Banks Are Accumulating Gold Faster In Recent Years

March 20, 2022 8:58 pm

The price of gold has increased significantly in the past few months as investors look to diversify their assets in response to geo-political turmoil and increasing inflation concerns.

In particular, the banks seem to be accelerating their rate of accumulation of precious metals such as gold and silver which may indicate higher prices to come.

Based on recent data, about 1.6M ounces of gold has arrived in the Comex vaults in just the first half of March which makes this the largest inflow of gold since October of last year.

The large amount of inflow in just a short time period has sparked interest from investors wondering what the big banks are doing now and what this means for commodities and crypto.

Zerohedge reports:

The Comex vaults have been steadily depleted over the last several months, however, 1.6M ounces of gold just showed up since March 1 as shown below. This is the largest inflow since October 2020 and we are only halfway through March!

This may be simply a restock of the metal lost in Jan and Feb. It’s also possible this is being used to support the massive delivery volume being seen in the historically quiet month of March.

But a third possibility is that the banks are preparing for massive delivery volume in April.

After all, as shown below, this metal has just shown up in the last three days and is primarily in Eligible. Most of it is not yet available for delivery, but it can be moved over instantaneously if the owner so wishes.

One thing to think about is the reasons why the big banks are restocking on gold at such a rapid pace right now.

Typically, if they were already well-capitalized, then such a large inflow within a short amount of time would not be necessary which might mean that there is something missing from the picture here.

If the April data continues this trend, it will continue to bring up the question on why the banks are doing this as it will most likely cause gold prices to surge.

The actions that the banks take for gold and other metals here may also affect their strategy towards cryptocurrencies and other alternative assets that they can include in their balance sheet.

SeekingAlpha reports:

Zooming out and looking at the inventory for gold and silver since 2016 shows the impact that Covid had on the Comex vaults.

Gold had almost nothing in the Registered category before JPMorgan and Brinks added their London inventory with nearly 20M ounces.

The Comex gold market has been flashing warning signs since early January. This continues to be the case. The latest influx of metal further supports the notion that banks are preparing for higher delivery volume and potentially higher prices.

That being said, with over 12 years of experience watching this market, nothing is ever easy or simple.

The bullish setup is there, but something tells me this game has a few more twists ahead.

Let’s see how the data unfolds.

 

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