LBMA Good Delivery Bars: The Standard Behind the Wholesale Market
Most people picture gold as coins or small bars. The wholesale market, where banks, central banks and large funds trade, runs on something much bigger: the London Good Delivery bar. These bars, and the rules that define them, form the backbone of the international bullion trade. Knowing how they work helps explain prices, vault holdings and the claims made by exchange-traded products.
What “Good Delivery” means
The London Bullion Market Association (LBMA) sets the standards for gold and silver bars that can be traded and settled in the London over-the-counter market, the largest wholesale market for precious metals. A bar meeting those standards is called a Good Delivery bar. Because it is produced by an accredited refiner and meets strict rules, it can change hands between market participants without being re-assayed each time.
The specifications
| Feature | Gold bar | Silver bar |
|---|---|---|
| Fine content | 350 to 430 troy oz | 750 to 1,100 troy oz |
| Typical size | About 400 troy oz (around 12.4 kg) | About 1,000 troy oz (around 31 kg) |
| Minimum fineness | 995.0 parts per 1,000 | 999.0 parts per 1,000 |
| Required marks | Refiner’s stamp, serial number, fineness, year of manufacture | Refiner’s stamp, serial number, fineness, year of manufacture |
The bars are not all exactly the same weight. Each one is weighed and its fine content recorded, so trades are settled on the actual fine metal in each bar. Physical appearance is regulated as well: the bars must have a suitable shape, be free of cavities and surface defects, and carry clear markings.
Accredited refiners
Only refiners on the LBMA Good Delivery List can produce bars accepted in London. To get on the list, a refiner must show a track record of production, financial strength, sound assay capability and, increasingly, compliance with responsible sourcing guidance, which aims to keep conflict gold and laundered metal out of the supply chain. Accredited refiners are monitored over time and can be removed from the list.
Bars made by refiners that later lose accreditation are generally treated differently from current production, which is why the year and the refiner’s mark on a bar matter.
The chain of integrity
A key concept in the wholesale market is the chain of integrity. A bar that has stayed within approved vaults, moved only by approved carriers, is presumed to be what its markings say. Once a bar leaves that chain, for example into a private home, it may need to be assayed again before it can re-enter the system. This keeps verification costs low for the vast quantities that change hands every day.
Where the bars are kept
Most Good Delivery bars sit in a small number of vaults in London, including the vault of the Bank of England, which holds gold for central banks, and vaults operated by commercial banks and security companies. Exchange-traded products backed by physical metal typically publish bar lists showing the serial numbers, refiners and weights of the bars they hold.
Kilobars and smaller formats
Good Delivery bars are far too large and expensive for most private buyers. Kilobars, weighing one kilogram, are widely used in Asia and in some retail markets, and many refiners make smaller cast and minted bars. These are not Good Delivery bars, though they often come from the same accredited refiners and can carry their reputation.
Why the standard matters to everyone
Even someone who will never touch a 400-ounce bar is affected by the system:
- Prices: the LBMA benchmark prices for gold and silver are set in this wholesale market, and retail prices are built on top of them.
- Trust: the accreditation system underpins confidence in bars from recognised refiners, which helps their resale.
- Transparency: bar lists let investors in physically backed funds see what they hold.
For more on how this physical market relates to futures trading, see COMEX, Paper Gold and Physical Metal. For the official holders of many of these bars, see Central Banks and Gold, and for the private side of storage, How to Store Bullion.
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