London Bullion Market

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London Bullion Market Association

logo
legal form Trade association
founding December 14, 1987
Seat City of London , United Kingdom
management Grant Angwin ( Chairman )
Branch Over-the-counter trading venues
Website www.lbma.org.uk

The London Bullion Market ( English bullion : bullion precious metal) is the most important off-exchange trading center for gold and silver , as well as one of the world's major commodity trading places in the City of London . The world market price for gold has been determined here since 1919 and the world market price for silver since 1897 . Trading is coordinated by the London Bullion Market Association (LBMA) .

history

Nathan Rothschild (1777–1836) became the most influential financier of the British government through the gold trade

The City of London first became the global center of the gold trade when Moses Mocatta († 1693) moved from Amsterdam to London in 1670 to start trading in gold, silver and diamonds from 1671 . In 1684 he founded his own bank under the name “Mocatta” on “Camomile Street” in the City of London (renamed “ Mocatta & Goldsmid ” at the end of the 18th century ). Moses Mocatta first sent silver to India in 1676 because it was cheaper in London than in Bombay . In return, he received diamonds from India. After the Bank of England was founded in 1694 , the Mocatta banking house was the son of Moses Mocatta. Abraham Mocatta († 1751), their exclusive gold and silver broker .

In 1717, the English mint master Sir Isaac Newton in London set too high a gold price for silver and thus the cornerstone of the gold standard , which was to last for around 200 years. The consequence of this was that silver gradually disappeared from payment transactions in England.

In 1809 NM Rothschild & Sons started trading gold bars and gold coins . During the Napoleonic Wars , the bank smuggled gold coins across the English Channel to finance the advance of British troops into France. Nathan Mayer Rothschild made a fortune during the war and became the British government's most influential financier.

With the London Silver Fixing in 1897 and the Gold Fixing in 1919, the market structure was created as it still exists today. Founding members of the gold and silver fixings were NM Rothschild & Sons, Mocatta & Goldsmid, Samuel Montagu & Co., Pixley & Abell and Sharps & Wilkins . On September 12, 1919 NM Rothschild & Sons took over the chairmanship of the gold fixing. For this event, the dealers met once a day at the Rothschild bank to determine supply and demand. When the two were in balance, the contestants lowered their British flags and the day's gold price could be fixed.

The Financial Services Authority has been regulating the London Bullion Market since 1987

After the outbreak of the Second World War , the London gold market closed on September 3, 1939, and the silver market came under the sole control of the Bank of England. In 1946 there was a partial resumption of the silver trade and in 1953 the silver market was fully opened. On March 22, 1954, a gold fixing took place again after 15 years.

When the British government decided in November 1967 to devalue the pound sterling , at that time the most important reserve currency after the US dollar , a rush for gold began at the London Bullion Market. On March 17, 1968 an agreement on the division of the gold market was signed. One price could continue to adapt freely to the market, the other was fixed. After two weeks of closure, the London Bullion Market reopened on April 1, 1968. Since then, there has been another daily meeting to set the gold price again when the US stock exchanges are open.

On December 14, 1987 the London Bullion Market Association (LBMA) was founded in close consultation with the Bank of England, which was the regulator for the precious metals market at the time. The primary regulator in the UK has since been the Financial Services Authority (FSA).

The silver price has been set by telephone since 1999 and the gold price since 2004.

In April 2004, after 200 years, NM Rothschild & Sons withdrew from all commodity trading and thus also from gold trading in London. The reason given was lower earnings in commodity futures trading: in 1999, commodities trading had contributed 8.8 percent to the earnings of the entire London area of ​​the bank; in the 2003 financial year the share was only 2.2 percent.

Trade structure

The off-exchange trading (English: Over-the-counter, OTC) with gold and silver bullion is performed by the London Bullion Market Association (LBMA). Its members are large international banks, manufacturers, finishers, processors, producers and distributors around the world. They usually trade among themselves and with their clients on their own account, which means that they bear all of the risks. Its customers are mainly institutional investors .

In contrast to a futures exchange , the OTC market offers a certain flexibility and confidentiality in the transactions that are carried out between the two clients. The London Bullion Market is a wholesale market where the minimum amounts traded are typically 1,000  ounces of gold and 50,000 ounces of silver. Over 600 tons of gold and 3,000 tons of silver are traded every day. Not all precious metal traded between the parties changes hands in the long term. Part of the trading volume is speculative transactions.

Price determination

Trading time is Monday through Friday from 8:50 a.m. to 3:00 p.m. UTC (9:50 a.m. to 4:00 p.m. CET ).

Gold fixing

The gold fixing is carried out twice a day with the aim of processing as many transactions as possible at a fixed price :

  • Morning: Monday to Friday 10:30 a.m. UTC (11:30 a.m. CET)
  • Afternoon: Monday to Friday 3:00 p.m. UTC (4:00 p.m. CET).

