by Ronan Manly
While many people will be familiar with the term ‘London Gold Market’, most will have little knowledge about its inner workings, especially when it comes to how, and to what extent, the world’s central banks trade and lend gold in London through the Bank of England and the LBMA bullion banks.
And that’s the way they like to keep it. Never in the history of financial markets has there been a trading venue that has been more opaque, more secretive, and more impenetrable than the London Gold Market. Especially when it comes to central bank gold operations.
That the London Gold Market (meaning the wholesale market) is controlled by a cabal of LBMA bullion banks is widely known, but what’s not so well understood is that within the core of this haze sits the Bank of England, overseeing, coordinating and facilitating the central banks of the world to conduct their gold transactions, including the ultra-secretive gold lending and gold swap transactions.