Just How Much Gold Is in London Vaults? Now We Know

by Peter Schiff, SchiffGold:

You can call London the City of Gold.

According to figures released by the London Bullion Market Association (LBMA), as of March 31, vaults in London held 7,449 tons of gold. That’s the equivalent of about 596,000 gold bars. The value of the yellow metal stored in London vaults is close to $300 billion.

London is also home to 32,078 tons of silver valued at $19 billion. That’s roughly the equivalent of 1,069,255 silver bars.

The amount of gold in the city underscores its position as the world’s biggest gold trading center.

The physical holdings of precious metals held in the London vaults underpin the gross daily trading and net clearing in London. The net clearing is undertaken by the members of the London Precious Metals Clearing Limited (LPMCL). London is the largest gold trading center in the world as demonstrated by the $18.1 billion of gold which was cleared on average each day in March, 2017.”

The Bank of England stores around 5,100 tons of gold in its vaults, about 68% of London’s physical store of the yellow metal. The bank holds UK’s gold reserves, as well as metal for other central banks. Private custodians store the rest of the gold for use by investors, and traded through LBMA member banks and clearing houses. These include Brinks, G4S Cash Solutions (UK), Malca-Amit and Loomis International Ltd, along with three are clearing banks – HSBC, ICBC Standard Bank, and JP Morgan.

This marks the first time officials have made information relating to the amount of physical gold in London available to the public. The LBMA released the data as part of a broader drive to increase transparency and confidence in the London gold market. Most gold trading in London happens over the counter – directly between buyers and sellers. As a result, the actual size of the market remains murky.

According to the Fair & Effective Markets Review, ‘in markets where OTC trading remains the preferred model, authorities and market participants should continue to explore the scope for improving transparency, in ways that also enhance effectiveness.’ Publication of physical holdings represents the first step in reporting for the London Precious Metals Market. The next step is Trade Reporting. The collection of trade data will add transparency to the market and provide gross turnover for the Loco London market. Previously gross turnover had been calculated from one-off surveys or estimated from the clearing statistics.”

The LMBA says it will update the amount of gold in London vaults on a monthly basis moving forward.

Last May, the LBMA  launched a code of conduct to boost confidence in the $5 trillion London gold market. The code sets out standards and best practices expected from participants in the global over the counter (OTC) wholesale market for precious metals.

The LBMA also plans to begin publishing trade reporting data, providing a gross turnover figure for physical gold in London. UBS analyst Joni Teves told Bloomberg the move will further increase market transparency.

This addition to the available pool of information helps various market participants, as well as regulators, have a better assessment of market activity in precious metals. As the LBMA data series extends up ahead, we should get an even better picture.”

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