GD APPLICATIONS AND PAM A BRIEF HIS TORY

2 0 t h Ma rch, 2 0 1 7

S t e wa rt Murra y, LBMA Go o d De live ry Co ns ult a nt

LBMA As s a ying a nd Re fining Co nfe re nce

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S COPE – Ma rk II

Current websit e vers ion is even more boring!

Good Delivery Evolut ion

• LBMA and it s predecessors • Bank of England • London Gold Market • London Silver Market

Requirement s for GD bars and ref iners

• Assay Test ing

• Bar dimensions, shape, weight

• Markings, appearance and physical qualit y

Proact ive Monit oring

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BEFORE THE LBMA Bank of England • First Gold “List ” : 1754

Last BoE Gold List : 193 3 Included melt ers and assayers

London Gold Market (aka Rot hschilds)

• First Gold Fixing: 1919

• First Gold List 193 4

London Silver Market (aka Mocat t a)

• First s ilver f ixing: 18 97

• A few of it s GD List s survive (but almost no applicat ion document at ion)

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Ba nk o f Eng la nd a nd t he Go ld GD Lis t Why is t he Ba nk Impo rt a nt ?

• The Ba nk wa s t he Bullio n Ma rke t ’s re g ula t o r unt il 2 0 0 0

• The Ba nk ho lds la rge a mo unt s o f go ld fo r ma ny ce nt ra l ba nks (ma ny o f which a re c lie nt s o f LBMA me mbe rs )

• The Ba nk ho lds go ld fo r a numbe r o f LBMA me mbe rs

• The Ba nk o nly provide s a llo ca t e d go ld s t o ra ge

• All go ld ba rs in it s va ult s mus t be Lo ndo n Go o d De live ry

• It ha s a n a c t ive a nd o ngo ing int e re s t in t he qua lit y o f t he me t a l t ra de d t hro ug h t he Lo ndo n ma rke t

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Ba nk o f Eng la nd – Pre -Tra ns pa re ncy

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LBMA We bs it e – c irca 1 9 9 9

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Ba nk o f Eng la nd – Po s t -Tra ns pa re ncy

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Go o g le S e a rch “Ba nk o f Eng la nd” & Va ult & Go ld – Ma rch 2 0 1 7

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Ba nk o f Eng la nd – The Age o f Gla s no s t

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How did t ra ns pa re ncy a rrive ? • 2 0 0 6 - Go ld Ho lding s Re ve a le d

(if yo u kne w whe re t o lo o k)

• 2 0 1 2 - Pro fe s s o r Po lia ko ff (a nd his ca me ra -ma n!)

• 2 0 1 7 – Mo nt hly Ho lding s re po rt s We bs it e , Vide o , App, Flickr pa ge

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Ba nk o f Eng la nd a nd t he Go ld GD Lis t A Time line o f t he Ba nk’s Ro le

1 9 3 4 : The firs t Lo ndo n Go ld Ma rke t Lis t

1 9 5 3 - LGM a s ks Ba nk fo r it s a pprova l o f t he Ma rke t ’s a cc re dit a t io n re co mme nda t io n (a ft e r t e chnica l t e s t ing a nd usually af t er receiving conf irmat ion f rom t he ref iner’s cent ral bank t hat it s bars were accept able)

The request t o t he Bank asked if “ it would accept t he bars wit hout melt ing and assaying”

1978 : Request for comment s f rom Bank prior t o accept ing applicat ions (hopefully based on advice f rom t he ref iner’s cent ral bank). Arrival of Japanese ref iners wit h support f rom JMIA

198 6: Request for Bank’s comment s s imult aneously wit h t echnical assessment

1995 : Nod of approval f rom Bank before accept ing some applicat ions

1996: Ref iner accredit ed wit hout BoE approval (based on cent ral bank support )

2000 : Accredit at ion wit hout explicit BoE or cent ral bank support let t er

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THE LBMA ARRIVES 198 7: LBMA Est ablishment • LGM and LSM passed responsibilit y for t heir GD List s t o t he LBMA

• LGM & LSM cont inued under new names t o operat e t he gold and s ilver f ixes unt il t hese were replaced by t he LBMA spot prices in 2014 and 2015

