A Guide to the Loco London Precious Metals Market
6. Good Delivery – Platinum and Palladium
A primary function of the LPPM is its involvement in the promotion of refining standards by maintenance of the LPPM Good Delivery List and a regime of Proactive Monitoring whereby refiners on the LPPM Good Delivery List have their assaying ability independently tested, under a continuous three-year rolling programme, in addition to being required to provide the LPPM, in confidence, with certain production and financial data.
A selection of ingots
Refiners of platinum and palladium have to satisfy the Management Committee of the LPPM in order to be accepted onto the Good Delivery List. LPPM Good Delivery accreditation has become the internationally accepted standard of product and refinery quality.
Given the status that Good Delivery has attained, both the LBMA and the LPPM take very seriously the assessment for inclusion in their Good Delivery Lists. The ongoing review and maintenance of the Good Delivery Lists is one of the core functions of both organisations.
The LPPM Rules for Good Delivery are for both Loco London and Loco Zurich and the current (as of July 2017) specifications are listed below. Please see the full details for the most up-to-date Good Delivery Rules.
Platinum Plate or Ingot
Form
Plate or Ingot
Weight
The maximum weight permitted is 6 kilograms (192.904) troy ounces. The minimum weight permitted is 1 kilogram (32.151 troy ounces)
Purity
At least 99.95% platinum
Markings
- Each plate or ingot must bear:
- The producer’s recognised mark
- The letters PT or PLATINUM with a stamp
- indicating the purity
- An individual number or mark
- Year of manufacture
- The weight in grams, kilograms or troy ounces (if in grams to one decimal place, if in kilograms to four decimal places and if in troy ounces to three decimal places).
Appearance
Smooth, free from cavities and easy to handle
Palladium Plate or Ingot
Form
Plate or Ingot
Weight
The maximum weight permitted is 6 kilograms (192.904) troy ounces. The minimum weight permitted is 1 kilogram (32.151 troy ounces)
Purity
At least 99.95% palladium
Markings
- Each plate or ingot must bear:
- The producer’s recognised mark
- The letters PD or PALLADIUM with a stamp
- indicating the purity
- An individual number or mark
- Year of manufacture
Weight
The principle applied to the weighing of LPPM Good Delivery platinum and palladium plates or ingots is that the weight stamped on a plate or ingot should be the minimum weight. The producer/refiner should expect to be credited with the stamped weight, and for any subsequent physical movement of such plate or ingot out of the clearing system should also reflect the stamped weight on the relevant weight list. The LPPM however accepts that there can be minor differences in weighing equipment, and for practical and clarity purposes has set out the following rules:
Weight Stamping
The weight in grams, kilograms or troy ounces (if in grams to one decimal place, if in kilograms to four decimal places and if in troy ounces to three decimal places).
Rounding
Weight lists shall be produced in troy ounces or converted from kilograms using the following formula, namely a standard conversion rate from kilograms to troy ounces of 32.1507465 to produce a five-decimal figure. If upon conversion to troy ounces the last two digits are 75 or greater, the third decimal place should be rounded up and if the last two digits are 74 or less, the third decimal in the troy ounce weight should remain unchanged.
Weight Tolerance
For plates/ingots dated 2014 or before, once the troyounce weight is established either by conversion or stamped on the plate/ingot, subsequent weighing tolerances shall be:
Minus: 0.006 troy ounces
Plus: no upward limit, the management of this upward limited is to be at the vault manager’s discretion.
For plates/ingots dated 2015 and onwards, once the troy ounce weight is established either by conversion or stamped on the plate/ingot, subsequent weighing tolerances shall be:
Minus: zero, the plate or ingot must weigh a minimum of the stamped weight
Plus: no upward limit, the management of this upward limited is to be at the vault manager’s discretion.
Appearance
Smooth, free from cavities and easy to handle.
The Gate-Keepers
It is worth noting that in addition to the above, a Good Delivery bar produced by an accredited refiner only becomes and continues to be London Good Delivery to the extent that the vault manager is willing to accept such a bar.
The vault managers are precious metal experts who manage the vaults approved by the members of LPMCL and who have achieved LBMA Approved Weigher status (certified vaults are listed in the latest GDL Rules). Vault managers are the gate-keepers of the global OTC market and a Good Delivery bar only continues to be London Good Delivery to the extent that the vault manager has confirmed that the bar can be accepted into the London vault and thus into Loco London. Hence, they play a pivotal quality control role in maintaining and sustaining the Good Delivery standards across the market as metal moves in and out of their custody. They also play a quality assurance role in terms of the product invested in by the client whose metal is placed in their custody.
More information is provided in section 7.
Why London Good Delivery is Important
Clearly, it is important for an investor to know that the bar of precious metal they have purchased is exactly what it purports to be – of the correct metal, weight and assay, and so on. However, only bars of the requisite size (as well as the other features listed above) can gain London Good Delivery status.
So whilst a platinum or palladium plate or ingot complying with the weight specifications set by the LPPM, and meeting all the other listed requirements, can be considered to be Good Delivery, the same can never be true of a 1 ounce platinum or palladium bar.
The key feature is that the Good Delivery List underpins the wholesale market. So if an investor is buying precious metals (be they held in allocated or unallocated accounts), the bars underlying those holdings are fungible. In other words, it is irrelevant whether the platinum was mined (and refined) in South Africa, Russia or North America, or indeed any other platinum-producing country, or if the bar was created out of scrap metal, obviously allowing for the fact that the metal meets the standards of Responsible Sourcing Guidance.