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Banks and traders are expanding their precious metals desks and logistics capabilities as they race to capitalise on gold’s historic rally this year — which has suddenly made the sleepy world of bullion trading and vaulting one of the most profitable areas in finance.
Amid a blistering rally for gold and silver, revenues from leading banks’ precious metals trading desks soared 50 per cent during the first nine months of this year compared with the same period of 2024, according to data analytics company Crisil Coalition Greenwich.
“There is a big pot to be made this year, and everyone is being quite aggressive on it,” said Callum Minns, research manager at Crisil. Precious metals are becoming “a bigger proportion of the overall markets business” for top banks, he added.
Precious metals trading revenues at 12 leading banks were about $1.4bn between January and September, putting 2025 on course to be the second-best year on record for gold trading, behind 2020, according to Crisil.
Even banks that had previously closed their precious metals desks are now dipping back into the sector — with Société Générale, Morgan Stanley and Mitsui all expanding their precious teams this year, according to market participants. Société Générale and Morgan Stanley declined to comment; Mitsui did not respond to a request for comment.
The trend is also triggering growing competition from outside the banking sector, with non-banks rushing to expand their share of the expanding market. Swiss refinery MKS Pamp, financial platform StoneX and London-based broker Marex have all bolstered their bullion trading operations this year.
Michael Skinner, head of metals at StoneX, said that a “democratisation of the market” was under way, arguing that the market would benefit from the rising number of participants.
This year StoneX, which already had a significant physical gold trading business, launched a Comex gold vault in New York, and is expanding a UK bullion refinery purchased last year.
In New York, certain vaults approved by Comex can hold metal for delivery against Comex futures contracts. In London, the world’s largest hub for physical gold trading, clearing more than $35tn of bullion annually, banks that are clearing members of the London market must have their own vaults. There are currently just four clearing members of the “Loco London” gold market.
Owning a vault was once considered a boring and low-margin business, and banks including Barclays and Scotiabank sold their vaults in recent years. It is now coming back in vogue.
“Most banks either are exploring or have explored vaulting,” said Minns at Crisil. “If you are on the vaulting list, you are getting additional revenue above everyone else. It is low returns but good traction.”
Among those looking at opening a vault now is Citigroup, according to market participants. Citigroup declined to comment.
James Emmett, chief executive of MKS Pamp, which bought Scotiabank’s New York vault in 2021, said having a vault made it possible to operate a custody business providing an annuity-type income.
MKS Pamp already has a trading arm (formerly known as MKS), as well as a large Swiss refinery (Pamp), which were joined together in 2021, making it unusual among the refineries.
The company has made several big hires this year including bringing on Paul Voller, former head of precious metals at HSBC, as vice-chair, and expanded its operations in Asia with a new regional headquarters in Hong Kong.
Emmett said more growth was planned for next year, including launching gold options trading and expanding refinery operations in the US. “Our ambition is to be the leading precious metals house globally,” he says. “We do everything but dig it out of the ground.”
One advantage that Wall Street banks have is their access to a large balance sheet — which has become critical this year, when the unexpected surge in gold prices strained the balance sheets of manufacturers and small traders.
However, many of their rivals outside the banking sector have the advantage of more expertise in sourcing physical bullion — which is complex because of the need to ascertain the origin of bullion for it to be considered “good delivery” and accepted by the London Bullion Market Association. The risks of buying non-compliant gold are considered to be too high for many banks to get involved early in the supply chain, before gold has been refined.
Two Swiss trading houses have recently started doing just that. Trafigura and Gunvor, which traditionally specialise in energy and base metals, have launched physical bullion trading desks this year that handle “doré” — bars of gold mixed with other metals sourced from mines — and refined gold.
One of the most profitable trades this year, according to Crisil, has been the arbitrage that opened up between New York and London during January and February. Fears over potential tariffs caused the US price for physical bullion to soar relative to its London counterpart.
Not everyone has been able to tap into the gains, however. Minns at Crisil said that banks’ gold trading revenues showed “more dispersion” than usual this year.
Many gold veterans welcome the fact that bullion is now the centre of attention. “There were times during my career that metals just weren’t something that people talked about,” said Skinner of StoneX. “That is reversed now.”