The First LBMA GD List • First LBMA GD List was published in 198 8 as an insert in it s f irst brochure

• Updat ed versions included wit h revised brochure in 198 9 and 1991

1993 : The LBMA Handbook In addit ion t o t he GD List , t his cont ained Rules for GD applicant s and sect ions on: • Trading gold and s ilver • The LBMA’s Art icles of Associat ion • Membership lis t • Commit t ee st ruct ure and members • VAT • Compliance

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Bullio n Ma rke t Co mplia nce in 1 9 9 3 The Good Old Days

To upda t e fo o t e r info rma t io n, p le a s e g o t o Ins e rt > He a de r & Fo o t e r 1 0

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2 0 0 4 – GOOD DELIVERY PERES TROIKA Expa nde d Re fe re e s Pa ne l a ppo int e d in De ce mbe r 2 0 0 3 (fo llowing a 2 -ye a r a cc re dit a t io n pro ce s s invo lving t he ma nufa c t ure a nd c ro s s che cking o f a la rge numbe r o f re fe re nce s a mple s )

Do uble blind t e s t ing o f a pplica nt s ’ s a mple ba rs Applica nt s s e nd t he ir unma rke d ba rs t o a Lo ndo n va ult which s e nd t he m o n be ha lf o f t he LBMA t o t wo re fe re e s fo r t e s t ing .

As s a y t e s t ing pe rfo rme d a no nymo us ly Re fe re e s ha ve no info rma t io n o n which re fine rs a re be ing t e s t e d wit h t he re fe re nce s a mple s which t he y provide .

Pro a c t ive Mo nit o ring wa s int ro duce d, invo lving As s a y t e s t ing o f dip s a mple s fro m curre nt pro duc t io n (a ls o invo lving blind a s s a y t e s t ing by t he re fe re e s ) a nd Provis io n o f up-t o -da t e pro duc t io n a nd t a ng ible ne t wo rt h info rma t io n.

Exe cut ive Re s po ns ibilit y The LBMA Exe cut ive t o o k ove r fro m t he va ult s re s po ns ibilit y fo r pro ce s s ing a pplica t io ns (a nd s hipping s a mple s ) a nd fro m t he Re fe re e s , re s po ns ibilit y fo r a s s e s s ing t he re s ult s o f a pplica nt s ’ a s s a y t e s t s .

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TIMELINE: As s a y Fine ne s s & Te s t ing Gold: Prior t o 1954 ~900 , ~916 (coin bars) and 995+

Af t er 1954 : only 995+ Silver: Has always been 999+

1977: First use of Referee gold samples t o t est applicant s

(previously, referees t est ed applicant s ’ samples)

1990 : Object ive pass/ fail crit eria agreed wit h t he LBMA’s t wo referees (f irst published in GD Rules in 2000 )

20 0 0 : Change of order of t est ing (assay t est before sample bars)

20 0 4 : Change t o 5 -f igure comparisons Rounding-up of 5 -f igure gold assays t o 999 .9 disallowed

20 13 : Weight of gold reference samples reduced f rom 10g t o 5 g

20 11: Adopt ion of object ive crit eria for unaccept able bias in assay result s

20 14 : Rounding-up of 5 -f igure gold assays t o 995 disallowed

20 14 : Possible use of spect rographic analysis for gold

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TIMELINE: Ba r Dime ns io ns a nd We ig ht s We ig ht s o f ba rs ha ve a lwa ys be e n e xpre s s e d in fine t roy o unce s o f go ld a nd g ro s s t roy o unce s fo r s ilve r

20 0 0 : Bars should be “ ingot -shaped” Recommendat ions on dimensional range for s ilver bars

20 0 4 : Recommendat ions on approximat e dimensions for gold bars

20 0 8 : Recommended ranges for dimensions and undercut s

20 10 : Compliance wit h dimensional ranges and markings mandat ory on any change

20 13 : Use of elect ronic balances for gold described in Rules

20 13 : Removal of descript ion in Rules of weighing s ilver using beam balances Rules describe for convert ing met ric t o London t roy ounce weight s

20 13 : New met hod for calculat ing undercut (re safe st acking and handling)

