JPMorgan to join HSBC in storing $52bn in gold bars

London — JPMorgan will join HSBC in storing bullion for the world’s biggest gold-backed exchange-traded fund (ETF), the fund’s operator said on Thursday, ending its rival’s sole guardianship of the $52bn stash of gold.

The change, which begins on December 6, is a boon for JPMorgan, which could rake in millions of dollars of storage fees.

HSBC had been the sole custodian for SPDR Gold Trust, also known as GLD, since it launched in 2004. The bank stores about 910 tonnes of gold for GLD in London — about a quarter of all the gold held for ETFs globally.

“The addition of JPM will change the current, single-custodian and vault operating model, to accommodate the activity of the fund in anticipation of future growth,” the World Gold Council (WGC), which runs the fund, said in a statement.

WGC executive Joe Cavatoni said the council wanted to diversify its storage and adding JPMorgan “gives us another commercial entity with a vested interest in supporting the product”.

He said the WGC would seek to funnel gold to JPMorgan, for example by sending its new metal added to the fund, and held out the possibility of an eventual even split between the two banks.

“If we get to the point where there’s a very equal balance between the relationships, that would be exciting for us,” he said.

Typical fees for large clients such as GLD are about 0.034%-0.04% of the value of the gold stored, a market source said. That means equal division of the fund’s 910 tonnes would see JPMorgan take revenue of about $8m-10m a year from HSBC.

Cavatoni said the WGC’s agreement with JPMorgan allowed it to store gold in the US and Switzerland but for the time the fund intended continue storing all its gold in London.

HSBC said: “We’re pleased to continue acting as a custodian for the World Gold Council’s SPDR Gold Trust.”

JPMorgan declined to comment.

Reuters