Three years in the making, LMEprecious contracts are exchange-traded and centrally cleared. They comprise of spot, daily and standardised monthly futures for both gold and silver. Thanks to the use of gold and silver bullion held in London, the LMEprecious contracts can be settled efficiently with OTC market deliveries.
The initiative itself was created by the LME in partnership with the World Gold Council (an industry body made up of gold miners) and a group of six leading industry players – Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis, OSTC and Société Générale. The Bank of China International, Commerzbank, Marex Financial and Macquarie Bank will also participate in trading.
“It brings together the daily structure of the OTC market with the monthly futures approach of existing international exchange offerings, while also providing a solution to pressing challenges such as ongoing regulatory change, increased transparency requirements and the threat of market fragmentation,” said Kate Eged, Head of Precious Metals at the LME told the news source.
Gold market changes
The launch of LMEprecious comes at an interesting time for the gold market as a whole. There is a general move towards providing a greater level of transparency in order to strengthen the market, which LMEprecious reflects.
But LBMA has gone one step further to reveal the volume of gold held in London’s vaults. The international trade association, which represents the London market for gold and silver bullion, revealed that as of the end of March 2017 there were 7,449 tonnes of gold and 32,078 tonnes of silver in the London vaults.
These physical holdings underpin the daily trading and clearing that takes place in the capital city so it should be of interest to gold investors to know that such a sizeable quantity of physical gold actually exists!
UKBullion offer something a little different for gold investors looking for an extra level of reassurance, however. We sell physical gold bullion bars direct to our customers for you to either hold in your own safe or arrange for us to store on your behalf.