One event that occurred in the physical market at the time this disparity occurred was the closure of three of the four major Swiss gold refineries, based in the south of Switzerland, and close to the heavily impacted parts of Italy. These closures were short-term and all refineries are now operating and busy.

The second reported factor was the significant drop in passenger aircraft flights, which are traditionally utilised for the movement of valuables such as gold. In the United Kingdom, Gatwick is closed and Heathrow is operating at 33% of its “normal” capacity, while Changi Airport in Singapore has seen a fall in passenger footfall of more than 50%. To the outsider, the immediate conclusion was that this would restrict the ability of secure logistics providers to facilitate the global movement of stocks. This assessment was naïve and ill-informed.

The reduction in passenger air travel has put a squeeze on space, and competition for that space between the various types of cargo that normally utilise it has become fierce with freight prices on some airlines increasing by over 400%. But space can still be secured, which means the decision to move gold becomes a simple profitability test. Can higher logistics costs be reasonably absorbed by potential profits, or by preventing the loss at the final stage of the deal? This, in turn, becomes a decision for our customers to make. Malca-Amit has fulfilled all transportation requests so far during this period and our precious metals departments have had their busiest month in years.