Fears that Trump could impose a blanket tax on all imports from Europe, including gold, have prompted a massive influx of the noble metal into the U.S. America’s gold inventories have more than doubled since Election Day, per Bloomberg, by far the biggest spike since the COVID-19 pandemic. The U.S. is now home to roughly $106 billion in gold, compared with about $50 billion on Nov. 5.

Much of that bullion needs to be retrieved from vaults deep below the streets of London, where wait times have reportedly ballooned from a few days to as long as eight weeks. Once the gold bars are aboveground, commercial flights into JFK are often the cheapest way to transport the booty safely.

Traders are responding to an uncommon price discrepancy, with gold trading roughly $20 higher per ounce in the U.S. than on the London Metal Exchange. Normally, gold futures on both sides of the Atlantic only differ in price because of specifications in the respective contracts, which are often backed by physical delivery of the underlying bullion, said Rob Haworth, a senior investment strategist and commodities researcher at U.S. Bank Wealth Management. However, the possibility of tariffs, he explained, is now being baked into U.S. prices, which cracked the $2,950 threshold for the first time on Thursday.

“What futures prices are telling us right now, today, is we have too much gold in London and not enough gold in New York,” Haworth said.

That initially presented a problem for the likes of JPMorgan and HSBC, which the Wall Street Journal has identified as the two biggest participants in the resulting transatlantic trade. Notably, the banks often lend out their gold (much of which is held in London) to borrowers who need to use the bullion as collateral. The bank generates revenue by charging interest on the loan, while simultaneously hedging against a price decrease in the underlying asset by selling gold futures in New York.

That means the banks are, in effect, shorting the price of gold, but the yellow metal’s cost has surged roughly 45% over the past 12 months. Typically, traders have no intention of fulfilling their obligation to deliver physical gold and instead purchase futures contracts to close out their positions. Instead of taking that loss, however, some dealers have found it’s cheaper to pay up—even if that means using plenty of frequent-flier miles. 

That’s why JPMorgan is reportedly set to deliver more than $4 billion worth of gold bars to New York, with HSBC also shipping plenty of bullion. Both banks declined to comment. 

JPMorgan and HSBC capitalize on arbitrage opportunity

These banks are not just shipping gold to cover their losses, however, but are also taking advantage of an arbitrage opportunity. A gold bar in New York has the same intrinsic worth as a bar sitting in a London vault. If you’re willing to part with the bullion, you’ll currently fetch a higher price in the U.S.

In most markets, those sorts of price discrepancies are quickly snuffed out by opportunistic participants. In this case, however, few traders can ship enough gold for the trade to be profitable, never mind have access to exchanges on both sides of the Atlantic and resources to comply with strict delivery rules.

“It’s an interesting trade,” Haworth said, “but it is a small one.”

Still, he thinks it’s notable if this trend is replicated with other commodities, particularly as Trump announces tariffs on metals that serve as critical manufacturing inputs. The premium on U.S. copper futures compared with those traded in London soared this week, Reuters reported, after Trump indicated last week that he planned to target the metal. The president hit all steel and aluminum imports with a 25% tax on Monday. The fallout, Haworth said, could exemplify how price increases from tariffs might cascade through the economy. For now, try to ignore the price tag if you’re buying gold jewelry on Valentine’s Day.