The anticipation of potential tariff implementations by US President-elect Donald Trump has stirred up a frenzied quest for copper bullion in London. This surge in demand has led to significant disruptions in the gold market, with lease rates in London hitting unprecedented levels as dealers rush to transfer metal to the US before any tariffs are imposed.

The escalating turmoil stems from fears that precious metals like gold and silver could be adversely affected if Trump fulfills his campaign promises of imposing tariffs of up to 20% on imports from all countries. The surge in lease rates, which typically hover near zero, signifies the intense scramble for bullion in London’s vaults. This heightened demand has also affected the silver market, raising concerns about the availability of sufficient metal to meet dealers’ requirements.

Financial institutions like JPMorgan and HSBC, alongside high-frequency trading firms and hedge funds, are pivotal in ensuring price equilibrium between London and New York markets. They engage in arbitrage trades to counterbalance significant price disparities between the two hubs. However, the current situation has prompted traders to close out positions due to mounting losses, leading to what some refer to as the “pain trade.”

Moreover, the mounting disruptions have expedited a potential supply squeeze in the silver market, with experts forecasting a surge in prices. The threat of universal tariffs by Trump has accelerated the depletion of silver stockpiles, necessitating higher prices to unlock inventories from unconventional sources. Despite challenges posed by limited availability and high demand, analysts predict a compelling setup for substantial price spikes in the silver market.

As the chaotic hunt for copper bullion intensifies in response to tariff fears, the global metals market faces a period of uncertainty and volatility. Traders and investors are navigating this challenging landscape, bracing for potential market fluctuations and disruptions as they seek to secure precious metal supplies amidst the evolving trade environment.