What is: Good Delivery
What is Good Delivery?
Good Delivery refers to the standard set by the London Bullion Market Association (LBMA) for the physical delivery of gold and silver bars in the precious metals trading market. These bars must meet specific criteria in terms of weight, purity, and size to be considered Good Delivery.
Criteria for Good Delivery
To be classified as Good Delivery, gold bars must weigh between 350 and 430 troy ounces, while silver bars must weigh between 750 and 1,100 troy ounces. The purity of the metal must also meet certain standards, with gold bars typically being at least 99.5% pure and silver bars at least 99.9% pure.
Importance of Good Delivery
Good Delivery is crucial in the trading of precious metals as it ensures the quality and authenticity of the bars being traded. By adhering to these standards, traders can have confidence in the products they are buying and selling, leading to a more efficient and transparent market.
Good Delivery List
The LBMA maintains a Good Delivery List, which includes refiners and mints that have been accredited as meeting the Good Delivery standards. This list is regularly updated to reflect any changes in the status of accredited entities.
Delivery Process
When a trade is executed in the precious metals market, the seller must deliver the physical metal to the buyer. This process involves the transfer of Good Delivery bars from the seller’s vault to the buyer’s vault, with strict procedures in place to ensure the security and integrity of the transaction.
Role of Custodians
Custodians play a crucial role in the Good Delivery process, as they are responsible for storing and safeguarding the metal on behalf of their clients. They must adhere to strict security protocols to prevent theft or tampering with the bars in their custody.
Global Recognition
Good Delivery bars are recognized and accepted worldwide, making them highly liquid assets that can be easily traded in international markets. This global recognition adds to the appeal of investing in precious metals as a form of wealth preservation.
Market Standards
The Good Delivery standards set by the LBMA are considered the benchmark for the trading of gold and silver bars in the global market. Adhering to these standards helps maintain the integrity and credibility of the precious metals market.
Regulatory Compliance
By following the Good Delivery standards, traders and refiners ensure compliance with regulatory requirements governing the trading of precious metals. This helps prevent fraud, money laundering, and other illicit activities in the market.
Continuous Improvement
The Good Delivery standards are regularly reviewed and updated to reflect changes in the industry and technological advancements. This ongoing process of improvement ensures that the standards remain relevant and effective in the ever-evolving precious metals market.