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TIMELINE: Ba r Pro duc t io n & Ma rking s 193 4 : Only mark needed was t he st amp of accept able melt er 1954 : Serial numbers and melt er st amp (plus assay st amp or cert if icat e) 198 2: Recommendat ion for a separat e year mark 20 0 0 : Font height >= 12.5 mm (lat er 12 mm) 20 0 6: Accept abilit y of t hird part y assayers and cert if icat ed bars t erminat ed 20 0 8 : Gat ed moulds for s ilver disallowed 20 0 8 : Mandat ory 4 -digit year mark (eit her separat e or part of bar number) Marking on bot t om surface disallowed End-marking for s ilver bars allowed Dot -mat rix punching of marks allowed 20 12: Cont inuous cast ing allowed for s ilver 20 13 : Consist ent font s must be used for assay marks 20 13 : Induct ion t unnels allowed for gold and, in 2014 , also for s ilver 20 15 : Upside-down cast ing disallowed

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TIMELINE: Ba r Qua lit y

1976 : First brief ment ion of requirement s for physical bar qualit y (concerning faces, edges, shrinkage and safe handling & st acking)

1993 : Furt her clarif icat ions were provided about defect s t o be avoided (including t he ment ion of “bubbles” on t he bot t om surface)

20 0 8 : First edit ion of t he Visual Guide t o Good Delivery Bar Defect s (focusing most ly on US Assay Of f ice bars)

20 15 : Launch of t he online LBMA Visual Guide

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EVOLUTION OF NON-TECHNICAL RULES Crit eria for accept abilit y of applicant s In 198 2, general requirement s for operat ing hist ory, t angible net wort h and product ion levels were int roduced for gold by t he London Gold Market . These crit eria were adopt ed and in some cases modif ied by t he LBMA.

• The init ial requirement was for 10 t of annual ref ined product ion of large gold bars. In 2000 , t his was relaxed t o 10 t of t ot al ref ined product ion.

• For s ilver, t he LBMA adopt ed a f igure of 3 0 t of t ot al ref ining product ion in 2000 and amended t his t o 50 t in 2012.

• Owning company t angible net wort h of £ 5 million (increased t o £ 10 million in 1993 and £ 15 million in 2012).

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TIMELINE: Applica nt Due Dilige nce

20 0 0 : “a brief hist ory of t he business and operat ions of t he Applicant , including it s current ownership st ruct ure”

20 0 4 : List of direct ors, main shareholders Evidence of company format ion, ownership, reput at ion and f inancial st anding General descript ion of suppliers and cust omers

20 0 4 : Relaxat ion of t he requirement for a let t er of support f rom it s cent ral bank

20 12: For gold ref iners, audit ed compliance wit h LBMA Responsible Gold Guidance

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TIMELINE: Ot he r Te chnica l Info rma t io n

20 0 4 : Addit ional informat ion f rom GD applicant s: Det ailed descript ion of ref ining t echnology and laborat ory met hods Video showing det ails of ref ining, cast ing and laborat ory equipment High-qualit y t echnical bar drawings and phot os wit h applicat ion

20 14 : Weight lis t s must be machine readable 20 16 : Act ual phot os of applicant sample bars must be submit t ed in advance

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PROACTIVE MONITORING In 1 9 9 7 , mo nit o ring by me a ns o f que s t io nna ire s , re s ult ing in s o me t ra ns fe rs t o t he Fo rme r Lis t .

Pro a c t ive Mo nit o ring wa s int ro duce d in 2 0 0 4 a nd ha s re ma ine d e s s e nt ia lly uncha nge d s ince . S e e Anne x I o f t he GD Rule s .

As s a y t e s t ing o nce e ve ry t hre e ye a rs .

Fo llowing a s ucce s s ful t e s t , t he re fine r is provide d wit h fe e dba ck o n t he s ubmit t e d a s s a ys o r, if a ppro pria t e , e le me nt a l a na lys e s .

Re fine rs mus t provide pro duc t io n a nd TNW info rma t io n a nnua lly.

Fro m April 2 0 1 7 , re fine rs mus t de mo ns t ra t e a n a bilit y t o ca s t GD ba rs .

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