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LBMA's gold shortage exposed: Spreads widen as paper market crumbles
From Bullion Star, Singapore
Monday, February 17, 2025
Over the past few weeks, financial markets have experienced an unprecedented widening of spreads between spot and futures prices for both gold and silver.
Traditionally narrow, these spreads have expanded to as much as USD $60 for gold and over USD $1 for silver. This significant discrepancy has created unique arbitrage opportunities, prompting substantial flows of physical metals from London to New York, as traders capitalize on lower spot prices in London and higher futures prices in New York.
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As of the time of writing, the spread has narrowed slightly, with a USD 18.615 difference (0.65%) between spot gold and gold futures. For silver, the spread stands at USD 0.745, equivalent to 2.27%.
Despite clear arbitrage potential, these spreads have not normalized as quickly as would be anticipated by an efficient market, suggesting underlying market failures beyond simple arbitrage opportunities. ...
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