More Transparency in the London Over-The-Counter Gold and Silver Markets

Transparency in the over-the-counter (OTC) gold and silver markets in London is improving. Indeed, for the first time in history, we now have a “window” into the bullion vaults in London.

At the end of July, the London Bullion Market Association (LMBA) started publishing, with a delay of three months, figures for the gold and silver bullion held in those London vaults offering custodian services.

As at March 31, there were 7,449 tonnes of gold, valued at $298 billion and 32,078 tonnes of silver valued at $19 billion. This is the equivalent of approximately 596,000 gold bars and 1,069,255 silver bars.¹

Source: LBMA. Notes: a) End of month figures; b) held within the environs of the M25 (large motorway around London); c) All physical forms of metal: large wholesale bars, coin, kilo bars, and small bars; d) Only includes physical metal held within the London environs; e) Jewelry and private holdings not included; and f) 1 gram = 0.0321507465 troy ounces.

In an even more historic move, the LBMA will be following up by reporting trade data, thereby providing “gross turnover for the Loco* London market.”² London is the largest gold trading center in the world. On average each day in March this year $18 billion of gold was cleared in London. In 2015, 310,358 tonnes (10 billion ounces) of gold were traded globally. The London OTC market amounted to 144,000 tonnes, or 46.3%, of the gold traded, while the New York futures market accounted for 130,350 tonnes or 42.0%.

About the Author:

Joe Foster has been Portfolio Manager for the VanEck International Investors Gold Fund since 1998 and the VanEck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.

Footnotes:
¹London Bullion Market Association: Demystifying London's Gold and Silver Vault Holdings, July 31, 2017
²Ibid.
^*“Loco simply relates to the place or location at which a commodity is physically held, e.g. Loco London gold. Precious metals held within the environs of the M25 are considered to be loco London.”