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London Bullion Market Association to Ban Russian Gold

The London Bullion Market Association (LBMA) has currently suspended transactions with all six Russian silver and gold refineries. The ban of Russian refineries on LBMA’s “Good Delivery” list is part of the US, EU, and the UK sanctioned imposed on Russia for its incursion on Ukraine. LBMA will still accept Russian bars produced prior to the ban.

The Following Six Russian Refineries Banned From “Good Delivery” Effective Immediately Are:

  1. Moscow Special Alloys Processing Plant (gold)
  2. Shyolkovsky Factory of Secondary Precious Metals, SOE (gold and silver)
  3. Prioksky Plant of Non-Ferrous Metals (gold and silver)
  4. JSC Novosibirsk Refinery (gold and silver)
  5. JSC Krastsvetmet (gold and silver)
  6. JSC Uralelectromed (gold and silver)

Who will replace the Russian Refineries? 

Currently, the LBMA does not plan to fill in the empty vacancies. LBMA is not expecting a huge impact on the market. 

Will there be a Supply Shortage?  

The global economy is recovering from the pandemic, with an increase in manufacturing that has created huge supply chain bottlenecks. Any market disturbances will lead to a higher premium and lower supply.

Are PGMs Affected by the Ban?

The London Platinum and Palladium Market (LPPM) said it will continue its association with Prioksky Plant of Non-Ferrous Metals and JSC Krastsvetmet. 

Why are Russian Refineries Permitted to Supply Metals to LPPM?

Russia is the leading exporter of palladium, supplying a little over 40% of the precious metal to international markets. Since Russia is a significant exporter, it gives them leverage against western sanctions. A palladium ban would be a tremendous blow to the automotive industry, which uses palladium for catalytic converters. 

Conclusion

The precious metals market is certainly under pressure and is expected to get worse. Analysts believe demand will increase as supplies continue to decline, pushing prices to all-time highs for the near term.

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