(Bloomberg) –
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JPMorgan Chase & Co. Provides a gold bully worth more than $ 4 billion against Future Contracts in New York in February, at a time of booming prices and the threat of import tariffs is firing a world dash to send metal to the US.
The bank, by far the world's largest bullying dealer, was one of several organizations to declare plans on Thursday to provide a bully against contracts traded on CME Group's Comex which will end in February. The Distribution Notices – totaling 3 million Troy ounces of Gold – was the second largest ever in course data that went back to 1994. Traders announced on Friday their intention to provide 1.1 million Troy ounces on Tuesday, at According to the latest notice from CME Group.
The fears of forthcoming tariffs on imports following the election of US President Donald Trump have caused prices to a gold future on Comex to swell over random prices in London. Spot prices shot to record highlights last week, but the extra premium on Comex has created a profitable arbitration opportunity for the handful of banks that can quickly fly a bully between key trading hubs.
Similar pricing dynamics have also emerged in other Comex contracts, and the difference has become so big that traders have started flying money into the country. The precious metal is usually too cheap and bulky to justify the cost of Airfreight, and one former industry says this is the first time they have seen it happen.
While there are millions of ounces of gold trade on Comex every day, only a small proportion of that is going to be physical delivery, with most long jobs rolled over or excluded before they expire .
The exchange is often used to hedge jobs in London, the largest trading hub, with banks offset nostalgia with short paper jobs in New York. Since the day of the US election, however, physical inventories in the deposits of the exchange have magnified 14 million ounces, about $ 39 billion of gold.
It is unclear whether JPMorgan or the other banks physically fulfilled to take advantage of an arbitration opportunity, or simply using the deliveries to leave the current short posts. JPMorgan and the owner of CME Group's exchange refused Inc. make a comment.
JPMorgan issued distribution notifications for 1.485 million ounces of gold to meet physical delivery for the February 100-ounce Gold contract, with deliveries on February 3. That accounted for about half of the total to be delivered, with Deutsche Bank , Morgan Stanley and Goldman Sachs Group Inc. form the majority of the rest.