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This week, the price of gold is reaching new record highs, while London, the center of global gold trading, is struggling with a shortage of physical gold. What is behind this development? Meanwhile, the Czech Republic is exploring the possibility of a Bitcoin reserve, much to the dismay of Christine Lagarde. Her dismissive stance triggered strong online reactions—and that’s not the only criticism she faced this week. Finally, we discuss some striking European political developments. Read on!
This week, the gold price surpassed €86,000 per kilogram for the first time. By Friday afternoon, the price per kilo had risen well above €87,000. The euro was not the only currency in which gold set a new record. Recently, gold has already reached record highs in the Japanese yen, Swiss franc, British pound, Indian rupee, and Chinese yuan. Yesterday, the U.S. dollar joined the list, as gold hit a new all-time high against the world's reserve currency for the first time since October.
Gold price in U.S. dollars per troy ounce (source: HollandGold)
This week, the Financial Times published a widely read article titled "Gold stockpiling in New York leads to London shortage." According to the prominent newspaper, gold traders in New York have stockpiled $82 billion worth of gold in recent months, fearing new import tariffs from Trump. This has reportedly led to a shortage of gold bars in London, the global center for physical gold trading. The waiting time for withdrawing gold from the Bank of England’s vaults has increased from just a few days to between four and eight weeks. A second reason could be the higher gold price on the New York futures market. Traders may have exploited this arbitrage opportunity by physically shipping gold across the Atlantic.
Gold reserves in New York (source: Financial Times)
According to insiders, people cannot access gold because so much of it has been shipped, and liquidity in the London market has declined. The Bank of England declined to comment on the matter to the Financial Times. Jan Nieuwenhuijs offered a more pragmatic explanation for the long waiting times for physical deliveries. Since the November elections, 393 tons of gold have been transferred to the vaults of the COMEX commodities exchange in New York, increasing reserves there by nearly 75% to 926 tons. The total figure is likely much higher, as additional shipments were probably sent to private vaults in New York owned by HSBC and JPMorgan.
It wasn’t just London shipping gold to the U.S. According to Bloomberg, Switzerland’s gold exports to the U.S. in December increased elevenfold compared to November. In the last month of 2024 alone, more than 64 tons of gold—worth nearly $6 billion—were sent to the U.S. This is the highest level since the Russian invasion of Ukraine. According to Bloomberg, traders rushed to move gold to the U.S. in anticipation of possible import tariffs.
However, ZeroHedge is skeptical of the Financial Times and Bloomberg’s main explanation. They argue that there are no indications that Trump is planning to impose import tariffs on gold. Instead, they speculate that major players, such as China—and possibly even the U.S.—are secretly stockpiling physical gold. This, they suggest, is the real cause of London’s shortage: "...there has been a panic scramble to store physical gold in the COMEX vault system located almost entirely deep under New York (recently, there are small, new vaults in Delaware) at the same time as China has been soaking up all the physical gold London and Switzerland have in inventory."
The last time we saw a similar "gold rush" was during the pandemic. ZeroHedge asks: "Why now (again)?" In March 2020, when the financial system seemed on the brink of collapse, there was a massive flight to gold as a safe haven. Back then, there was a clear and immediate reason for the record accumulation of gold. So why are the world’s smartest investors now once again stockpiling gold in vaults?
Aleš Michl, chairman of the Czech National Bank (CNB), announced this week that he wants to invest billions of euros of national reserves into Bitcoin. This move could make the CNB the first Western central bank to hold crypto assets. Michl aims to diversify the CNB’s reserves, stating that the bank could ultimately allocate up to 5% of its €140 billion in reserves to Bitcoin. His proposal to investigate this further was approved by the bank's board yesterday.
Aleš Michl (source: CNB)
In our monthly update, we discussed the "first-mover advantage" for countries that establish a Bitcoin reserve early. Norway’s sovereign wealth fund seems to be benefiting from this trend. This week, it was revealed that the world's largest sovereign investment fund has indirect Bitcoin exposure worth over $355 million. This exposure comes from the fund’s holdings in companies like MicroStrategy, which hold Bitcoin on their balance sheets. At the end of 2024, the fund indirectly held 3,821 BTC, a 153% increase from the 1,507 BTC it held a year earlier. However, it’s important to note that this exposure likely stems from a sector-weighted investment strategy rather than a deliberate decision to increase Bitcoin exposure.
Christine Lagarde, president of the European Central Bank (ECB), made it clear this week that she is strongly opposed to Bitcoin. Feeling compelled to speak out, she expressed confidence that no central bank in the EU would hold Bitcoin as a reserve. She also mentioned having had a "good conversation" with her Czech counterpart, Aleš Michl. Lagarde’s comments sparked significant online criticism. Many saw her remarks as yet another example of Europe falling behind while the U.S. takes a different path. On X (formerly Twitter), Jeroen Blokland shared: "I have no clue and zero understanding of why the ECB would not explore other potential stores of value to strengthen the current debt-driven economic system."
Christine Lagarde during her speech on January 30 (source: ECB)
Lagarde was already under fire earlier this week for seemingly disregarding central bank independence. She invited Ursula von der Leyen to a dinner with the ECB’s board. Economist Edin Mujagic was blunt on X: "…what a farce, what a joke."
Lex Hoogduin was equally critical: "The worst part is the brazenness with which this is done. Just openly, with a photo showing the two women symbolically walking 'hand in hand.'"
Finally, let’s take a look at developments in some key issues we’ve been following.
You may recall the article "Scandinavian Ministers Furious at the Germans." In countries like Norway, people are feeling the impact of Germany’s failed energy policy. The electrical grid in European countries is becoming increasingly interconnected, which has driven up energy prices even in Norway—a country rich in oil, gas, and hydropower. In Norway, this issue caused the governing coalition to collapse. The euroskeptic Centre Party has left the coalition due to dissatisfaction with EU energy market regulations, which they argue make it impossible to protect citizens from high electricity prices.
Meanwhile, Germany and Hungary are seeking to resume pipeline imports of Russian gas. In our monthly update, we already discussed the increase in EU imports of Russian LNG in 2024.
Finally, Ursula von der Leyen has presented a Competitive Compass to make the EU more competitive—an economic doctrine for the next five years. Economist Daniel Lacalle provided a concise summary of the criticisms surrounding the plan.
