The term Good Delivery might sound confusing, especially for those who trade small amounts of bullion. In fact, there is nothing more confusing than a market jargon. In this article, Gerrards explain you everything about Good Delivery gold bars and why they are so important in the global gold market.
A primary function of the London Bullion Market Association (LBMA) is facilitating the international distribution and acceptability of gold bars. It has become an internationally accepted standard of quality for the wholesale trading of gold bullion bars. This set of rules describe :
The Good Delivery specification ensure that high quality standards are respected across the global market for the wholesale of gold and silver bars. In fact, this enable investors to trade gold bars of comparable fineness and weight, so that the market maintains integrity and stability.
The Good Delivery specification is contained in a document issued by the LBMA titled the Good Delivery Rules for Gold and Silver Bars: Specifications for Good Delivery Bars and Application Procedures for Listing. Each year, the LBMA releases a Good Delivery List with information about all the official Good Delivery bars?
Good Delivery gold and silver bars are mostly traded in the international bullion markets like Hong Kong, London, New York, Sydney, Tokyo and Zürich. They are also exchanged in the gold reserves of governments, central banks and the IMF.
In order to be accepted on the LBMA Good Delivery list for gold, gold refiners must meet specific standards for the gold bullion bars they produce.
The Good Delivery describe the physical characteristics of gold and silver bars used in settlement in the wholesale London bullion market. Although these guidelines are flexible, Good Delivery gold bars must be manufactured with such specifications as accurately as possible in order to quality for wholesale trading.
The specification for Good Delivery gold bars are mentioned below :
|Marks||serial number, refiner’s hallmark, fineness, year of manufacture||serial number, refiner’s hallmark, fineness, year of manufacture|
|Fine precious metal content||350 – 430 troy ounces (11 – 13kg)||750–1,100 troy ounces (23–34 kg); 900–1,050 troy ounces (28–33 kg) recommended|
|Length (top)||210–290 mm (~8.3–11.4 inches)||250–350 mm|
|Width (top)||55–85 mm (~2.2–3.3 inches)||110–150 mm|
|Height||25–45 mm (~1–1.8 inches)||60–100 mm|
One thing to note is that the weight is not recommended to be stamped on bars of either gold or silver, because bars will be officially weighed on delivery. This weight (that may be different from that originally marked) will prevail. Moreover, a bar’s weight may also change by handling or sampling, thus invalidating the original mark.
Gold bars with different specifications can still be traded on the bullion market, providing that they have a fineness of at least 995, but they are not classed as Good Delivery Bars. Bars that do not comply with Good Delivery rules are termed Non–Good Delivery. If they are similar to Good Delivery bars but do not fully meet the requirements, they must be stamped with “NGD” to distinguish them from conforming bars.
How big is a 400 oz gold bar ?
A good delivery gold bar, also known as a 400 oz gold bar contains around 12.5 kg of fine gold. Depending on the manufacturer, it’s size will vary.
Refiners seeking acceptance to the Good Delivery List must undergo stringent checks regarding their history in the market, their financial standing and their ability to produce bars that meet the exacting standards of London Good Delivery (LGD) bars. Additionally, they must implement LBMA’s Responsible Gold and/or Silver Guidance prior to accreditation. Bars are then freely traded between institutions within the market.
Applicants to the Good Delivery status must comply with the following requirements :
Good Delivery also put requirements for listing on the LBMA Good Delivery List of approved refineries. Refiners that manufacture gold bars in accordance to the Good Delivery standard are listed in the Good Delivery List of Acceptable Refiners : Gold
Refiners that the LBMA accepts for placement on the silver and gold Good Delivery Lists “commit to responsibly sourcing metal, refining it into Good Delivery bars (of approximately 400 troy ounces for gold and 1,000 troy ounces for silver) and shipping to approved vaults in London. Bars are then freely traded between institutions within the market.”
Three years after being placed on the Good Delivery Lists, accredited refiners are subject to LBMA’s Proactive Monitoring, which is conducted on a three-year cycle.
The PAM program examines each refiner’s assaying competence. Should a refiner no longer meet the required conditions, then its bars would be moved to the Former List. View the Good Delivery Rules for further details.
Additionally, LBMA conducts an annual check to ensure that the refiners all continue to meet the minimum requirements for refined production and tangible net worth.