Loco London means gold or silver located in London, and it is the basis on which most of the world’s over-the-counter bullion trading is priced and settled. A credit balance on a loco London unallocated account represents a holding of metal, much like a currency balance held in a foreign bank account. Nearly all global OTC gold and silver trades clear through this London system.
How Does Loco London Settlement Work?
Settlement happens by transferring metal between unallocated accounts held with London bullion dealers, rather than by physically moving bars. The London bullion clearing system nets these paper transfers daily across participants.
This makes loco London the analog of a currency nostro account: holding a loco London balance is holding metal, and trades settle by adjusting those balances. Spot bullion typically settles two business days after the trade, like FX.
Why Is Loco London the Standard?
London has long been the center of the OTC precious-metals market, so quoting and settling “loco London” gives participants a common, trusted basis for international trading. It allows trading without the cost and risk of shipping physical metal around the world.
Platinum and palladium are usually settled loco London or loco Zurich, with Zurich the principal center for those two metals.
Loco London vs. Allocated Metal?
A loco London balance on an unallocated account is a claim on the dealer’s general stock, so the holder is an unsecured creditor and no specific bars are set aside. An allocated account, by contrast, holds specific, identified bars segregated in the holder’s name. Metal can be allocated out of an unallocated balance on request.
Related Terms: Contango, Gold/Silver Ratio, Bullion, Unallocated Account, Good Delivery Bar. See the full glossary for more.
This is educational content, not financial or trading advice.