a realization of the importance of gold in global trade going for forward they show the LBMA problems and we need to secure our payment and supply chains for gold if we view it as an international asset that’s needed other metals would follow in five minutes he could reverse this and say I didn’t mean it and you could think that he’s either screwed up or bluffed and you’d say he’s a dummy or and this is equally true Trump has a habit of most government does what Trump has a habit of shooting and then aiming so perhaps he shot an aim because he wanted to see how they can react you know when you’re the incumbent you get to make those mistakes that’s why Microsoft software sucks because they can put it out and then fix it later on anyway moving on today’s Friday nothing is scheduled Saturday vice chairman for supervision Michelle Bowman speaks take a look at the charts there’s the chart that we’re looking at there the five-minute chart gold is now futures are up 24 and gold is down spot is down almost four so people right now have rushed in to cover their gold futures and silver a little bit and then those that panicked first either panicked best or were stupid you don’t know these things can go on a lot longer and it’s far from over I’m Vince have a great weekend well thank you Vincent for this morning’s report and thank you for another great week of the show hope everyone had fun watching and following along with everything that happened this week certainly exciting times out there and nice to see a recovery after last week’s sell-off so thank you for joining us each and every morning especially everyone who makes it into the chat for the live show and before we wrap up did just want to thank one of the companies that does make this show and this channel possible which is Dolly Barton Silver and as we mentioned and talked about earlier Dolly Barton obviously has been out drilling already they did complete a financing they have their financials in place and actually increased the size of the drill program to 55,000 meters and just to give you an idea of what they are focusing on now well here’s a quick word from Sean Duncan the CEO of Dolly Barton from the last time we had him on the show what we did going back in April is we decided to list our shares on the NYC American and we did that because there are only 10 companies on the New York Stock Exchange that are giving investors exposure to silver and now Dolly Barton is one of those companies so we’re open to the biggest market in the world we’ve got our shares there and then after we we had more eyeballs and more more buyers and more investors come into the company the share price lifted and we took our shares that had gone up and we used them to buy depressed assets to buy assets for pennies on the dollar well thank you Sean and I might add that we have just set up an interview between David Morgan and Sean so that David can dig in a little deeper into the technicals on the mining side and we will have that coming your way in the next two weeks but just wanted to keep you updated on the latest progress from Dolly Martin Silver and to hear the full clip of what Sean said the last time he gave a great overview of the company well I will wish you a good weekend and let you know that that one’s coming your way now
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