It's a bull market in gold vaults.

The surging gold price has driven a significant uptick in demand for physical bars and coins, and with so many investors stacking gold, they need somewhere to store all that metal.

Sharps Pixley told The Financial Times that its vaults are packed "floor to ceiling." The London-based bullion dealer is now seeking a site to build an additional depository.

Swiss gold group MKS Pamp also needs more storage. Chief commercial officer Omar Leiss said he is looking to build a "substantial" vault specifically catering to the group's richest clients.

"When people are leaving $200 million or more with us, we want to make sure we have the right infrastructure in place for them."

Leiss said he has noticed a surge in demand over the last 12 to 18 months for the company's top-tier "white glove service," which serves clients investing a minimum of $50 million.

"They want it as a safety net. If for any reason the banking system collapses, at least they have this gold that is physically allocated and outside the banking system."

These are not isolated phenomena. As The Financial Times reports, there is a global race to build additional precious metals vaults "from Switzerland to Singapore."

"This is a problem the industry doesn't usually have — after all, gold takes up very little space, and a vault can last for hundreds of years. But the blistering rally in the gold price, which has doubled in the last three years, and accompanying surge of demand from wealthy individuals who insist on holding their gold in physical bar form, have prompted a small rush of activity in the normally sleepy vaulting sector."

Swiss Gold Safe operates six vault locations, and COO Ludwig Karl said the company needs to expand every single depository.

A Sharps Pixley director said the need for more vaulting space is partly a function of wealthy investors pivoting out of gold-backed ETFs.

"It is not ETFs that clients want now. It is bars. It is coins."

ETFs are a convenient way for investors to gain exposure to the gold market, but owning ETF shares is not the same as holding physical gold. You don't own metal; you own paper. That distinction matters in a market where much vaulted bullion sits in "allocated" accounts — where specific bars are titled to the owner — as opposed to "unallocated" claims on a dealer's broader stock, a structure that has historically made some holders uneasy during periods of banking stress.

Another gold dealer with vaults at eight sites globally told the FT that "physical gold has become very in vogue," noting that many of his clients who were focused on ETFs two years ago now want gold bars and coins.

"They want to have a highly liquid asset, but they also want to have it in multiple jurisdictions. They want to be as close to the metal as possible, and they want as few intermediaries as possible."

Despite the January price correction and gold trading sideways in the ensuing months, wealthy investors remain bullish on gold.

As Jean-Sebastien Jacquetin, managing partner of Hong Kong-based Cavendish Investment Corporation, put it, the price decline did not "change the case for gold."

"There is a correction in the market, which is normal. But fundamentally gold is still highly in demand."

He said some families his company serves hold a quarter to a third of their portfolio in gold.

A recent HSBC survey found that nearly half of high-net-worth investors plan to increase their gold allocations in the next year, while only 13 percent said they plan to decrease their gold holdings.

The survey also found that gold is especially popular among Gen Z investors, many of whom maintain a 50 percent or greater allocation to the yellow metal. According to the HSBC report, "Gold could end 2026 as Gen Z's leading non-cash asset, ahead of equities."

The debasement trade appears to be adding to gold demand pressure. This investment strategy emphasizes holding tangible assets such as gold, silver, and other commodities to protect against the decline of fiat currencies through monetary debasement.

The debasement trade can be seen in action as central banks and many foreign investors swap dollar-denominated assets, particularly Treasuries, for gold. Central banks have been net buyers of gold for years, with official-sector demand accelerating sharply after 2022, when Western sanctions froze a large share of Russia's foreign exchange reserves — an episode widely cited by officials in several countries as a reason to hold more gold and fewer currencies that can be frozen.

Treasuries have been selling off in recent months, with many countries increasingly wary of holding U.S. debt. The national debt eclipsed $40 trillion last week, and with U.S. policymakers seemingly uninterested in addressing out-of-control borrowing and spending, America's fiscal situation does not inspire confidence.

On top of the fiscal problems, the U.S. has weaponized the dollar as a foreign policy tool, making some countries even more wary about holding greenbacks.

World Gold Council market strategist John Reed has noticed this trend.

"What gold tells you is that, in general, people are concerned that we are heading towards a more fractured, less stable, less predictable world, where the U.S. is seen as a less trustworthy partner — that U.S. Treasuries are perhaps not what they were in the past."