Banks and traders are Expansion of its precious metal tables and its logistics capacities They are vying to capitalize on this year’s historic gold rally, which has suddenly transformed the previously quiet world of precious metals trading and custody into one of the most profitable parts of the financial system.
He dizzying rise in gold and silver prices 2025 has seen a new upswing in recent days, fueled by latent geopolitical tensions between the US and Venezuela as well as bets on interest rate cuts in the US. Both precious metals reached All-time highs this week.
The price of Gold came to it for the first time $4,500 per troy ounce on Wednesday, while the Silver This week the threshold was exceeded $70 per ounce. This increases the Cumulative profit for the year at 71% and 150%respectively.
In the middle of this rally income the banks’ most important precious metals trading desks they have skyrocketed by 50% in the first nine months of the year compared to the same period in 2024, according to data analytics firm Crisil Coalition Greenwich.
“There is a huge chance to win this year and everyone is pretty aggressive” said Callum Minns, research manager at Crisil. Precious metals would take up “a larger share of the total market business” for major banks, he added.
Precious metals trading revenues from 12 major banks amounted to about $1.4 billion between January and September, putting 2025 on track second best year in history for gold trading, according to Crisil, only behind 2020.
Even banks that had previously closed their precious metals departments are now closed Return to the sector. Société Générale, Morgan Stanley and Mitsui have expanded their metals teams this year, according to market participants. SocGen and Morgan Stanley declined to comment; Mitsui did not respond to a request for comment.
The trend is also driving a increasing competition outside the banking sectorwith non-banking companies rushing to gain share in an expanding market. Swiss refiner MKS Pamp, financial platform StoneX and London broker Marex have increased their precious metals trading activities this year.
Michael Skinner, Head of Metals at StoneX, said: a “democratization of the market” is underway and emphasized that the industry will benefit from the growing number of participants.
This year, StoneX – which already had a significant physical gold trading business – launched Vault Comex gold factory in New York and is expanding a precious metals refinery in the United Kingdom that it bought last year.
In new YorkCertain Comex-approved vaults can store metal for delivery against Comex futures contracts. In LondonThe largest physical gold trading center in the world, which handles over $35 billion worth of bullion annually, banks that transact on the London market are required to have their own vaults. At the moment There are only four clearing members of the Loco London gold market.
Owning a safe was once considered a boring, low-margin business, and banks like Barclays and Scotiabank have sold their safes in recent years. Now it’s back in fashion.
“Most banks are either exploring the vault business or have already explored it“said Crisils Minns. “If you are on the vault list, you will receive additional income over the others.” These are low yields but with good traction.”
Among those thinking about opening a safe is Citigroupsaid market participants. Citi declined to comment.
James Emmettremarked the CEO of MKS Pamp – which purchased the Scotiabank vault in New York in 2021 With a safe, you can run a custody business that generates regular income in the form of income.
MKS Pamp It already has a trading arm (formerly known as MKS) as well as a large Swiss refinery (Pamp), which were integrated in 2021, making it a rare company among refiners.
The company has made several key hires this year, including the addition of Paul Vollerformer head of precious metals at HSBC, as deputy chairman. The company also expanded its operations in Asia with a new regional headquarters in Hong Kong.
Emmett hinted Further growth is expected next yearincluding the introduction of Gold options trading and the expansion of refining operations in the USA. “Our goal is to be the world’s leading precious metals house,” he explained. “We do everything but get it out of the ground.”
One advantage of Wall Street banks is theirs Access to large balance sheetswhich became critical this year when the unexpected rise in gold prices strained the finances of manufacturers and small traders.
Many of theirs Competitors outside the banking sector have the advantage of a Greater experience in sourcing physical gold barsa complex process as the origin of the metal must be certified is considered “good delivery” and is accepted by the London Bullion Market Association. The risk of purchasing non-compliant gold is considered too high for many banks to intervene early in the supply chain before the gold is refined.
Two Swiss trading houses have recently started this. Trafigura And GunvorTraditionally focused on energy and base metals, this year introduced physical precious metals trading desks that handle “doré,” gold bars mixed with other metals from mines, as well as refined gold.
One of the most profitable operations of the year, Crisil said, was the arbitration opened between New York and London in January and February. Fears of possible tariffs caused the price of physical gold in the US to skyrocket compared to its equivalent in London.
However, not everyone managed to benefit from the profits. Crisil’s Minns noted that banks’ income from gold trading was taking a hit “more spread” than usual this year.
Many market veterans celebrate this Gold bars have become the focus of the scene. “There were times in my career when metals were simply not a topic of conversation,” said StoneX’s Skinner. “That has now been reversed.”
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