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Gold July 22, 2020 10:00:30 PM

Gold Supply Chains Crashed Due to Covid-19

Paul Ploumis
ScrapMonster Author
In order to meet inflows, the largest gold ETF, the SPDR Gold Trust, leased gold from Bank of England.

Gold Supply Chains Crashed Due to Covid-19

SEATTLE (Scrap Monster): The Covid-19 crisis has had its impact on every link in the gold supply chain. The prolonged supply chain disruptions have impacted the primary markets for gold.

The flow of gold along supply chains took a hit due to strict travel restrictions imposed by supply chain countries, closure of birders between nations and cancellation of international flights. Only a few commercial flights operated during the pandemic period. Even for them, gold was of low priority, as preference was given to essential medical supplies. Although, gold mine production continued, though at reduced pace, the delivery of gold was interrupted. This in turn resulted in higher delivery costs.

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In order to meet inflows, the largest gold ETF, the SPDR Gold Trust, leased gold from Bank of England. The London Bullion Market Association (LBMA) recorded 29.2 million ounces of gold transfers, worth approximately $46.4 billion in March this year. This is the biggest amount of transfer since 1996.

The refineries reported shortage of gold as input. The suspension of refinery operations led to reduced supply of refined gold. The shortage passed on to traders and ultimately to the end users, who were forced to pay higher prices for the available gold.

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