What is the “London Bullion Market”?

The London Bullion Market: The world's largest Over the Counter market for physical gold 

What is the “London Bullion Market”?

The London Bullion Market is the collective activity of market making institutions in London who trade gold (and silver) on a principal to principal basis and on an institutional level. They also happen to be members of the London Bullion Market Association (LBMA), which is a trade association. 

While the London Bullion Market is not a commodity exchange, its participants’ activities represent the largest Over the Counter (OTC) trading activity for gold bullion in the world.

The unit of account for settlement of gold transactions is the Ounce troy fine (a troy ounce of pure gold) contained in a London good delivery (LGD) bar

A LGD gold bar must be at least 99.50% pure and must contain a minimum of 350 ounces troy of pure gold and a maximum of 430 ounces troy of pure gold. 

In addition there are other specific requirements in relation to the weight multiples, dimensions and various marks to be stamped on such a bar.  A gold bar with weights or dimensions or specifications other than the LGD requirements cannot be described as a LGD bar. 

As these institutions are market making members of the LBMA, they are required by the LBMA rules on market making membership to respond quickly to requests for prices from other Market Makers, and consistently provide bid and ask prices in accordance with prevailing market conditions. The normal hours are from 8:00am until 5:00pm or, on days when the New York market is closed, until the PM LBMA Gold Price auction.

Transactions between members of the London Bullion Market tend to be in standard dealing amounts. Traditionally, bid and ask price quotations are said to be for up to a 5,000 ounces of gold.

 
However, when dealing with non-member clients, a market maker can provide a tailor-made service – offering quotes for variable quantities, qualities and types of material as well as for various value dates and delivery destinations. Thus, the London Bullion Market as an OTC market is said to be more flexible. It also provides confidentiality, as transactions are conducted solely between the two principals involved. This is said to be particularly important for central banks activity in the market.

Six members of the London Bullion Market provide loco-London “clearing” for gold via London Precious Metal Clearing Limited (LPMCL). 

These are Barclays Bank PLC, Deutsche Bank A.G. (London Branch), HSBC Bank USA N.A. (London Branch), JPMorgan Chase Bank N.A. (London Branch), The Bank of Nova Scotia – ScotiaMocatta and UBS A.G. (London Branch) and they jointly own the LPMCL.

Three of the LPMCL clearing members also own their own bullion vaults.

These are Barclays, HSBC and JP Morgan.

These clearing institutions’ vaults act as “gatekeepers” by physically checking and weighing all new bars entering the London market. They ensure that the gold bars comply with the LBMA's “Good Delivery” specifications. Those gold bars which comply with standards are admitted and can be traded and moved within the London Bullion Market. Those which don’t are rejected. This gatekeeper role provides maintains the quality of gold bullion traded in London and its integrity in the worldwide gold bullion markets.

For the purposes of Financial Services and Markets Act 2000 (Recognition Requirement for Investment Exchanges and Clearing Houses) Regulations 2001, the London Bullion Market is neither a Recognised Investment Exchange nor a Recognised Clearing House.


Auric Gold knowledge base | all

Gold Market News

Osisko Commences Drill Program at Osborne-Bell

Osisko Mining Inc. (TSX:OSK) (“Osisko” or the “Corporation”) is pleased to announce it has commenced drilling with two drill rigs on its 100% owned Osborne-Bell gold deposit located in the Abitibi greenstone belt, Quévillon Township, Eeyou Istchee James Bay Region, Québec. Located 17 kilometres northwest of the town of Lebel-sur-Quévillon and 112 kilometres west of

Asante Gold Closes Shares for Debt Private Placement and Early Warning Report

Asante Gold Corporation (CSE:ASE) (FRANKFURT:1A9) (OTC:ASGOF) (“Asante Gold” or the “Company”) announces that it has closed a Shares for Debt private placement announced on October 26, 2017.

Fortune Minerals Completes $5M Private Placement

Fortune Minerals Limited (TSX: FT) (OTCQX: FTMDF) ("Fortune" or the "Company") (www.fortuneminerals.com) announces that, further to its press release dated November 29, 2017, it has closed the previously announced $5,000,000 non-brokered private placement of units of securities of the Company ("Units") pursuant to which 29,411,766 Units were issued.

Gold Outlook 2018: Watch the Fed, Debt and Geopolitics

Analysts share their thoughts on the gold outlook for 2018. Most agree that it will take a sharp shock to the market to move the price significantly higher.

Goldcorp Tech VP: Mining is Ripe for Disruption — Especially Exploration

Luis Canepari, vice president, technology at Goldcorp, discusses the company's #DisruptMining event and why innovation in mining is important.

Signature Announces Extension to Private Placement

Signature Resources Ltd. (TSXV:SGU) (OTCQB:SGGTF) (“Signature” or the “Company”) announces the extension of its previously-announced non-brokered private placement of non-flow-through units and flow-through units for aggregate gross proceeds of up to $750,000 (the “Offering”) until December 29, 2017. Additional details regarding the Offering can be found in the Company’s news release dated November 14, 2017.

Margaux Resources Announces Extension for Completion of its Non-Brokered Private Placement of Flow-Through Shares and Units

Margaux Resources Ltd. (TSXV:MRL) (OTCQB:MARFF) (“Margaux” or the “Company”) announces it has been granted an extension of its previously-announced non-brokered private placement for aggregate gross proceeds of up to $3 million (the “Offering”) until December 22, 2017. Additional details regarding the Offering can be found in the Company’s news release dated November 2, 2017 and

Monarques Gold Intersects 7.84 g/t Au Over 9.0 Metres (29.5 Feet) at Croinor Gold

MONARQUES GOLD CORPORATION (“Monarques” or the “Corporation”) (TSX.V:MQR) (OTCMKTS:MRQRF) (FRANKFURT:MR7) is pleased to report new results for its 2017 drilling program at Croinor Gold, including for the Gold Bug sector. These are the final results for the drilling program, which consisted of 26 holes totalling 9,388 metres of drilling on the Croinor Gold deposit and 26 holes totalling

Anaconda Mining Produces Over 4,100 Ounces of Gold and Generates $5.8M in Revenue in Q2 FY 2018

Anaconda Mining Inc. (“Anaconda” or the “Company”) (TSX:ANX) is pleased to announce production results and certain financial information from the three month period ended November 30, 2017 (“Q2 FY 2018”) and the six months ended November 30, 2017 (“YTD FY 2018”). All dollar amounts are in Canadian Dollars.

Alamos Gold Announces Positive Feasibility Study for the Lynn Lake Project

Alamos Gold Inc. (TSX:AGI) (NYSE:AGI) (“Alamos” or the “Company”) today reported results from the positive feasibility study conducted on its Lynn Lake Gold Project (“Lynn Lake”), located in Manitoba, Canada. All amounts are in United States dollars, unless otherwise stated.

Lock in gold price

Buy now !

Pay a deposit and fix the price of your gold bar. Pay the remaining.

Call us now More Info