Spike in gold inventories points to another large US trade gap

The rush of gold bullion deliveries into New York depositories from overseas will likely keep the US goods-trade deficit close to a record.

February merchandise-trade data on Thursday are likely to show the deficit grew to almost $162 billion, according to Stephen Stanley, chief economist at Santander US Capital Markets. He’s one of several forecasters who expect the deficit to widen, or at least stay close to January’s $155.6 billion, though the median projection in a Bloomberg survey calls for it to narrow.

Much of the widening can be traced to imports of gold. Stockpiles have surged in recent months on concerns precious metals may be included in the Trump administration’s broad tariffs. That’s also boosted prices and created an arbitrage opportunity that incentivized traders to get their hands on physical bullion.

Inventories of gold in New York’s commodities exchange surged another 25% last month after climbing 43% in January. Stockpiles on the Comex stood at a record 42.6 million ounces on Tuesday, nearly double the inventory at the end of 2024.

Typically, a boom in imports would be a drag on growth, but gold for investment purposes is excluded from the government’s calculation of gross domestic product. Even so, the dramatic widening of the trade gap is adding to heightened anxiety about the economy as Trump’s tariffs raise concerns about stagflation and even recession.

A similar phenomenon is playing out with silver. While that metal is included in GDP no matter what the end purpose is, it’s much cheaper than gold, so the impact on the deficit is more modest.

The Federal Reserve Bank of Atlanta’s GDPNow estimate sees the economy contracting an annualized 1.8% in the first quarter, with trade subtracting a whopping 4 percentage points. However, the model doesn’t exclude the impact from gold imports, though researchers have tried to quantify it.

The government’s final estimate of fourth-quarter growth is also due Thursday, while a preliminary look at the first quarter isn’t due until late April. The Bureau of Economic Analysis, which publishes the trade and GDP reports, recently published a more detailed explanation of how international gold trade is recorded in the agency’s international economic accounts. The BEA makes no adjustments for silver.

Goods imports

The more complete January trade report — which comes out after the goods-trade figures and includes service-sector activity — showed inbound shipments of finished metal shapes, a category that includes bars of precious metals, accounted for nearly 60% of the increase in goods imports.

Much of the supply has come from Switzerland, which shipped the most gold to the US in January in data going back to 2012. February figures were similarly high.

(By Vince Golle)