London Good Delivery - Gold

London Good Delivery Gold

A primary function of the London Bullion Market Association (LBMA) is facilitating the international distribution and acceptability of their gold bars. Historically, members of the London bullion market compiled lists of accredited smelters and assayers whose gold bars they would accept without question in settlement against transactions conducted between each other and with acceptable counterparties.[1]

LBMA Good Delivery accreditation has become an internationally accepted standard of quality. Today, refiners of gold have to satisfy the Physical Committee of the LBMA that their bars meet the stringent requirements outlined in the "LBMA Good Delivery List." For this reason, the on-going review and maintenance of this list is a core function of the LBMA. Additionally, the assaying capabilities of refiners on the Good Delivery List are periodically checked under the LBMA’s Proactive Monitoring system.[1]

Good Delivery rules for refiners

Refiners wishing to apply for Good Delivery status submit applications to the LBMA Chief Executive, who in turn consult members of the Physical Committee to assess the refineries. The main requirements to be considered for listing are normally:[2]

  • The applicant has been in existence for not less than five years and has been involved in refining operations of the metal for which it is applying for Good Delivery status for not less than three years prior to the application
  • The applicant has an established annual refining production (which need not be in the form of standard bars) of no less than 10 tonnes of gold
  • The applicant has a tangible net worth of not less than the equivalent of £15 million or such figure as the LBMA may from time to time determine
  • The applicant’s ownership, financial standing and reputation would allow it to satisfy the KYC (Know Your Customer) tests practised in the London bullion market

Good Delivery rules for gold bars

Details of the specific standards required for inclusion on the LBMA Good Delivery List are published by the LBMA in the “Good Delivery Rules for Gold and Silver Bars,” available on their website.

Generally, to qualify as Good Delivery metal, gold bars must conform to the following specifications:[3]

  • Form: plate or ingot
  • Weight: minimum 350 fine troy ounces (approximately 10.9 kilograms); maximum 430 fine troy ounces (approximately 13.4 kilograms)
  • Purity: the minimum acceptable fineness is 995.0 parts per thousand fine gold
  • Appearance: smooth, free from cavities, holes, or blisters and easy to handle
  • Markings (each plate or ingot must bear):
    • Assay stamp of refiner
    • Fineness (to four significant figures)
    • Serial number
    • Year of manufacture

Proactive Monitoring

In 2004, the LBMA introduced Proactive Monitoring, a system for monitoring the quality of the production and assaying ability of refiners on the Good Delivery List. Prior to its introduction a refiner only had to demonstrate its refining and assaying ability at the time of its application for admission to the list.[4] Currently refiners on the list are monitored on a regular basis – helping to ensure that the most stringent requirements continue to be met. This further enhances the list’s reputation and those of the refiners on it.

This monitoring includes using supervisors to witness the dip-sampling that provides samples for testing by the LBMA’s Referees. Apart from newly-listed refiners, refiners are subject to full monitoring once every three years.4 As of 1 January 2012, all current Good Delivery refiners are required to submit their production and audited financial data on an annual basis to the LBMA Chief Executive.[2]

See Also


References

  1. http://www.lppm.org.uk/otcguide.pdf
  2. http://www.lbma.org.uk/assets/GD_Rules_5.pdf
  3. http://www.platinummetalsreview.com/pdf/13-14-pmr-jan04.pdf
  4. http://www.lbma.org.uk/Default.aspx?PageID=13275985&A=SearchResult&SearchID=1364466&ObjectID=13275985&ObjectType=1