The London Metal Exchange is exiting the precious metals business. The exchange today indicated that it will be ending its LMEprecious market due to low trading volumes in both gold and silver contracts.
The move comes just five years after the firm attempted to break into the precious metals space, taking on industry giant the London Bullion Market Association, which is backed by both HSBC and JPMorgan Chase. The exchange first offered contracts in precious metals in 2017, backed by Morgan Stanley and Goldman Sachs, whom at the time indicated it wanted to provide more transparency over the pricing of contracts than its peers.
As per Bloomberg, the exchange for a time was somewhat liquid, trading up to 3 million ounces a week at its height, before one major partner, Societe Generale SA, exited commodity trading two years after the contracts first launched. The LBMA, in comparison, trades up to 10 million ounces a day – a far larger figure than that of the LME.
What impact the closure is expected to have on the gold and silver markets is presently unknown, however gold and silver bugs on Twitter expect minimal impact, if any.
Trading of precious metals futures is expected to officially halt “on or about July 11,” on the exchange.
Information for this briefing was found via Bloomberg and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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