Since June 7, 2004, the meeting, previously chaired permanently by Rothschild, has been held at Barclays Bank under an annual rotating chairmanship . Representatives of the Bank of Nova Scotia – ScotiaMocatta , Barclays Bank, Deutsche Bank AG London , HSBC Bank USA NA London Branch and Société Générale , all of whom are members of the London Bullion Market Association (LBMA), will meet at this event .

Silver fixing

From 1897 to 2014 there was this pricing process for silver in London. It was performed once a day: Monday to Friday 12:00 PM UTC (1:00 PM CET). The event was chaired by the Bank of Nova Scotia-ScotiaMocatta and, together with Deutsche Bank and HSBC Bank USA, fixed the silver price. After the deal was concluded, so-called clearing companies took care of the transaction. The following LBMA companies were responsible for clearing : Bank of Nova Scotia-ScotiaMocatta, Barclays, Deutsche Bank, HSBC Bank USA, JPMorgan Chase & Co. and UBS .

In May 2014 it was announced that the silver fixing would be discontinued on August 14, 2014.

Good delivery bars

Aurubis in Hamburg is on the “Good Delivery List” of the London Bullion Market Association

Only bars from refineries and mints that meet certain quality requirements are permitted for trading . Standard bars from LBMA are very heavy and very fineness . A standard gold bar with a fineness of 995 ‰ (“good delivery bar”) weighs a nominal 400 troy ounces , ie approximately 12.44 kilograms, but may vary from 350 to 430 troy ounces. The fineness must be at least 995 ‰ for gold and at least 999 ‰ for silver. The fineness, the manufacturer's brand and the bar number must be stamped on the bar. The bar number is used to identify each bar and is entered in a directory by the producer.

The international seal of approval " good delivery " (German: "in good delivery") guarantees the embossed or stamped features such as fineness and weight as well as constant, uninterrupted storage in accepted storage facilities. Bars with good delivery status are accepted and traded worldwide.

The Deutsche Bundesbank has been bringing gold stored abroad back to Germany since 2012 . The bars that are stored in Paris go straight to transport with the London good delivery status. However, bars from the Federal Reserve Bank of New York that were acquired there from the 1950s onwards must first be monitored and remelted in order to achieve this quality.

Company in German-speaking countries with Good Delivery certification

On the current "Good Delivery List" of the LBMA in 2015:

from Germany:

from Switzerland:

LBMA Referees

The LBMA has accredited five companies as so-called “Good Delivery Referees” to monitor the Good Delivery System. Your main tasks are:

  • The technical assessment of new applicants for Good Delivery Certification
  • The proactive monitoring of the certified companies
  • The provision of technical expertise on various topics

The following are accredited as referees:

Further commodity markets in London

Aluminum bars are traded on the London Metal Exchange (LME)

The pricing for platinum and palladium takes place at the London Platinum and Palladium Market (LPPM). Like the London Bullion Market, the LPPM is an exception among the commodity markets: it is not an exchange, but an OTC market.

For industrial metals such as aluminum , lead , copper , nickel , zinc and tin which is the London Metal Exchange (LME) is responsible. With the exception of copper and aluminum, which are also traded on NYMEX in New York City , the LME has almost a monopoly on all other metals .

The ICE Futures (formerly "International Petroleum Exchange," IPE) is trading platform for Europe's leading oil grade Brent . It is the largest futures exchange for options and futures on oil , natural gas and electricity in Europe.

Web links

Individual evidence

  1. ↑ Trading in spot,… ( Memento from 23 August 2016 in the Internet Archive ) on the website of the London Bullion Market Association.
  2. ↑ Management Committee
  3. ^ Paul H. Emden: "Jews of Britain. A Series of Biographies ", Sampson, Low, Marston & Co., London 1944, DNB 1004941854, pp. 87-88
  4. ↑ Entry on "Mocatta family" in the " Oxford Dictionary of National Biography "
  5. ↑ Rothschild withdraws from gold trading. In: Handelsblatt . April 16, 2004.
  6. ↑ The gold market - how and when is gold traded? ( Memento from December 12, 2009 in the Internet Archive ) on bullionaer.de
  7. ^ Gold Fixings and Silver Fixings ( Memento November 26, 2010 in the Internet Archive ) on the London Bullion Market Association website.
  8. ↑ London silver fixing will end in August! on goldseiten.de.
  9. ↑ Update: The London silver fixing will be history on finanzen.net from August .
  10. ↑ Deutsche Bundesbank dissolves gold storage in Paris on orf.at, January 19, 2013.
  11. ^ Good Delivery Lists ( Memento February 4, 2015 in the Internet Archive ) on the London Bullion Market Association website