London Bullion Market

The London Bullion Market is the biggest wholesale market for gold and silver in the world, with a turnover of about 18 million ounces of gold and 108 million ounces of silver per day. Trading is done by the members of the London Bullion Market Association (LBMA): banks, mining companies, refiners, investors, etc. The LBMA has currently over 130 members from more 20 countries from around the world.

Early History

History of the London Bullion Market can be traced back to the 17th century cooperation between the East India Company and Moses Mocatta in shipping gold, and the gold rushes in the late 17th and 18th centuries. These played the key role in the foundation of the Bank of England and in the rise of London as one of the world’s leading bullion markets.

The London Gold Market and the Good Delivery

The London Gold Market was founded by five companies - Scotia-Mocatta (Mocatta & Goldsmid), N M Rothschild & Sons, Sharps Wilkins, Samuel Montagu & Co., and Pixley & Abell - in 1850. As the founding members of the Gold Market, these five companies took over the control and supervision as well as formed the first Gold Price fix in 1919. The London Gold Market also formulated the so-called Good Delivery, a set of rules in regard to the physical properties/quality of bullion bars that are traded on the London Bullion Market.

Due to high standards in terms of both size and purity, Good Delivery bullion bars are highly sought after throughout the world and are traded with on other markets as well including that in New York, Tokyo, Hong Kong and Zürich, to mention only a few. They are bought by both private and public sector financial institutions including central banks and governments as gold reserves.

The London Bullion Market Association (LBMA)

There were very little changes in the way the London Bullion Market is run and regulated since the foundation of the London Gold Market. It is still overseen and managed by the five founding members. Among the very few and the most important changes was the foundation of the London Bullion Market Association (LBMA) in 1987. It was formed on the insistence of the Bank of England which demanded the creation of an independent body to watch over the Good Delivery List.