(Kitco News) - The global supply chain crisis, driven by the Iran war, continues to undermine broader financial markets and the global economy. Now, this uncertainty is prompting some U.S. politicians to look at strengthening their own nation’s supply of critical monetary metals.
On Thursday, a bipartisan group of U.S. senators introduced legislation aimed at reducing the geographic concentration of precious metals storage tied to regulated futures markets. The proposed bill looks to address potential vulnerabilities in the physical gold and silver supply chain.
Senators Jim Risch (R-Idaho) and Catherine Cortez Masto (D-Nevada) this week unveiled the “System Integrity through Licensed Vault Expansion and Resilience Act,” or the SILVER Act, which seeks to expand the footprint of exchange-approved depositories beyond the New York region.
The proposal follows companion legislation introduced in the House in March and comes amid growing concern among policymakers and industry participants that the current vaulting structure is overly concentrated in one area. Under existing practices, most facilities approved to store metals for delivery against futures contracts are located within close proximity to New York City, a framework that has been in place for decades.
The SILVER Act would require derivatives clearing organizations to approve at least two depositories in each U.S. time zone—Eastern, Central, Mountain and Pacific—aimed at improving system redundancy and broadening access to approved storage.
“Having metal depositories located in more than one region in the United States will provide Americans across the country with affordable access to metal exchanges and safeguard assets in the event of a national emergency or extreme weather event,” said Representative Russ Fulcher, R-Idaho, when the House version of the legislation was introduced in March.
Lawmakers and industry advocates argue that the current concentration leaves the broader precious metals market exposed to potential disruptions, ranging from cyber incidents and natural disasters to transportation constraints that could affect physical delivery tied to futures markets. The issue has also attracted regulatory attention, with the Commodity Futures Trading Commission signaling support for efforts to address structural concentration risks and improve market resilience.
Beyond risk concerns, proponents say a more geographically diversified vault network could support liquidity in the physical market and reduce costs for investors, refiners and mining companies.
The bill has drawn support from the Sound Money Defense League and Money Metals Depository, which have both argued that the existing framework disadvantages western U.S. market participants despite the region’s importance to domestic mining and refining activity.
Industry groups have also argued that limiting approved vaults to a single region restricts competition and contributes to higher storage costs.
"The current system creates unnecessary vulnerabilities for the nation's precious metals markets and supply chains - and it arbitrarily excludes major industry players," said industry coalition member Stefan Gleason, CEO of Money Metals, a large national online dealer, depository, and lender based in Idaho.
"The SILVER Act would promote resiliency, improve competition, lower costs for investors and commercial users, and strengthen America's financial and critical minerals infrastructure," Gleason said.
The push to modernize U.S. vault infrastructure comes as physical precious metals markets have faced significant supply disruptions in recent years, which lawmakers say have exposed limitations in the current system.
