A Guide to the Loco London Precious Metals Market
5. London Good Delivery – Gold and Silver
As mentioned in the introduction, the Bank of England formally recognised those refineries that produced gold bars to the required standard in 1750 via the London Good Delivery List for gold. Today, the LBMA handles that responsibility for both gold and silver under the auspices of its Physical Committee, which has to be satisfied that the bars meet the stringent, globally accepted, requirements set by the Association.
Refiners of platinum and palladium have to similarly satisfy the Management Committee of the LPPM. The LBMA and LPPM Good Delivery accreditations have become the internationally accepted standards of product and refinery quality. This is covered more fully in sections 5 and 6.
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.
Gold and Silver
Only gold and silver bars that meet the LBMA’s Good Delivery standards are acceptable in settlement of a Loco London contract. The LBMA benchmarks and regulates the acceptable requirements for large gold and silver bars through its continuously updated publication of the London Good Delivery Lists. These standards, recognised throughout the world, ensure that accredited refiners continue to maintain the high standards necessary for listing. The Lists can be accessed on the LBMA’s website.
The Lists are also used by many precious metals exchanges around the world to define in whole, or in part, the refiners whose bars are accepted in their own markets. Exchanges utilising the LBMA’s work in this field include ICE, Borsa Istanbul, CME Group and TOCOM, as well as the Singapore Bullion Market Association, Shanghai Gold Exchange and Dubai Multi Commodities Centre.
Requirements for Listing
The requirements for listing involve a stringent set of criteria, which include a minimum level of production and tangible net worth, with a rigorous technical assessment to review casting, refining and assaying abilities.
To ensure that the high standards are maintained, Accredited Good Delivery refiners are subject to on-going testing under the LBMA’s Proactive Monitoring Programme. Refiners that no longer meet the minimum standards, or those that decide to stop producing Good Delivery bars, are transferred to the Former Lists for Gold and Silver.
LBMA Physical Committee
The Physical Committee is made up of industry experts from the physical bullion market. It is responsible for monitoring, developing and protecting the Good Delivery Lists and works closely with sub-groups such as the LBMA Referees and the LBMA’s Vault Managers Group. It also ensures that standards are maintained, with emphasis on continuous improvement and transparency of the market. The Committee meets approximately every month throughout the year.
Gold Good Delivery bars
Good Delivery Referees are refiners appointed by the LBMA to assist with the maintenance of the Good Delivery System.
The technical assessment of applicants for listing includes/covers the:
- proactive monitoring of refiners on the List, and
- provision of technical advice on a range of topics
Good Delivery Rules
The Good Delivery Rules provide information for existing refiners and the banks that work with them, as well as the necessary guidance for refiners seeking accreditation. These specifications include the acceptable fine ounce weight, purity and physical appearance (including markings and surface quality). To view a full copy of the most up to date Rules, please refer to the LBMA’s website.
Only bars that meet Good Delivery standards are acceptable in the physical settlement of a Loco London gold or silver transaction. The high level of consistency within the global OTC market is maintained by ensuring both refiners and vaults implement the Good Delivery Rules relating to a bar’s assay, appearance, weight, and safe handling and stacking. The main specifications for Good Delivery gold and silver bars are summarised below. No other refined gold or silver products produced by accredited refiners fall within the scope of the Good Delivery Lists. For further details, please also see section 7 regarding the work of the London Precious Metal Clearing Limited.
The current (as of July 2017) specifications are listed below. For detailed, and latest information, please refer to the LBMA’s Good Delivery Rules.
Bars typically weigh a few ounces either side of 400 troy ounces (roughly 12.5 kilos) but the precise specifications are:
Minimum gold content: 350 fine troy ounces (approximately 10.9 kilograms) Maximum gold content: 430 fine troy ounces (approximately 13.4 kilograms). The gross weight of a bar should be expressed in troy ounces, in multiples of 0.025, rounded down to the nearest 0.025 of a troy ounce.
The recommended dimensions for a Good Delivery gold bar are approximately:
- Length (Top): 250 mm+/- 40 mm.
- Undercut* range: 5-25 degrees
- Width (Top): 70 mm +/- 15 mm.
- Undercut*: 5-25 degrees
- Height: 35 mm +/- 10 mm
*The undercut refers to the degree of slope on the side and ends of the bar and is calculated using the following formula: 90 degrees (ATAN(H/((T-B)* 0.5))), where H=Height, T= Top, and B=Bottom dimensions of the bar, the bottom dimension being measured to the theoretical sharp edges.
The minimum acceptable fineness is 995.0 parts per thousand fine gold.
- Serial number
- Assay stamp of refiner
- Fineness (to four significant figures)
- Year of manufacture
Vault storage of Silver Good Delivery bars