Summary: London Good Delivery bars play a vital role in the international gold market, and their specifications are rigorously governed to ensure consistency and quality in gold trading.
London Good Delivery (LGD) bars, weighing approximately 400 troy ounces (12.5 kg) of fine gold, form the backbone of the loco-London bullion market, one of the world’s most significant physical gold markets. This market sees daily clearing turnovers exceeding 800 tonnes (US$30 billion) with over 1,000 transfers of LGD bars between allocated and unallocated accounts conducted by the six clearing members of the London Bullion Market Association (LBMA).
These bars are traded by a wide range of participants, including international dealers, mining companies, central banks, financial institutions, major investors, and fabricators, such as jewelry manufacturers. Many of these bars are further transformed by dealers and refiners into smaller bars, like kilobars, to meet various market demands.
LGD bars are primarily produced by LBMA-accredited refiners, using newly-mined gold or recycling old gold scrap and non-accredited bars when the need arises for substantial gold trading in the international market. Central banks worldwide also hold about 30,000 tonnes of gold, often lending or selling old LGD bars to international bullion banks.
The history of trading LGD bars in London dates back to 1919, and the LBMA has been responsible for accrediting these bars since 1987. The LBMA provides detailed specifications for LGD bars, which are regularly updated. The key specifications for LGD bars include:
- Weight: LGD bars should contain a minimum of 350 fine ounces and a maximum of 430 fine ounces.
- Fineness: The minimum acceptable fineness is 995.0 parts per 1,000 parts fine gold.
- Marks: LGD bars must include a serial number, the assay stamp of the refiner, the millesimal fineness to four significant figures (e.g., “998.4”), and the year of manufacture.
- Recommended approximate dimensions: These dimensions encompass the length, width, and height of the bars, with allowances for slight variation.
LGD bars are known for their variability in weight, purity, and dimensions due to historical conventions and the significant impact that even minor variations in gross weight and purity could have on their fine gold content and value for trading purposes. Therefore, each bar’s fine gold content is precisely calculated and recorded.
It’s important to note that the weight is not normally stamped on the bars, as the official weight is determined during the weighing process upon delivery. Additionally, the LGD bars can have variable dimensions within specified parameters, and many older bars from historical or long-established refiners may not conform to the LBMA’s recommended dimensions.
Furthermore, the year of manufacture is now required for newly-manufactured LGD bars, typically included as a separate 4-digit number in the bar’s serial number.