Gold’s Wild Ride: Why Geopolitical Chaos Could Send Prices Soaring Again
Gold has been making a beeline for the U.S. ever since Trump’s tariff threats rattled markets, but is the trend starting to slow? Maybe—but don’t get too comfortable. According to the World Gold Council (WGC), while recent disruptions in gold flows may be easing, ongoing geopolitical instability could send prices soaring again.
This isn’t the first time we’ve seen gold movements shake up the market. We’ve seen it happen during economic crises, wars, and global uncertainty—and right now, all of the above are in play. If you think the current slowdown means smooth sailing ahead, think again.
Tariffs, COMEX, and the Gold Flow Disruption
Gold has been pouring into the U.S. since late 2024, largely due to fears that tariffs might impact imports. Investors scrambled to shift their gold holdings, pushing COMEX gold inventories up by nearly 300 metric tons (about 9 million ounces). That’s a massive spike, especially considering the U.S. is already one of the world’s top gold producers.
Why did this happen? Because financial institutions don’t like uncertainty. Many traders moved gold preemptively to the U.S. just in case new tariffs made it more expensive to do so later. This rush caused futures contract prices to shoot up, with spreads between COMEX gold and London spot prices widening to as much as $50 per ounce—way above the usual $13 per ounce average.
We've Seen This Before—And We Know What Comes Next
The WGC points out that this kind of market turbulence isn’t new. During the COVID-19 crisis, COMEX inventories surged, London inventories dropped, and traders panicked. Eventually, things normalized—but not before gold’s price skyrocketed.
Right now, London still holds roughly 8,500 metric tons of gold, with about 5,200 tons stored at the Bank of England. However, reports suggest that retrieving gold from the BoE is taking longer than usual. The WGC dismisses this as a logistics issue, but let's be real—when there’s a "perception of scarcity," markets react accordingly.
Another sign of disruption? Gold’s lending rate spiked to as high as 5% in January, reflecting a tightening market.
Gold Supply: More Complex Than It Looks
A lot of the gold flooding into the U.S. is coming from Switzerland, which refines gold from larger 400-ounce bars into 1-kilogram bars—the size required for COMEX delivery. Some of this gold likely originated in London before being reprocessed. Other major suppliers include Canada, Latin America, Australia, and, to a lesser extent, Hong Kong.
Yes, the U.S. is the fifth-largest gold producer in the world, but domestic mining alone isn’t enough to meet all demand. If too much gold flows into the U.S., it could tighten supply elsewhere, particularly in London. The WGC believes this will be a short-term issue, but when it comes to gold, "short-term" problems often turn into long-term price hikes.
Is Normalization on the Horizon? Maybe—But Don't Count on It
The WGC claims the gold market is stabilizing. COMEX inventory growth is slowing, the price spread between futures and spot gold is narrowing, and ETF bid-ask spreads remain stable. Even lease rates, which spiked to 5% in January, have cooled closer to 1%.
But here’s the catch—gold isn’t just moving because of trade policies. It’s moving because of fear. And fear isn’t going away anytime soon.
Between escalating geopolitical tensions, economic uncertainty, and looming central bank policies, gold demand is still driven by investors looking for a safe haven. Even though gold hasn’t been directly targeted by tariffs, the mere possibility of economic disruptions has already sent ripples through the market.
Now that COMEX inventories are stocked and Bank of England withdrawals are clearing up, some may assume the gold market will calm down. But history tells us otherwise. Even temporary disruptions can lead to long-term price surges. This is your warning: gold’s next big spike could be just around the corner.
Protect Yourself Before the Next Crisis Hits
The markets may be stabilizing for now, but that won’t last. If you don’t already have gold and silver in your portfolio, now is the time to act. Download Bill Brocius’ free eBook, "Seven Steps to Protect Yourself from Bank Failure," and learn how to safeguard your wealth before the next financial shock.
