Misplaced Pages

#368631

19-743: The physical characteristics of gold and silver bars used in settlement in market is described by the Good Delivery specification which is a set of rules issued by the LBMA. It also puts forth requirements for listing on the LBMA Good Delivery List of approved refineries. Internationally, gold is traded via over-the-counter (OTC) transactions, with trading on the New York Mercantile Exchange (NYMEX) and Tokyo Commodity Exchange (TOCOM). Twice daily, at 10:30 AM and 3:00 PM (local time).

38-626: A sufficient number of market participants request delivery of physical bullion. LBMA accepts memberships from companies that deal with business closely related to gold or silver bullion in the London market. Members pay between £5,000 and £12,000 annually depending on membership type. LBMA members come from Australia, Belgium, Canada, China, Germany, Hong Kong, India, Italy, Japan, Kazakhstan, Luxembourg, Mexico, Netherlands, Poland, Russian Federation, South Africa, Switzerland, Taiwan, Turkey, United Arab Emirates, United States, and Uzbekistan. A full membership in

57-620: Is because gold, like currencies, is borrowed and lent by central banks in the interbank market. Interest rates for gold tend to be lower than US domestic interest rates. This encourages gold borrowings so that central banks can earn interest on large gold holdings. Except in special circumstances the gold market tends to be in positive contango , i.e. the forward price of gold is higher than the spot price. Historically this has made it an attractive market for forward sales by gold producers and contributed to an active and relatively liquid derivatives market. The bulk of global trading in gold and silver

76-546: Is conducted on the over-the-counter (OTC) market. London is by far the largest global centre for OTC transactions followed by New York, Zurich, and Tokyo. Exchange-based trading has grown in recent years with Comex in New York and Tocom in Tokyo generating most of the activity. Gold is also traded in forms of securities , such as exchange-traded funds (ETFs), on the London, New York, Johannesburg, and Australian stock exchanges. Although

95-550: Is distinct from the London Metal Exchange (LME). The latter is the futures exchange with the world's largest market in options and futures contracts on base and other metals. Good Delivery The Good Delivery specification is a set of rules issued by the London Bullion Market Association (LBMA) describing the physical characteristics of gold and silver bars used in settlement in

114-543: The IMF . The entire Good Delivery specification is contained in the LBMA document titled The Good Delivery Rules for Gold and Silver Bars: Specifications for Good Delivery Bars and Application Procedures for Listing . The document includes specific requirements regarding the fineness , weight, dimensions, appearance, marks, and production of gold and silver bars. It specifies procedures for weighing, packing, and delivery. It also describes policies for ensuring refiners' compliance with

133-644: The London School of Economics and the College of Europe in Bruges where he obtained degrees in economics, he started work as an analyst with Gold Fields Mineral Services (now GFMS ). Following the management buyout of GFMS in 1988 with Paul Walker and Hester le Roux he became Executive Chairman and Global Head of Metals Analytics. In 2011 GFMS became part of Thomson Reuters . After leaving GFMS Philip Klapwijk became Managing Director of Precious Metals Insights Limited,

152-606: The Good Delivery List and added to the Former List. Five companies are accredited by the LBMA as Good Delivery Referees in order to supervise the Good Delivery System and monitor the companies with Good Delivery certification. The referees' main functions are: The companies accredited as referees are: Philip Klapwijk Philip Klapwijk is an economist in precious metals commodities markets. After studies at

171-410: The LBMA enables members to expand operations internationally, like it did for VTB Bank, for example. VTB, a Russian-based bank, joined in 2015 as the first full member from Russia and was able to begin expanding into Asian emerging markets as a result. Each year the LBMA forecast gathers the opinions of selected bankers, traders and analysts who follow the precious metals markets with their forecasts for

190-561: The LBMA publishes the gold price in US dollars. These forward contracts are known as gold futures contracts . Spot gold is traded for settlement two business days following the trade date, with a business day defined as a day when both the New York and London markets are open for business. Unlike many commodity markets , the forward market for gold is driven by spot prices and interest rate differentials, similar to foreign exchange markets , rather than underlying supply and demand dynamics. This

209-471: The account do not entitle the creditor to specific bars of gold or silver or plates or ingots of platinum or palladium but are backed by the general stock of the precious metal dealer with whom the account is held. The client in this scenario is an unsecured creditor. The total quantity of unallocated gold is estimated to be 15,000 tonnes at the end of 2008 which supports the 2,134 tonnes on average of spot gold trade through London every day representing 14.2% of

SECTION 10

#1732855232369

228-418: The client's behalf as custodian. To avoid any doubt, metal in an allocated account does not form part of a precious metal dealer's assets. Unallocated accounts represent the most popular way of trading, settling and holding gold, silver, platinum and palladium. Transactions may be settled by credits or debits to the account while the balance represents the indebtedness between the two parties. Credit balances on

247-485: The high, low and average dollar fixing price per troy ounce for gold, silver, platinum and palladium. The aim of the LBMA forecast is to predict the average, high and low price for each metal as accurately as possible. The prediction closest to the average price wins. In the event of a tie, the forecast range is taken into account. In the 2009 LBMA forecast, Philip Klapwijk took the prize for most accurate forecaster for both gold and silver prices. The London bullion market

266-509: The physical market for gold and silver is distributed globally, most wholesale OTC trades are cleared through London. The average daily volume of gold and silver cleared at the LBMA auctions in May 2019 was 18.6 million troy ounces (2965 transfers, worth $ 23.9 billion) and 211.8 million troy ounces (978 transfers, worth $ 3.1 billion) respectively. The Gold Anti-Trust Action Committee has claimed that clearing data substantially understates

285-514: The pool. This compares to average daily turnover in UK equities of between 0.34% and 0.63% for the 12 months ending September 2009. While members of the LBMA provide no information on the backing for unallocated gold the improbably high turnover is suggestive they are operating a fractional reserve system where unallocated accounts are only partially backed by physical gold. Similarly to a bank run this makes LBMA unallocated gold accounts susceptible to loss if

304-486: The requirements, they must be stamped with "NGD" to distinguish them from conforming bars. The LBMA maintains two Good Delivery Lists of approved refineries (one for gold and one for silver) that meet certain minimum criteria (age, net worth, and production volume) and have demonstrated their ability to produce Good Delivery bars. Listed companies agree to submit to monitoring by the LBMA. Those listed companies that refuse to participate in regular monitoring are removed from

323-664: The specifications. The current edition of the Good Delivery Rules was published in January 2023. Weight is not recommended to be stamped on bars of either gold or silver, because bars will be officially weighed on delivery, and this weight, which may be different from that originally marked, will prevail. A bar's weight may also change by handling or sampling, thus invalidating the original mark. Bars that do not comply with Good Delivery rules are termed Non–Good Delivery. If they are similar to Good Delivery bars but do not fully meet

342-416: The true amount of gold traded due to the netting of trades in the calculation of Clearing Statistics. Allocated accounts are accounts held by dealers in clients' names on which are maintained balances of uniquely identifiable bars, plates or ingots of metal 'allocated' to a specific customer and segregated from other metal held in the vault. The client has full title to this metal with the dealer holding it on

361-478: The wholesale London bullion market . It also puts forth requirements for listing on the LBMA Good Delivery List of approved refineries . Good Delivery bars are notable for their large size and high purity. They are the type normally used in the major international markets ( Hong Kong , London , New York , Sydney , Tokyo , and Zürich ) and in the gold reserves of governments, central banks , and

#368631