Gold Bars Fight Covid Kits for Space on the Plane - Bloomberg Report

[LawrenceChard]

Before the health crisis, gold typically traveled around the world on commercial flights.

By Elena Mazneva, Justina Vasquez, and Ranjeetha Pakiam
May 3, 2020, 2:00 AM EDT

We know the feeling, as it has been taking weeks or months for us get physical delivery of gold and silver coins and bars, which have been bought and paid for previously.
We don't too anxious about this, but we know many of our customers want their gold in their hands, so during the international pandemic lockdown, it has been a daily struggle to get any mews on where our goods are.
We understand the problem, but many of our customers don't.

I took a screenshot, and also quoted the entire article. It helps to explain l lot.

When we are expecting a high value delivery, it can be difficult to get advance notice of it, because understandably, the security carriers do not want to publicise their movements in advance, for their own security.

We share the problem, because, although we would often like keep our customers informed, he feel it is correct to withhold security related information until after we have received deliveries.

[Uksilverstackers]

I think there is more to this than transportation. There are grounded planes everywhere and probably airline companies that would be grateful to be able to just fly the thing whatever was in it.  Cargo planes are still flying, and passenger airlines have taken cargo where they can, but are they flying commodities at a price dictated to by a paper market that has disconnected to a certain extent from the physical side?

My take is, it is the delivery/insurance cost, not a shortage of transportation per se. The cost of the delivery/insurance could be outweighing the cost to transport the metal. This cost cannot easily be passed on to the buyer. 
 

Forget retail selling. I wonder what price does a refiner sell to the LBMA. It cant be the paper price because LBMA are selling at that and they need their profit. 

This is like Bairds selling to Chards, both need to make a profit and its achievable because the premiums reflect the costs. But can that be done when dealing with LBMA / Worldwide Distribution Companies who are in turn supplying mints/retailers are they on paper price contracts?
 

Lets guess that just 1 Metric Tonne is required to be delivered.

1 metric tonne is 32,150oz, at a current rate $1712 oz = $55,040,800
Lets say the normal delivery/insurance is 5% - $2,752,040 

Now because of the current situation, delivery/insurance is now 15%

That is $8,256,120.

So the cost of the gold is now,  $63,296,120 ($1968oz)

So can the refinery absorb the $5,504,080 additional delivery/insurance cost of this to keep a delivery date? 
 

At our Silver Forum individual buyer level, we have seen changes of delivery terms and along with costs of shipping rising (ie GS.be £25) etc to the point of some of us saying shipping cost is too high to buy, is the same happening in the tonnage arena?

Lots of questions regarding this, way above my understanding, so any more info, much appreciated.

 

[freefall]

So gold usually travels on passenger planes. All the passenger planes are grounded looking for a charter id imagine.

The gold has to be transported Trans-Atlantic in either direction for delivery.

Lets say the average plane has 300 seats with each customer paying £1000 for a return ticket. The airline after fuel costs would still make a profit on the £300,000 revenue going by recent ticket prices. Each passenger has a luggage allowance of 20KG for a total of 6 tons of cargo.

6 tons of gold at todays prices is valued £266 million. So even if the plane was chartered just to fly gold, a conservative estimate of the transportation costs would amount to 0.1% of the cargo. That's dirt cheap to transport anything to another continent. Ask yourself why insurance costs would differ today as opposed to a year ago? There's no more risk to the cargo or plane that I can think of.

So why isn't the gold moving? There's no shortage of planes, no shortage of pilots, the cost hasn't changed, there's no shortage of demand.

In my opinion the possible reasons are:

1. There is a shortage of gold (temporary or otherwise).

2. The people who have the gold want to keep a hold of it. Possibly because they don't have what they claim to have or they don't trust the counterparty.

 

[freefall]

"Initially, the Bank cited “operational reasons”, saying the necessary insurance and shipping arrangements could not be put in place"

https://www.cityam.com/going-gold-bank-england-became-battleground-venezuela/

In January 2019.

Seems like the stock response when central banks don't want to deliver gold.