Who is the London Bullion Market Association (LBMA)?

The London Bullion Market is the most important off-exchange trading center for gold and silver, and one of the major global commodity trading places in London. It states since 1919 the world market price for gold, and since 1897 the world market price for silver. Trade co-ordinates the London Bullion Market Association (LBMA).

The History 

London was the first time the global center of gold trade when Moses Mocatta in 1671 sailed from Amsterdam to London to deal in gold and diamond. Mocatta & Goldsmid took his bank in 1684 on their business, ten years before the founding of the Bank of England.

1717 imposed by the English master of the mint, Sir Isaac Newton in London to a low gold price of silver and thus the "cornerstone" of the gold standard, which should have for about 200 years to come. The consequence was that in England silver gradually disappeared from circulation.

1809 NM Rothschild & Sons began trading in gold bullion and gold coins. In the Napoleonic wars, the Bank smuggled gold coins across the English Channel to finance the advance of British troops in France. Nathan Mayer Rothschild earned a fortune in the war and became the most influential financier of the British government. With the London Silver Fixing the Gold Fixing in 1897 and 1919, the market structure as it exists today. Founding members of the gold and silver Mocatta & Goldsmid Fixings, Samuel Montagu & Co. were, Pixley & Abell and Sharps & Wilkins.

On 12 September 1919 NM Rothschild & Sons took over the presidency at the Gold Fixing. Among the audience were the dealers once a day in the banking house of Rothschild, to determine supply and demand. If both are found in equilibrium, the participants lowered their British flags, and the price of gold of the day could be fixed.

When the British government in November 1967 devaluated the pound sterling, then the most important reserve currency after the dollar sat at the London Bullion Market in a rush for gold. On 17 March 1968 an agreement on the division of the gold market was signed. The price one could remain free to adapt to the market, the other was fixed. After two weeks of closing on 1 April 1968 the reopening of the London Bullion Market occurred. Since that time, there are daily meetings to the gold price to the opening time of the U.S. stock markets again to determine.

In 1987, the London Bullion Market Association (LBMA) was established in close consultation with the Bank of England, which was then the regulatory authority for the precious metals market. The primary regulator in the UK since the Financial Services Authority (FSA).

Since 1999 the price of silver, and gold since 2004, the price is set by telephone. In April 2004, NM Rothschild & Sons pulled back after 200 years of the total commodity trade and thus also from the gold trade in London. 

Good Delivery

Historically, the members of the London bullion market compiled lists of accredited melters and assayers whose gold and silver bars they would accept without question in settlement against transactions conducted between each other and with other acceptable counterparts. Such bars earned the distinction of London Good Delivery status.

The LBMA Good Delivery List is now widely recognised as representing the de facto standard for the quality of gold and silver bars, in large part thanks to the stringent criteria for assaying standards and bar quality that an applicant must satisfy in order to be listed. The assaying capabilities of refiners on the Good Delivery List are periodically checked under the LBMA’s Proactive Monitoring programme.

The main requirements to be considered for listing are normally that a refiner must: 

• Have an established track record of at least three years of producing the refined metal for which the listing is being sought 
• Produce a minimum quantity of refined metal per year – 10 tonnes of gold and 50 tonnes of silver
• Have a tangible net worth of at least £15 million equivalent
• Furnish evidence of their ownership structure and directors 
• Provide, if required, a suitable letter of endorsement, e.g., from the central bank or an acceptable commercial bank in their country of operation.

(Source: Wikipedia)