Covid-19: Stranded gold may travel on chartered flights

Bloomberg

Gold suppliers are in talks to use chartered or cargo flights to transport the precious metal, which usually moves around the world in commercial planes and has been left stranded as global travel grinds to a halt.
The global gold market has been thrown into upheaval by the coronavirus outbreak. Logistics are becoming increasingly difficult and some leading refineries have been forced to close, all at a time when demand for gold is surging. A key South African refinery said it’s had to stop shipping to London.
The London Bullion Market Association (LBMA), which represents gold market participants, said that refining capacity isn’t a problem — there’s easily enough plants still operating to meet demand.
However, the group is looking at ways to solve the logistics problems and is investigating the possibility of allowing global delivery outside of London.
“LBMA is confident there is more than sufficient global refining capacity,” it said in a notice issued overnight.
“Refiners and other market participants are actively
engaged with logistics companies to overcome travel constraints and ensure the physical movement of metal via, for example, chartered or cargo flights.”
The disruptions in gold supply chains have combined with surging demand for the traditional haven to drive prices higher.
Spot gold is headed for its biggest weekly gain since 2008.
Uncertainty over whether there was enough gold available in New York to deliver against contracts on the Comex drove the spread with London spot prices to the highest in four decades.
While tightness on the Comex may be easing amid signs that investors are rolling April contracts into June, the constraints on transporting gold remain in place.
Some wholesalers and retail dealers have said they are running out of the metal and South Africa’s Rand Refinery Ltd is exploring back-up plans and alternative measures to be able to meet its delivery commitments to the London gold market after commercial flights dried up.
“Headlines have popularised the worries about the ability to buy and deliver physical gold and spreads have blown out,” RBC Capital Markets said in a note.
To be sure, gold stocks in London remain healthy with more than 8,000 tons based on the latest published figures, the LBMA said.