November 17, 2021
Business Manufacturing Policy washington

With $1 Billion Monthly Surplus, U.S. Gold Trade Shaking Off Wild 2020

U.S. gold exports topped imports by more than $1 billion in February, an increasingly rare occurrence, according to the latest government data available.

It would seem that American traders in the precious metal who were unnerved by Covid-19 in the spring of 2020 are increasingly confident in the U.S. economy now.

But what a ride 2020 was.

In 2020, the value of U.S. gold imports tripled over the total in 2019 and was more than double to the 2016 record. Overall U.S. gold trade — exports and imports — set a record at $55.24 billion.

What was the impact of that $34.68 billion import total in 2020?

It led to the first trade deficit in gold trade since 2003, a year when gold imports topped exports by $227.15 million. That is laughable compared to the 2020 deficit, which, at $14.12 billion, was some 60 times greater.

All of that deficit came in just five months, March through July, as the Covid-19 pandemic, confusion and polarization spread. That included the peak month of May, when the United States imported a record $8.77 billion in gold to meet the demand of U.S. buyers flocking to the safety gold offers. The deficit that month alone was $7.35 billion.

The United States traditionally imports less gold, generally in its raw form and often mined in Mexico, Canada, Colombia or elsewhere in Latin America, than it exports, which is generally refined before being flown to Switzerland, England or elsewhere.

But the difference in the value of those exports and imports, particularly in recent years, rarely tops $1 billion a month. Prior to February, it had only happened twice in the last 30 months.

What made 2020 unusual is that those gold imports were not raw gold mined in Latin America but refined gold coming from Switzerland. Five of the last seven years, the percentage of gold imports entering the United States from Switzerland was between 2.23% and 3.15%. Another two years it topped 20%. In 2020, Switzerland accounted for 42.90% of all gold imported into the United States.

While traditionally Miami International Airport is the primary entrance point for gold, given its stature as a hub for Latin America trade, its 2020 market share shriveled to 9% . New York’s JFK International Airport ballooned to 74%. Ever-so briefly, for one month, it was the nation’s top trade gateway, ahead of traditional No. 1 the Port of Los Angeles and more than 450 airports, seaports and border crossings.

Fast forward to February of 2020. As the surplus topped $1 billion, MIA was back on top of the rankings, albeit barely, with $276 million in imports compared to $270 million for JFK. Switzerland, which accounted for 43% of the total in 2020 was down to 4.5% in February. Mexico, Canada and Colombia accounted for 53% of all imports.

The biggest buyers? India, now locked in a nasty fight with Covid-19, has increased from 2.7% of the value of U.S. gold exports to 12% while the United Arab Emirates has increased from 0.45% to 9%. The United Kingdom and Switzerland each accounted for 31% in February, a 22% decrease and 2% increase, respectively.