The world’s trade in bullion is London-based with a global reach of activity and participants. The roots of the London Bullion Market can be traced to the partnership between Moses Mocatta and the East India Company, who started shipping gold together towards the end of the 17th century. Shortly afterwards, while Sir Isaac Newton was master of the Royal Mint, gold in England was overvalued so it became more freely circulated than silver. This increased circulation quickly led to England having a gold based coinage, whereas the rest of Europe remained silver based until the 1850s.
The first gold rush of 1697 brought gold from Brazil into London, partly transported on ships owned by the East India Company which had a Royal Charter from Queen Elizabeth I. This inflow of gold led to demand for a purpose-built London vault, which the Bank of England duly set up. Their 'bullion warehouse' served the whole of the European market, as it does now, and was further stocked by the influx to London from the subsequent gold rushes in California, Australia and South Africa. The refineries that were set up to process this gold were located close to the Bank of England (who owned the St Luke’s refinery) which played a key role in being a custodian, regulator and facilitator of lending and selling of gold by other banks.
In 1750 the Bank set up the London Good Delivery List, which formally recognised those refineries who produced gold bars of a certain standard and could therefore be allowed to enter the London market. Today this list is regarded as the only globally accepted accreditation for the bullion market, ensuring that the wholesale bullion bars traded in the market meet standards and quality required by Good Delivery.
By 1850, the five companies - N M Rothschild & Sons, Mocatta & Goldsmid, Pixley & Abell, Samuel Montagu & Co. and Sharps Wilkins - that 150 years later would form the London Gold Market Fixing Company, were already established and flourishing. The term London Gold Market refers to these five companies who formed to oversee the operation of the gold market in London. In 1919, it set up the first Gold Price fix at Rothschild's offices. The London Gold Market was also responsible for Good Delivery accreditations and the maintenance of the resulting List of Acceptable Melters and Assayers, as the List was originally known. The fact that London was at the centre of international time zones has always facilitated it being the perfect place from which to operate the market.
The Market's five members remained essentially unchanged for most of its history. But by the 1980s the development of the market was such that the Bank of England recognised that the custody, maintenance and regulation of the Good Delivery List required an independent body. This was the catalyst for the founding of the London Bullion Market Association in 1987.