EDITOR NOTE: As mainstream investors debate the value of holding gold and silver amid inflation threats, Wells Fargo moves in on precious metals to capitalize on their demand as a monetary hedge and as an industrial component in various industries. The bank’s precious metals trading segment will be focused solely on corporate clients, leaving hedge funds and retail investors out of the picture. As banks and corporations begin accumulating physical gold and silver, the prices of the metals are likely to rise further as the investing public remains indecisive about the value of holding precious metals even as demand surges. If you find value in hedging the decline in your purchasing power, you have a very narrow window of opportunity to purchase non-CUSIP gold and silver at their current price levels. With gold and silver in short supply, the production of coins and bars will slow, and as banks and corporations accumulate more of the metal, the cost of your inflation hedge will gradually become less affordable the longer you wait.
U.S. bank Wells Fargo said it has expanded its precious metals trading business, filling gaps in the market left by the withdrawal of Bank of Nova Scotia (Scotiabank).
Scotiabank was for years the biggest global lender to the physical precious metals industry. It decided in 2018 to downsize and last year to exit the sector.
Wells Fargo in January hired from Scotia a trader and a sales woman in metals, including gold, silver, platinum and palladium, according to the bank and profiles on LinkedIn.
Other banks to have taken on Scotia staff since it began to shrink include Canada’s Bank of Montreal (BMO) and Royal Bank of Canada (RBC).
Wells Fargo is focusing on corporate clients, including manufacturers, chemicals producers and refineries in the United States and does little business with hedge funds and other investors, Ryan Moffett, the bank’s head of metals and agricultural commodities, said.
“Our expectation is to grow the precious metals business and, as we do, we will add headcount as needed,” Troy Black, its head of commodities, said.
Investment banks have seen a revival in profits from precious metals following market turmoil triggered by the novel coronavirus outbreak, supply issues, rising prices and heightened interest from investors in gold and silver.
Originally posted on Reuters