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The wholesale trading in gold and silver bullion market is carried out through the London Bullion Market Association, which is generally termed as LBMA. Founded in'87, the LBMA works with The Bank of England for regulating the traditional bullion market of London. Still it is working with the Financial Services Authority, which is the basic regulator of the bullion market in the United Kingdom.
The LBMA has-- market making dealers, or members, and it has 52 simple dealers who can be brokers or bankers. The five market making members meet twice a day for fixing the price of gold. The whole process is called gold fixing. Only those refiners are accepted who comply with the tough criteria of good delivery, and are therefore remain in The Good Delivery List that the LBMA is responsible of maintaining. The good delivery gold and silver bars have a set standard, which defines it as 995 in being fine, and 400 ounces weight. The Proactive Monitoring Programme is responsible for keeping check regularly in order to maintain the standard quality.
The loco-London gold is actually deposited in the vault of Swiss bank, but its spot quotations are prepared in London. The terms and the concepts of loco-London became famous in the mid of the nineteenth century, making London the hub of refining, and selling the gold that was actually dug in South Africa, California, and Australia.
All this has helped in building up a huge client portfolio to the London Bullion Dealing Houses. The individuals, and the gold dealers may have loco-London accounts in many of the London trading houses, but it is compulsory that they should be a member of the LBMA. The bullion accounts are dealt in the same manner as the other currency accounts.
The daily work timings of LBMA are form 9 in the morning until 5 in the evening, but that is only for the formal trading, the informal trading starts quite early, and lasts late than the original times, starting at 7:15 in the morning till 7:15 in the evening. The timings have been like this for quite a long time.
Two meetings take place daily, one at 10:30 am, and the other at 3:00 in the afternoon, there are five opted members in the meeting, and the meeting place is always a specified room in Rothschild. The gold fixing starts with the chairperson suggesting a price keeping in mind the pre fix trading activity. All dealers have the right to participate in gold fixing, and the chairperson decides the final price from their suggestions.
Until the year'97, no one knew the activities of LBMA. Therefore, the public never knew the actual size of the gold market. Even today, the actual figure of the amount of gold that is traded every day is not known, but it can only guessed and it is guessed to be somewhat around 30 million ounces.
Each year, the Association elects or re-elects a chairman in its annual general meeting The LBMA is highly supported by a few essential facilities like vaulting, clearing and standard documentation. One of the primary functions of the LBMA is to promote confidence, good trading practices, and to develop standard documentation as required. LBMA has had maintained high standards of good delivery, gold fixing, and monitoring system to ensure a reliable system of bullion trade, and to avoid all sorts of potential risks.
The LBMA has-- market making dealers, or members, and it has 52 simple dealers who can be brokers or bankers. The five market making members meet twice a day for fixing the price of gold. The whole process is called gold fixing. Only those refiners are accepted who comply with the tough criteria of good delivery, and are therefore remain in The Good Delivery List that the LBMA is responsible of maintaining. The good delivery gold and silver bars have a set standard, which defines it as 995 in being fine, and 400 ounces weight. The Proactive Monitoring Programme is responsible for keeping check regularly in order to maintain the standard quality.
The loco-London gold is actually deposited in the vault of Swiss bank, but its spot quotations are prepared in London. The terms and the concepts of loco-London became famous in the mid of the nineteenth century, making London the hub of refining, and selling the gold that was actually dug in South Africa, California, and Australia.
All this has helped in building up a huge client portfolio to the London Bullion Dealing Houses. The individuals, and the gold dealers may have loco-London accounts in many of the London trading houses, but it is compulsory that they should be a member of the LBMA. The bullion accounts are dealt in the same manner as the other currency accounts.
The daily work timings of LBMA are form 9 in the morning until 5 in the evening, but that is only for the formal trading, the informal trading starts quite early, and lasts late than the original times, starting at 7:15 in the morning till 7:15 in the evening. The timings have been like this for quite a long time.
Two meetings take place daily, one at 10:30 am, and the other at 3:00 in the afternoon, there are five opted members in the meeting, and the meeting place is always a specified room in Rothschild. The gold fixing starts with the chairperson suggesting a price keeping in mind the pre fix trading activity. All dealers have the right to participate in gold fixing, and the chairperson decides the final price from their suggestions.
Until the year'97, no one knew the activities of LBMA. Therefore, the public never knew the actual size of the gold market. Even today, the actual figure of the amount of gold that is traded every day is not known, but it can only guessed and it is guessed to be somewhat around 30 million ounces.
Each year, the Association elects or re-elects a chairman in its annual general meeting The LBMA is highly supported by a few essential facilities like vaulting, clearing and standard documentation. One of the primary functions of the LBMA is to promote confidence, good trading practices, and to develop standard documentation as required. LBMA has had maintained high standards of good delivery, gold fixing, and monitoring system to ensure a reliable system of bullion trade, and to avoid all sorts of potential risks.
About the Author:
Jack Wagon is a gold investment consultant. Learn how to buy gold in the times of recession. For more information visit his recommended website at http://www.goldmadesimple.com/.
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