Bullion Frequently Asked Questions
When are the rates quoted?
The means are set at 11 am London time. These are the rates we show on the LBMA website, along with the means for LIBOR (London Interbank Offered Rates) for US dollars for the same time periods as GOFO. We subtract GOFO from the corresponding values of LIBOR to show derived gold lease rates.
How are the GOFO means established?
At 10.30 am London time, the Reuters page is cleared of all rates. Contributors then enter their rates for all time periods. A minimum of six contributors must enter rates in order for the means to be calculated. At 11.00 am, the mean is established for each maturity by discarding the highest and lowest quotations in each period and averaging the remaining rates.
What are some uses for GOFO means in the market?
They provide a basis for some finance and loan agreements as well as for the settlement of gold Interest Rate Swaps and Forward Rate Agreements.
What is the guiding principle behind the London Gold and Silver Fixings?
The Fixings are an open process at which market participants can transact business on the basis of a single quoted price. Orders can be changed throughout the proceedings as the price is moved higher and lower until such time as buyers' and sellers' orders are satisfied and the price is said to be 'fixed'. ers exeings are conducted as principal-to-principal transactions between the client and the dealer through whom the order is placed.
How are the fixings used in the market?
The fixings are the internationally published benchmarks for precious metals. They are fully transparent and are therefore used to deal in large amounts, or to achieve the accepted average price of the metal. As a benchmark, many other financial instruments are priced off the fixing, including cash-settled swaps and options. The silver fixing started in 1897 and the gold fixing in 1919.
Who are the members of the London Gold Fixing?
There are five members of the Gold Fixing - all of whom are Market Making members of the LBMA. They are the Bank of Nova Scotia-ScotiaMocatta, Barclays Bank Plc, Deutsche Bank AG, HSBC Bank USA.
Who are the members of the London Silver Fixing?
Three Market Making members of the LBMA conduct the Silver Fixing meeting under the chairmanship of The Bank of Nova Scotia-ScotiaMocatta by telephone at 12.00 noon each working day. The other two members of the Silver Fixing are Deutsche Bank AG and HSBC Bank USA.
What is the procedure for arriving at the Fixing price?
Clients place orders with the dealing rooms of fixing members, who net all orders before communicating their interest to their representative at the fixing. The metal price is then adjusted to reflect whether there are more buyers or sellers at a given price until such time as supply and demand is seen to be balanced. Throughout the proceedings customers may change their orders, at which point the fixing member will raise a small flag to visually convey to the other members that they are changing their order. The price cannot be 'fixed' whilst a flag is raised. The fixing is an open transparent process that allows customers to be kept advised of price movements, together with the changes in the level of interest, while the fixing is in progress such that they may cancel, increase or decrease their interest dependent upon this information.