- JPMorgan Sells Good Assets to Offset 'London Whale'
- Euro Zone Bank Safety Net Leaves Holes Unplugged
- Glitches Halt New Goldman Trade Platform
- Greece Pours $22.6 Billion Into Its Four Biggest Banks
- Funds Cut Exposure to Euro Zone Banks
- US Markets Will Be Watching Europe—And Jobs Report
- As Irish Head to Polls, ‘No’ Voices Get Louder
- Emerging Markets to Test Lehman Lows on 'Grexit'
- Spain's Debt Costs Near Danger Level: Is Bailout Next?
- A New Look at the ‘New Poor’
- Six Pack: Beer Buzz of the Week
- Greek Exit Could Trigger 50% Fall in Euro Stocks: Analyst
- Under Pressure, FHA Skews to Wealthier Home Buyers
- Big Stock Upside for Hudson City Deal: Analyst
- 5 High-Yield Stocks Ready to Boost Dividends
- Yoshikami: Four Things You Need to Know About Gold Now
- Steinbock: The Euro Zone Endgame Begins
- Option Bulls Take Another Shot on Idenix
MOST SHARED
- JPMorgan Dips into Cookie Jar to Offset "London Whale" Losses
- European Shares Buoyed by China Stimulus Hopes
- As Irish Head to Polls, ‘No’ Voices Get Louder
- Shell Puts Alberta Oil Sands Project on the Block
- Euro Isn’t Loved, but Few Want to Drop It, Poll Says
- US Law Firm Dewey Files for Chapter 11, Seeks Liquidation
- U.S. Winds Down Longer Benefits for the Unemployed
- Glitches Halt New Goldman Trade Platform
- China Moves to Tame Microbloggers
- Funds Cut Exposure to Euro Zone Banks
MOST POPULAR
HOT ON FACEBOOK
Gold Vaults Charge More for Storing Bullion
Text Size 
Banks are charging more to store gold after a surge in demand for precious metals has left London, the centre of the global bullion market, short of vault space.
 |
Boris Engelberg | Stock4B | Getty Images |
Almost all of the major bullion-dealing banks have raised fees since March this year, in some cases more than doubling the rates they charge for vaulting gold, according to clients of the banks and people familiar with the situation.
The development is a further sign of how demand for assets which are seen as safe is straining the financial system. Bank of New York Mellon announced last week it would start charging fees on large deposits after a sudden influx of cash.
Investors from sophisticated hedge funds to wealthy individuals are turning to gold in an attempt to protect their wealth from the turmoil in financial markets. On Tuesday, the price of bullion surged to a nominal record of $1,778.29 a troy ounce. It has risen 550 per cent in the past decade.
HSBC [HSBA-LN
Loading...
()
] and JPMorgan [JPM-LN
Loading...
()
] along with security companies Brink’s and Via Mat operate commercial vaults in London. The Bank of England has a large vault that is primarily geared to providing services for central banks. Other bullion dealers such as Barclays Capital [BARC-LN
Loading...
()
], Deutsche Bank and UBS sublet vault space.
“People are used to storage being a non-issue,” said Jonathan Spall, director of precious metals sales at Barclays Capital. “But demand for physical gold means that vault space is now at a premium.”
Much of the increased demand comes from exchange-traded funds. Investors in ETFs this week boosted their collective gold holdings to about 2,300 tonnes, more than most central banks.
HSBC’s London vault holds the gold of the SPDR Gold Trust, the largest gold ETF, while JPMorgan is the custodian for the largest silver ETF, the iShares Silver Trust.
“The issue seems to be that London is very close to being out of space,” said a banker at a company that has recently raised rates.
Banks charge varying rates for vaulting gold, with large clients such as central banks and hedge funds paying less than retail investors. Fees are typically between 0.03 per cent and 0.15 per cent of the value of the gold held per year.
The move to raise vaulting fees began several months ago, when some banks and vaulting companies raised rates. That triggered a chain reaction, as some of those subletting vault space followed suit. Others have recently moved from charging a fee based on the weight of the gold to one determined by its value.
In response to the growing strain on the London vaulting system, both Barclays Capital and Deutsche Bank are planning to build new vaults.
- Critical elections are scheduled for Greece in June. Here are some of the players and their roles.
- Our financial system is still not designed to meet the needs of poor families, says this author.
- Statistics show there aren’t many women billionaires compared to their male counterparts. Why?
- Click to see various forms of funding and what entrepreneurs have used to build successful companies.
- Here are some of the most expensive hotels in the world to book. And we mean expen$$ive.
- Always drink responsibly and when you do, try one of these more unusual and tasty drinks. Cheers!
Data is a real-time snapshot *Data is delayed at least 15 minutes
