The London vaults provide secure locations for bullion and act as gatekeepers to the London market, ensuring that bars meet the LBMA's Good Delivery Rules.
The clearing members each maintain confidential and secure vaulting facilities, within central London locations, either at their own premises or those of a secure storage agent. These sites process and store precious metals for the member and those clients of theirs requiring custodial storage.
The LBMA publishes on a monthly basis data on the amount of gold and silver which is stored in the vaults in London. The data and further information can be found here.
Whenever bullion is delivered or moved, there are close ties between the vault operations and the precious metal trading and sales team. This is particularly so in key Government or Central Bank physical transactions, which require sensitive and confidential handling and high security precautions. It is this facilitation of the physical movement of precious metals that enables location and quality swaps and provides the basis for liquidity management.
There are seven custodians offering vaulting services in the London bullion market, three of whom are also clearing members of the LBMA (HSBC, ICBC Standard Bank and JP Morgan). There are also four other security carriers, who are also LBMA members (Brinks, G4S Cash Solutions (UK), Malca Amit and Loomis International (UK) Ltd). The Bank of England also offers a custodian service (gold only). In excess of 7,000 tonnes of gold and 30,000 tonnes of silver are physically stored in the London vaults. Those clearing members without their own dedictated vaulting operations will utilise their accounts with one of the other custodians.
In addition to providing custodian services, those clearing members with vaulting facilities also physically check and weigh all of the bars that are new to the London market, ensuring they meet the LBMA's strict Good Delivery standards. Those meeting the standards will be accepted and can be traded and moved within the London bullion market, those that don't are rejected. This gatekeeper role maintains the quality of bullion traded in London and its pre-eminence in the global market.
A company that wishes to open a vault for the storage of precious metals may wish to first become a member of the London Bullion Market Association (LBMA). In order to join the LBMA a company must be involved in activities closely related to the London market in gold or silver bullion. (See Joining the LBMA for further details). Contrary to popular belief, the LBMA does not approve or accredit new vaults. However, with the assistance of the existing London vaults the LBMA has complied some Best Practice Guidelines for opening a new vault for the storage of precious metals. In addition, Best Practice Guidelines for the safe packing, transportation and storage of gold and silver bars has been produced. Both of these Best Practice Guides can be downloaded via the Useful Links section on the right hand side of this page.
The role of the Bank of England
The Bank of England plays an important role in the London gold market. Although the Bank isn't a member of the LBMA, members of the LBMA hold gold custody accounts with the Bank. Reputedly it is the second largest vault in the world and provides custody services on behalf of its customers, including LBMA members, central banks, international financial institutions and Her Majesty's Treasury. The Bank publishes on a monthly basis the amount of gold which is stored in its vaults (these holdings are also included in the monthly data that the LBMA publishes). To access the data and for further details please refer to the Bank of England's website.
The Bank of England has been intrinsically linked with the London bullion market since its foundation in 1694.