The Pure Gold Company was recently accredited by the London Bullion Market Association as an associate member, and it’s more than just another logo on our website. So, what is the LBMA and why should it matter to our customers?
What is the LBMA?
The LBMA is the key independent standards agency for gold. It sets and promotes the quality standards for products like gold and silver bullion bars, specifying the purity and appearance of the bars. These standards allow buyers to be assured the gold they purchase is the correct weight and purity, taking the risk out of buying gold.
The LBMA accredits companies and organisations globally from across the gold value chain, including miners, refiners, producers, traders and companies that store and transport precious metals. This is important because the entire process of producing, selling and storing gold must be assured in order for each gold bullion item to be standardised, verified and traceable (for ethical reasons).
The organisation maintains the Good Delivery list which are refiners whose gold and silver bars meet the stringent quality and ethical standards set by the LBMA. In addition, it fixes the gold price twice a day based on market demand and supply, and these ‘London fixes’ are used by everyone in the gold industry.
What does accreditation mean?
To even apply to become an LBMA member or associate member, three current members have to attest to a longstanding existing relationship with your business within the gold market, essentially vouching for your credibility. From this point the LBMA conduct a thorough vetting and due diligence programme before the application is considered by their board. This builds a picture of trust, which when added to the LBMA principles and business conduct rules, indicate that a business is a trusted participant in the gold market.
The LBMA principles cover integrity, skill, diligence and responsible management, and businesses must demonstrate that they have effective governance. These baseline requirements provide potential customers with assurance that the company they’re dealing with is trustworthy and safe to trade with.
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Why is this important?
The internet has made it easy to transact online but it has also made it easy to falsify identities or misrepresent organisations. That’s why doing your due diligence on the companies you transact with is essential.
Credibility is crucial when selling gold, most importantly because gold is a high-value commodity, and buyers need assurance of its purity, weight, and authenticity. Sellers with established credibility can provide this assurance, making transactions smoother and more secure. This assurance also mitigates risk, protecting buyers from counterfeit products, which is a real problem when buying from unauthorised sellers. The market for fake gold sales on social media is an ongoing problem.
Credibility assurance like LBMA accreditation also indicates that the seller is complying with the necessary regulations. Other accreditations like membership of the Royal Numismatic Society and British Numismatic Society demonstrate engagement in the field of coins and currency units. Keeping up with news and research in this area is an important part of the continued credibility of a company.
Many years ago, almost all customers had a relationship with their local store owners, but that personal connection has disappeared with the advent of retail chains and internet shopping. Now accreditations, customer feedback and reviews have replaced the personal recommendation. In the internet age, customers need to satisfy themselves that their transactions are trustworthy, and it’s all the more important for a high value item like gold.