Bullion Banks
Are buyers of gold (and silver),
clearers and distributors of metal in the market. They are traders and market
makers, always ready to make and deal on the price. That commitment to deal
is on a continuous basis, whatever the spread.
Over the last twenty-five years they have also acted increasingly as intermediaries in the mobilisation of central bank reserves, either for leasing, swaps or sales.
They create consignment stocks in regional markets so that gold is easily accessible to consumers in jewellery or industry. They also provide finance for those consumers.
The facilities provided by international bullion banks have been crucial in the development of markets in Hong Kong, Singapore and Japan in the 1970s and, more recently, in India where several have established sales offices since liberalisation of the local market.
The bullion bank’s role in project finance for the gold mining industry has expanded since the mid-1980s with the doubling of gold output. Initially in Australia but later world-wide they came to work hand-in-hand with mining companies in every aspect of bringing a new mine on stream and marketing the gold once it was produced. They organisedgold loans as initial finance and sold the eventual gold, putting together increasingly complex hedging programs for many mines combining spot, forward and options strategies.
One bullion banker has called himself ‘the miner’s friend’, a description not all mines would concur with. Nowadays the bullion banker is also known as a ’resource banker’. Overall, they are the core turntable of the gold industry.