Key Takeaways
- Standard for gold and silver bar quality.
- Ensures purity, weight, and appearance consistency.
- Trusted worldwide for large bullion trades.
- Maintained by LBMA with strict refinery criteria.
What is Good Delivery?
Good Delivery is a globally recognized standard defining the quality and specifications required for gold and silver bars traded in wholesale bullion markets. This system ensures that bars meet strict criteria for purity, weight, and physical appearance, facilitating trust and liquidity in large-scale transactions.
The tender process in bullion markets often relies on Good Delivery bars to guarantee uniformity and ease of settlement between parties.
Key Characteristics
Good Delivery bars adhere to precise standards that promote confidence and efficiency in precious metals trading:
- Purity: Gold bars must have a minimum fineness of 99.5%, ensuring high-quality bullion.
- Weight: Gold bars typically weigh approximately 400 troy ounces; silver bars are about 1,000 troy ounces.
- Physical Appearance: Bars must be well-marked with the refiner’s hallmark, serial number, fineness, and year of manufacture.
- Approved Refineries: Only bars from refineries listed on the LBMA Good Delivery List qualify, guaranteeing consistent standards.
- Non-Good Delivery Bars: Bars not meeting these criteria are classified as NGD and carry specific markings to distinguish them.
How It Works
Good Delivery functions within the London bullion market where metals are traded bilaterally without an exchange. Approved refiners produce bars that meet the standard, which are then stored in authorized vaults for easy transfer and settlement.
This system reduces the need for individual bar testing, as buyers trust the bars’ conformity to Good Delivery rules. It streamlines transactions and supports liquidity, especially important when dealing with large quantities of precious metals.
For investors, understanding idiosyncratic risk is vital when choosing bullion products, and Good Delivery bars help mitigate some of this risk by ensuring reliable quality.
Examples and Use Cases
Good Delivery standards are used widely across financial institutions and commodity markets to facilitate bullion trading:
- Precious Metals Dealers: Dealers source bars from LBMA-approved refiners to provide clients with guaranteed quality.
- Storage and Vaulting: Bars meeting Good Delivery specifications are accepted into secure vaults in London and other major financial centers.
- Investment Portfolios: Investors looking to diversify might consider bullion alongside other assets, including crypto investments.
- Regulatory Reporting: Compliance officers ensure bars meet Good Delivery criteria to satisfy regulatory and audit requirements.
Important Considerations
While Good Delivery standards ensure uniformity, investors should verify the refinery’s standing on the LBMA Good Delivery List and understand that bars may vary slightly in weight due to handling. Non-Good Delivery bars can carry additional risks and may require more scrutiny.
Incorporating bullion that meets Good Delivery standards into your portfolio can help reduce handling and market risks, but always consider your overall asset allocation and consult resources like facility definitions to understand custody arrangements.
Final Words
Good Delivery standards ensure consistent quality and liquidity in large-scale precious metal trading, streamlining transactions across global markets. To make informed decisions, verify that your bullion meets recognized Good Delivery criteria before proceeding with significant purchases or sales.
Frequently Asked Questions
Good Delivery is a standardized system that sets rigorous quality and specification standards for gold and silver bars, ensuring they meet strict criteria for purity, weight, and appearance. It enables trusted global trade of large-scale bullion transactions.
Good Delivery bars are produced by approved refiners and shipped to authorized vaults in London. Once accepted, these bars can be traded freely between institutions without the need for individual testing, allowing for fast and efficient settlement.
Bars must meet specific criteria including approximate weight (around 400 troy ounces for gold and 1,000 troy ounces for silver), minimum purity (at least 99.5% for gold), and physical characteristics such as markings and surface quality.
Weight is often not stamped because bars are officially weighed upon delivery and the weight can change due to handling or sampling. This ensures the recorded weight is accurate for each transaction and avoids discrepancies.
The LBMA Good Delivery List is a registry of approved refiners who meet high standards for producing gold and silver bars that comply with Good Delivery rules. Being listed confirms a refinery’s bars are trusted for use in wholesale bullion markets.
Refiners must produce bars meeting strict purity and quality standards, refine a minimum volume of metals, maintain a tangible net worth of at least 15 million pounds, adhere to responsible sourcing policies, and ship bars to approved London vaults.
Good Delivery ensures consistency and trust in the quality and authenticity of bullion bars traded globally. This standardization facilitates liquidity and efficient settlement in the wholesale precious metals market.
