LBMA Good Delivery

The LBMA Good Delivery scheme sets the technical and operational standards that define acceptable gold and silver bars for trading in the London bullion market. Maintained by the London Bullion Market Association, it is the de facto global specification for precious-metals over-the-counter (OTC) trading, ensuring purity, weight, and refiner integrity.

The LBMA’s Role as a Standards Body

The LBMA is not an exchange—there is no pit, no clearing house, no daily settlement price set by committee. Instead, it is a trade association of bullion dealers, refiners, and financial institutions that maintains the technical specifications and accreditation standards for bars eligible for the London professional market. A bullion bar “Good Delivery” according to LBMA standards is tacitly acceptable across the global OTC network; a bar that fails those standards is either rejected or deeply discounted.

This seems a small thing, but it is fundamental. Gold is fungible only if quality is standardised. A refinery in Switzerland, a dealer in London, and a central bank in Tokyo must all be able to transact with confidence that a bar purporting to be 11 kg of 99.5%-pure gold really is. The LBMA Good Delivery list publicly accredits refineries and confirms that their bars meet the standard. A buyer can check: if the refinery is on the list, the bar is acceptable. If not, it must be remelted and recast by an accredited refiner, a costly and time-consuming process.

Specifications and Purity

A LBMA Good Delivery gold bar must weigh between 350 and 430 troy ounces—roughly 11 to 13 kilograms. (A troy ounce is slightly heavier than an avoirdupois ounce; precious metals always use troy.) The fineness (purity) must be at least 99.5%. In practice, most accredited refineries produce bars at 99.95% or higher, as the cost difference is negligible and the higher purity commands a premium.

The bar must be cast—that is, shaped and cooled in a mould—with no visible damage, cracks, or swelling. It must carry a serial number, the refinery’s name and mark, the date of production, the weight (often stamped, sometimes only documented), and the assay certificate confirming fineness. The refinery stamps its maker’s mark on the bar; some refineries have iconic marks (the Credit Suisse bar with its shield, the Swiss bank hallmark) that are recognised worldwide.

Silver bars are heavier—750 to 900 troy ounces—and must be 99.9% pure. The larger weight reflects silver’s lower price per ounce; a bar needs to be economical to handle and transport.

Accreditation and Refiner Discipline

The LBMA publishes a list of accredited refiners, regularly updated. To be listed, a refinery must:

• Prove consistent production of bars to the weight and purity standard
• Undergo periodic assay testing by independent labs
• Maintain documented chain-of-custody procedures
• Submit to spot audits
• Pay an accreditation fee to the LBMA

The list includes household names (Metalor, Valcambi, Johnson Matthey) and smaller specialist refineries across North America, Europe, Asia, and Australia. If a refinery’s quality slips—too many bars failing assay, weight deviations, marking errors—it can be suspended or delisted, cutting it off from the professional market. That discipline matters: a refinery’s reputation is its sole asset. Once lost, regaining LBMA approval takes years.

The existence of the accredited list also protects dealers and traders from fraud. Counterfeiting bullion bars is theoretically possible but practically difficult: the maker’s mark must be forged, the assay certificate faked, and the weight and dimensions exactly matched. Most counterfeits are amateurish and quickly detected. But the possibility keeps dealers vigilant. Professional traders verify bars by weight, dimension, and sometimes by ultrasonic density testing or X-ray fluorescence (a non-destructive assay). The LBMA spec sheet gives precise dimensions and weights, enabling quick authentication.

The London OTC Market Structure

LBMA Good Delivery bars are traded bilaterally—two dealers call each other, agree on a price in US dollars per troy ounce, and the bars change hands via London Bullion Market Association (LBMA) clearing. There is no futures contract, no central exchange, no standardised settlement date. Instead, bars are typically settled “spot” (delivery within two business days) or forward (settlement weeks or months hence).

The market is quoted continuously by major dealers. A trader wanting to buy or sell makes calls to two or three of the big banks—JPMC, Citi, Scotia—and gets bid-offer spreads. The bid-ask spread in the professional market is typically narrow, a few cents per ounce, reflecting the market’s depth and the absence of hedging costs (unlike a futures contract).

Central banks, sovereign wealth funds, and institutional investors transact primarily in the OTC market. They accumulate bars for reserves, sell for liquidity, or lend them out for gold lease rate income. The bars are often stored in London vaults (notably the Bank of England’s) or in approved facilities elsewhere, and ownership is transferred via ledger entries and warrant-like documentation, not by physical shipping.

Cross-Border Acceptance and the Role of Fineness

Because LBMA Good Delivery bars are uniform in specification and backed by accredited refiners, they move across borders without friction. A bar refinanced in Switzerland, stored in London, and sold to an Indian bank faces no quality disputes or delays. Customs and tax authorities recognise LBMA-certified bars as standardised commodities.

This is not trivial. Other countries’ refineries produce bars that may be of excellent quality but do not meet LBMA specifications—perhaps they are slightly lighter, or the purity is lower, or the refinery is not on the LBMA list. Those bars must be remelted by an accredited refinery to enter the professional market, a process costing hundreds or thousands of dollars and taking weeks. The remelting loss (also called “refining loss”) is borne by the holder.

Fineness also matters in tax and regulatory contexts. Some jurisdictions exempt 99.5%-pure gold from value-added tax (VAT) or capital-gains taxation, treating it as a monetary asset rather than a commodity. Lower-purity bars may face different tax treatment. LBMA Good Delivery gold is treated consistently in most jurisdictions, another reason for the standard’s ubiquity.

Warrant-Like Trading and Custody

In the London bullion market, when a dealer holds large volumes of Good Delivery bars, they are often “registered” with a custodian or vault operator. The dealer receives a custody receipt (sometimes called a “warrant,” though technically distinct from LME warrants) certifying the metal on account. These receipts can be traded bilaterally, allowing buyers and sellers to exchange ownership without physical movement. A pension fund might buy a custody receipt for 50 bars, store them in a London vault, and sell the receipt to another fund weeks later without ever seeing the metal.

This custody system, underpinned by LBMA standardisation, enables efficient leverage and financing. A bank lending gold to a bullion dealer takes a LBMA bar as collateral. If the dealer defaults, the bank’s claim on those bars is frictionless because the LBMA spec guarantees quality.

Good Delivery vs. Futures and the Retail Premium

The London OTC bullion market operates in parallel with exchange-traded futures contracts (notably COMEX gold futures in New York). COMEX contracts are priced in cents per troy ounce and settled via cash or delivery of approved bars (which must meet specifications similar to, but not identical to, LBMA Good Delivery). Most professional trading happens OTC in LBMA bars; retail and smaller institutional participants gravitate to futures for the liquidity and transparency.

Retail bullion buyers—investors buying one or two kilos—typically pay a far higher premium above the LBMA spot price because they buy smaller, more refined bars (coins or small ingots) from dealers who charge handling and markup. A LBMA Good Delivery bar is sold between institutions; smaller bars are sold to individuals, and the unit cost is much higher.

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