FAQ – The Precious Metals Market

The Primary Bullion Market is the most competitive precious metals market in the world. Central Banks, Bullion Banks, government agencies, institutional traders, refineries, and fabricators actively participate in this market.

These entities trade gold and silver at competitive global prices in the OTC market. All transactions are settled two business days after execution, ensuring swift and secure trades.

• ADDITIONAL RESOURCES:
• The Primary Market
• Participating in the Primary Market

The London Bullion Market Association (LBMA) represents the wholesale gold and silver bullion market. London is the focal point for the international OTC precious metals market. This client base includes central banks, producers, refiners, fabricators, and traders globally.

The LBMA Good Delivery List sets the global standard for gold and silver bars. The LBMA’s stringent assaying criteria ensure bar quality. Additionally, LBMA’s Global Precious Metals Code governs participants’ conduct, maintaining integrity in the market.

• ADDITIONAL RESOURCES:
• London Bullion Market Association
• LBMA Membership

LBMA Good Delivery accreditation sets the global quality standard for gold bars. Accredited refiners must demonstrate high assaying capabilities to remain on the LBMA Good Delivery List.

Key Requirements for Refiners:

• Minimum production of 10 tonnes annually
• Established for at least five years
• A tangible net worth of £15 million or more

Maintaining these standards ensures the integrity and liquidity of bars traded within the market.

• LBMA Good Delivery Standards

A Good Delivery Bar meets strict physical specifications set by the LBMA. These bars are widely accepted in the wholesale bullion market due to their high purity and quality.

Key Specifications for Good Delivery Gold Bars:

• Weight: 350 to 430 troy ounces
• Purity: Minimum 99.5% fine gold
• Markings: Assay stamp, fineness, serial number, and year of manufacture

These specifications ensure the marketability and authenticity of the bars.

• Good Delivery Bar Information

The “Chain of Integrity” ensures that gold bars meet the highest quality standards. Bars can only enter the chain if they meet LBMA Good Delivery standards.

Each bar in the chain is marked with:

• A unique serial number
• The official bar weight
• The purity (fineness)
• The refiner’s mark

Maintaining the chain protects the authenticity and value of the precious metals.

Good Delivery bullion ownership provides liquidity. By storing these bars in recognized vaults, you avoid the need for re-assaying, which adds costs. The audit trail guarantees the authenticity of the bullion, ensuring that it remains in the Chain of Integrity.

• More on Gold Liquidity

The Spot Market Price is the price paid for gold when the trade settles immediately, typically within two business days. Participants in the Primary Bullion Market enjoy these globally competitive prices.

Spot prices are quoted in US dollars per troy ounce. The buyer typically arranges collection and delivery of the bullion.

The LBMA Gold Price, or London Gold Fixing, sets a standard price twice a day for gold transactions. This price serves as a benchmark for pricing many financial instruments, including swaps and options.

• London Gold Fixing Details

Fourteen major market-making members of the LBMA participate in the London Gold Fixing. These include Barclays, Goldman Sachs, HSBC, JP Morgan, and others.

• London Gold Fixing Members

During the gold fixing, participants submit buy and sell orders based on the starting price. Adjustments are made until the net volume reaches a pre-set tolerance, ensuring an efficient price discovery process.

• More on London Gold Fixing Procedure

The fixing price is crucial for dealing in large volumes of gold. Many financial instruments, such as cash-settled swaps and options, use the fixing as a benchmark.

In large transactions, this standardized price provides a reference that ensures transparency and consistency across deals. By using the fixing, market participants can rely on an accepted price that reflects the current market conditions.

• ADDITIONAL RESOURCES:
• More on the London Gold Fixing

Throughout history, gold has served as a universal store of value, medium of exchange, and symbol of wealth. It is unique for its combination of properties—rarity, divisibility, durability, and universal acceptance. For centuries, gold has provided individuals, nations, and civilizations with protection against political and financial instability.

Unlike financial assets, physical gold is not a promise of future performance and does not rely on counterparties. Its value is derived from global supply and demand. In times of economic or geopolitical uncertainty, gold remains a safe haven, maintaining its value when other assets falter.

Gold’s enduring status as a trusted asset ensures its place in investment portfolios, particularly for those seeking security and diversification against systemic risks.

• ADDITIONAL RESOURCES:
• Learn why gold is essential for a balanced portfolio