Market Overview

Internationally, bullion is traded on a 24-hour basis, mainly through London, in Over-the-Counter (OTC) transactions in spot, forwards and options.

The governance of this market is maintained through the London Bullion Market Association’s (LBMA) publication of the Good Delivery List. This is the list of accredited refiners, whose standards of production and assaying meet the requirements set out in the LBMA’s Rules. Only bullion conforming to these standards is acceptable in settlement against transactions conducted between participants in the bullion market.

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.

OTC Bullion Market

The pie diagram shows the five main elements which together comprise the London Over the Counter (OTC) Bullion Market. An OTC market provides flexibility in terms of pricing, size of deals and length of contract, and means that all transactions are conducted between two parties on a principal-to-principal basis. This maintains confidentiality but also ensures that all risks, including those of credit, exist only between the two counterparts.

The term Loco London refers to gold and silver bullion that is physically held in London. Only LBMA Good Delivery bars are acceptable for trading in the London market. Counterparties and their clients from all over the world settle their transactions through the London OTC market.

    All bullion transactions between the clearing members of the LBMA are settled and cleared by The London Precious Metals Clearing Limited. Read More
    Seven members of the LBMA, together with the Bank of England, physically hold the gold and silver bullion traded in London. They act as gatekeepers to the Market, ensuring the bullion traded and delivered meets the standards set by the LBMA. Read More
    The LBMA maintains the Good Delivery Lists for gold and silver bars. Only bars produced by refiners on the Lists can be traded in the London market. Both the refiners' practices and the bars they produce have to measure up to the most stringent standards of quality.Read More
    LBMA Market Makers set continuous two-way bid and offer prices for bullion products. The LBMA Gold and Silver Prices are operated and administered by IBA, with the LBMA Platinum and Palladium Prices operated and adminstered by the London Metal Exchange (LME). These benchmark prices are used around the world as a basis for settling a variety of transactions. We also publish monthly data on gold and silver, both the amounts held in London vaults and settled in the daily clearing. Read More
    Most traded and settled bullion in London is on an unallocated account basis. This is an account where the customer does not own specific bars, but has a general entitlement to an amount of metal. This is similar to the way that a bank account operates. Allocated accounts means that the customer has entitlement to specific bars. Read More

Other Useful Documentation

For a more comprehensive overview of the market, the LBMA has extensively revised and refreshed the "Guide to the Global OTC Precious Metals Market", which is available in electronic format on the LBMA's website here.