What is the London Bullion Market Association (LBMA)

The London Bullion Market Association (LBMA) is the international trade association representing the bullion and silver market. Based in London, the LBMA has a global client base, including most gold-owning central banks, private investors, mining companies, producers, refiners and manufacturers. There are around 150 member companies. These companies are all actively involved in the London gold and silver market, or they provide services to that market.
 

Functions of LBMA

 
The LBMA's work includes quality assurance towards market participants and refiners, setting and monitoring refinery standards, preparing trade documentation and promoting the development of good business practices. The LBMA's main role is to make the voice of the precious metals market heard and be a point of contact for regulators, investors and customers. They also coordinate market clearing, custody, promotion of good business practices and development of standard documentation.  
 
The LBMA also sets objective criteria for institutions wishing to enter the market as dealers and custodians. Moreover, in times of crisis, the LBMA plays a key role in preventing potential market disruption. This was particularly evident during the unwinding of Silver Fixing in the first half of 2014. The LBMA then coordinated the market's response to ensure continuity and to ensure that the market retained a silver benchmark (now known as the LBMA Silver Price). 
 

The development of the LBMA

The roots of the London gold market can be traced back to the partnership between Moses Mocatta and the East India Company, which began shipping gold together towards the end of the 17th century. However, it was the introduction of the London Silver Fixing in 1897 and the London Gold Fixing in 1919 that formally marked the beginning of the structure of the market and of the interaction between its members that made the market what it is today. 
 
The growth in the number and type of market participants in the early 1980s, combined with the introduction of the Financial Services Act in 1986, led to the creation of the LBMA on 14 December 1987.
 

What does the LBMA seal of approval mean?

 
The LBMA hallmark is given to smelters who produce investment gold and silver. This hallmark can only be obtained if the smelter meets a number of strict quality requirements. When a smelter achieves this hallmark, it is added to an online list: the Good Delivery List. Refiners with the LBMA hallmark have Good Delivery Status. 
 

LBMA's Good Delivery List

Central to the LBMA's quality assurance work is the maintenance and publication of the Good Delivery List for gold and silver. This list is universally recognised and serves as a benchmark for the quality of gold and silver bars. In fact, a smelter must meet the LBMA's strict criteria. The list is also used by many precious metal exchanges around the world to determine which refiners accept gold and silver bars from their own markets.
 
Total refined gold production on the LBMA's Gold Good Delivery List is generally even higher than total world mine production. Part of the difference here is through recycling. Newly mined gold processed by the refineries on the list represents about 85% - 90% of world production.
 

Benchmarking 

 
Benchmarking is an important part of the LBMA's current responsibilities. Auctions are used to set prices for precious metals. This is also known as ‘fixing’. Globally, the LBMA's benchmarks are maintained. These prices apply to anyone who wants to buy or sell gold, silver, platinum or palladium. No distinction is made between large or small companies or individuals. Benchmarking makes the market more stable, transparent and accessible.
 
The biggest changes in benchmarking occurred between 2014 and 2015 when the four benchmarks for precious metal prices became the intellectual property of the LBMA, namely the:
 

• LBMA Gold price
   
• LBMA Silver price
   
• LBMA Platinum price
   
• LBMA Palladium price

 
These are the official setting prices in London. The LBMA Gold price is set twice a day, at 10:30 and 15:00 (GMT+1), and is expressed in US dollars per troy ounce of 99.5% pure gold. LBMA prices for platinum and palladium are also set twice a day, at 09:45 and 14:00 (GMT+1). In contrast, the LBMA Silver price per 99.9% pure troy ounce is set every working day at 12:00 (GMT+1).
 

The importance of LBMA

 
The LBMA is an important player in precious metals because it is an independent authority. Because of its independence, it became possible for the LBMA to own the four benchmarks, be able to set quality requirements that refiners and producers must adhere to and the LBMA develops market services to support market players.
 
In addition, members of the LBMA can vote at meetings and on new regulations, increase their network, and membership shows integrity, allowing people to act with confidence.