Gold traders across London are scrambling as the city’s precious metals market skids into unprecedented territory. The Bank of England’s vaults are backed up with delivery delays stretching to 4-8 weeks. That’s a far cry from the 2-3 days promised by the London Bullion Market Association.
Let’s call it what it is: a technical default on spot contracts.
The London gold market’s paper promises are evaporating faster than morning dew. Call it what it is: a technical default.
The backlog stems from a massive gold exodus to U.S. COMEX warehouses—12.2 million ounces shipped in just two months. Why? Trump’s tariff threats have traders nervous. They’re exploiting price differences between London and New York markets. Smart move for them. Potential disaster for everyone else.
London’s gold market is running on fumes. Only 36 million ounces available for immediate use, yet outstanding spot contracts total 380 million ounces. The market’s structural vulnerabilities have become impossible to ignore amid this liquidity crisis. Do the math. It doesn’t add up.
Sure, LBMA data shows 279 million ounces in London vaults, but most of that gold is already spoken for—pledged to central banks, ETFs, or foreign governments.
Meanwhile, COMEX inventories have surged 75% since November 2024, hitting 926 metric tonnes. That’s 29.8 million ounces sitting pretty in New York after an airlift of 393 tonnes from London warehouses.
Talk about robbing Peter to pay Paul.
The LBMA’s four-week reporting lag doesn’t help. Markets are flying blind through this crisis. The Bank of England Governor dodged questions during UK Treasury Committee testimony. Classic.
Gold prices have hit record highs around $2,900 an ounce, with $3,000 within reach. Annual demand reached 4,974 tons last year, worth a staggering $382 billion.
The ripple effects? Chinese banks now offer clients the option to keep cash in gold instead of Yuan. Trump wants to verify Fort Knox’s gold reserves. Swiss refineries are bottlenecked.
The London gold market’s house of cards is showing cracks. Physical gold matters. Paper promises? Not so much.
This confidence crisis deepens as approximately 96% of gold traded daily lacks physical backing, with only 4% representing actual deliverable metal.
