Swiss refiner Valcambi SA tried for five
straight days last month to move a shipment of gold out of Hong Kong. Twice the
metal was packed carefully onto a plane, only to be offloaded again.

After daily attempts and numerous
arguments, the gold suddenly arrived in Switzerland without warning, said Chief
Executive Officer Michael Mesaric. “We had not even asked for a slot.”

The coronavirus crisis has shone a light on
a corner of precious metals markets that usually draws little attention: the
logistics of transporting gold, silver and other metals across the world. The
business is dominated by companies including Brink’s Co., G4S PLC, Loomis AB
and Malca-Amit, which link miners and refiners with gold trading and
consumption hubs around the world.

In normal times, gold bars worth millions
of dollars travel the world in the cargo holds of commercial planes, just a few
meters from the feet of passengers, before being whisked in armored trucks to refineries
and vaults.

But the grounding of flights has had a
chaotic effect on an industry that’s used to relying on instantaneous delivery:
prices in key markets have diverged dramatically, and the London gold market
has even started talking about allowing delivery in other cities around the
world.

Now, with global travel at a standstill, the
precious metals industry is scrambling for alternative ways to keep the market
moving. It’s a world of logistical headaches: even when space can be found on a
plane, packages are often turned away if essentials like medical supplies need
to travel instead.

“The limited commercial flights,
charters or freighters we are using must prioritize personal protection
equipment, medical, food and other essential products over our requirements to
move bullion,” said Baskaran Narayanan, vice president at Brink’s Asia
Pacific Ltd.

Another big name in the business,
Malca-Amit could deliver within 24 hours before the health crisis, said
managing director of Malta-Amit Singapore Pte. Ariel Kohelet. Now it’s more
like 48 to 72 hours, and costs have risen.

“We’ve widened our use of cargo-only
aircraft that are not dependent on passengers to fly and we’ve also chartered
aircraft,” he said.

Some in the market say they’re managing to
keep operating without delays. However, it’s been particularly difficult to get
metal in and out of Asia, said Robert Mish, president of precious-metals dealer
Mish International Monetary Inc.

“Some customers understand it and some
don’t,” said Mish. “Some customers will pay more now, and others will
say, ‘I understand,’ and take delivery in two weeks.”

It’s even getting more expensive to move
gold that doesn’t typically travel by airplane.

German refiner C. Hafner GmbH + Co. KG used
to send gold bars to neighbouring Poland in security trucks. After road borders
closed and its contractor stopped operating, the company has started flying the
metal with FedEx Corp., said Torsten Schlindwein, deputy head of precious
metals trading. Transportation costs have surged about 60% as a result.

Lockdown regulations and red tape have
contributed to the delays, said Peter Thomas, a senior vice president at
Chicago-based broker Zaner Group. When he tried to fly some silver out of Peru in
early April, authorities initially refused to approve loading documents or
allow union workers to load the plane. The metal was eventually moved on
private aircraft, he said.

“It was expensive but it got done,”
he said. “I think that as the virus subsides and as we get rolling again,
we’re going to see a lot of product that has been sitting around, especially in
smaller refineries, hit the market.”

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