London Good Delivery

London Good Delivery is the set of specifications for large gold and silver bars that are acceptable for settlement in the London over-the-counter bullion market, together with the list of refiners accredited to produce them. Both are maintained by the London Bullion Market Association (LBMA), the trade body for the wholesale precious metals market. A gold Good Delivery bar must contain between 350 and 430 fine troy ounces of gold, roughly 11 to 13 kilograms, with a minimum fineness of 995.0 parts per thousand. A silver Good Delivery bar must contain between 750 and 1,100 troy ounces with a minimum fineness of 999.0.

Because almost all wholesale gold traded in London settles in bars meeting this standard, and because central banks hold much of their gold in the same form, the London Good Delivery bar is effectively the global unit of institutional gold.

London has been the center of the international gold trade since the nineteenth century. The market operates over the counter, with dealing banks and trading houses quoting prices to each other and to clients rather than through a central exchange. Trades are generally settled loco London, meaning delivery in London vaults, and most positions are held in unallocated accounts, which give the holder a general claim to metal against the bank. A client can instead hold allocated gold, where specific bars, identified by refiner and serial number, are set aside in its name.

Clearing of unallocated balances is handled by London Precious Metals Clearing Limited, a company owned by member banks. Physical bars are held in vaults run by commercial custodians and by the Bank of England, which stores gold for many central banks. The LBMA Gold Price, set twice daily in an electronic auction administered by ICE Benchmark Administration since 2015, is the main global reference price for gold.

• Weight. Gold bars 350 to 430 fine troy ounces; silver bars 750 to 1,100 troy ounces. Gold bars are typically close to 400 ounces.
• Fineness. At least 995.0 for gold and 999.0 for silver.
• Markings. Each bar must carry the refiner's stamp, a serial number, its fineness and, for gold, the year of manufacture, so that it can be identified and traced.
• Shape and finish. Bars must meet requirements on dimensions, surface quality and the absence of cavities or inclusions.

Bars are weighed and assayed precisely, and gross weight, fineness and fine weight are recorded on bar lists that accompany transfers. A bar that falls outside the specification, or whose chain of custody has been broken, may need to be re-assayed or re-melted before it can rejoin the market.

Only bars made by refiners on the LBMA's Good Delivery List are accepted. To be listed, a refiner must meet requirements on production volume, financial strength, assaying capability and responsible sourcing, and must pass tests of sample bars. Listed refiners are re-examined periodically under the LBMA's Proactive Monitoring program, and those that fail can be suspended or removed. Bars produced before a refiner's removal usually remain acceptable.

Since 2012 refiners have also had to comply with the LBMA's Responsible Gold Guidance, which requires due diligence on the source of metal to reduce the risk that gold financed conflict, human rights abuses or money laundering. The guidance draws on the OECD's due diligence framework for minerals, and there is similar guidance for silver. Sanctions screening has become increasingly important; after Russia's invasion of Ukraine in 2022, the LBMA suspended Russian refiners from the list.

Central banks hold most of the monetary gold in their foreign exchange reserves in Good Delivery bars, often in London, which allows them to sell, lend or pledge gold quickly. For many central banks, gold is the main reserve asset besides holdings of a reserve currency such as the US dollar. Gold lending and gold swaps between central banks and commercial banks are conducted against this standard. Good Delivery bars also underpin forward contracts, gold-backed exchange-traded funds and many tokenized gold products. Spot prices quoted in the market, comparable to a spot rate in currencies, refer to metal of this quality delivered in London.

Gold's long history as a reserve asset, from the gold standard and bimetallism to the Bretton Woods system, explains why the market still values a common bar standard that any participant can accept without independent testing.

Not all gold trades in 400-ounce bars. Retail investors buy small bars and coins, and Asian markets, particularly in China, India and Singapore, often use one-kilogram bars. Futures exchanges set their own delivery specifications, such as the 100-ounce gold bars and 1,000-ounce silver bars deliverable on some US futures contracts. Platinum and palladium have a separate Good Delivery standard maintained by the London Platinum and Palladium Market. Converting between standards requires refining and recasting, which adds cost and time during periods of high demand in one center.

• London Bullion Market Association