Recycled gold and traceability

Knowing the story behind the bar

Gold has long endured as a store of value, and as such, has continued to be an essential part of many investors’ portfolios. Of late, the world has largely been pushing to decarbonise, and investors have begun to follow suit when it comes to the sustainability of their portfolios, raising questions around the carbon intensity of gold.

The majority of gold comes from mining, accounting for around 75% of global production annually. While gold mining is already on the lower end of carbon emitters, compared to other major materials, it is still a carbon intensive process. It requires great amounts of energy, and shifting large volumes of earth – it takes 1,250,000kg of natural material to produce 1kg of pure gold.

Source: Mining.com. For illustrative purposes only.

A possible solution to this is focusing on the best-in-class ESG gold miners, that are sourcing their gold responsibly, and sustainably. This can reduce the relatively low carbon intensity of gold mining even further, limiting the emissions footprint of an investors’ portfolio.

 Recycled gold, some have argued, is the ideal way to access sustainable gold – especially given the fact it is over 90% less carbon intensive than mined gold.

Mining is not the only source of gold, however. Around a quarter of global supply comes from gold that has already been extracted from the ground. Recycled gold, some have argued, is the ideal way to access sustainable gold – especially given the fact it is over 90% less carbon intensive than mined gold.

Given gold is infinitely recyclable, it seems like a no-brainer. As such, we’ve seen large brands like Apple, Samsung, and Pandora announce the use of recycled gold in their products – with the latter aiming to use recycled gold exclusively by 2025. According to the World Gold Council, the supply of recycled gold increased 9% year over year to 1237t in 2023.

Recycled Gold

Source: Metals Focus; Refinitiv GFMS; World Gold Council. Data as of 31/12/2023. For illustrative purposes only.

But criticism has mounted around the traceability of recycled gold. As companies eagerly look to recycle more and more gold to lower their carbon footprints, the risk grows that gold from irreputable sources may enter the ecosystem.

Picture a lump of gold mined illegally, by an operation with no regard for ESG principles, being recycled into a fresh gold bar with a new stamp, with its questionable origins now unrecognisable. How can you tell if the freshly minted gold bar has a far less glowing past? This has been termed by some as “gold laundering”.

These concerns are not without merit, and investors are right to be wary of traceability when it comes to gold investing. At HANetf, we believe we have a solution to this.

In 2020, we partnered with The Royal Mint – the official maker of British coins since its origins in c.886 AD – to create The Royal Mint Responsibly Sourced Physical Gold ETC (ticker: RMAU). All of the gold within the ETC is custodied by The Royal Mint, at their highly secure vault in Llantrisant, Wales.

Crucially, all of the gold is London Bullion Market Association (LBMA) post-2019 responsibly sourced good delivery bars – the highest available standard – ensuring that the gold is fully traceable, and ethically sourced.

But beyond this, over half of the gold held by the ETC is 100% recycled gold, thanks to The Royal Mint’s partnership with Quintet Private Bank. This gold is not recycled from multiple sources, but purely from scraps in The Royal Mint’s manufacturing process. This creates a closed circuit – a circular ecosystem whereby only pre-approved, responsibly sourced gold is recycled into new bars.

This greatly reduces the carbon intensity of the gold, but also ensures it is traceable, and that its lifecycle is transparent. Investors can rest assured that the gold they are investing in has been thoroughly vetted, and that the recycled bars are minted from gold that has already been approved and certified.

The bottom line is – recycled gold can undoubtedly reduce the carbon intensity of investors’ portfolios, but it is essential to ensure that the circular economy is truly circular, with no potential for tainting.

RISKS

Investors’ capital is at risk and investors may not get back the amount originally invested and should obtain independent advice before making a decision. Any decision to invest should be based on the information contained in the relevant prospectus. ETC securities are structured as debt securities and not as shares (equity).

More Articles

Trump stance will force NATO countries to spend more whether elected or not

maggio 2024

The great travel industry rebound

maggio 2024

ESG Mining – Turning a brown industry greener

maggio 2024

ESG and defence investing: a balancing act

maggio 2024

Dominant Magnificent 7 could lose ground to broader tech rally

maggio 2024

The fall of Russian defence spending, and the rise of NATO

aprile 2024

The AI Revolution – a commodities play?

aprile 2024

Why investors should consider defence

aprile 2024

Copper’s new supercycle | Fresh highs and the long-term story

aprile 2024

Bitcoin in 2024 – a monumental year so far

marzo 2024

Gold price rallies but miners need to catch up

marzo 2024

Investing in India’s rise – what makes India an ideal emerging market?

febbraio 2024

Global instability – three potential ways to hedge

febbraio 2024

Energy Transition: The Metal Elephant in the Room

gennaio 2024

HANetf’s 2024 Outlook

dicembre 2023

The Road Ahead for Digital Infrastructure

agosto 2023

HANetf Model Portfolios Performance Review – Q2

agosto 2023

Two Ways to Invest in Low-carbon Gold

marzo 2023

US ETFs are not the only ETF wrapper with a tax advantage; Irish domiciled ETFs have one too!

marzo 2023

Article | There is no Walt Disney Company in crypto yet…

gennaio 2023

Gold Shining in 2023?

gennaio 2023

HANetf 2022 wrap up and outlook for 2023: Where did the inflows go?

gennaio 2023

Key Dates for Digital Assets in 2022

gennaio 2023

Article | The Merge and Ethereum – what you need to know

settembre 2022

Article | The innovative US funds that HANetf has brought to Europe

luglio 2022

Article | Why small ETFs are not necessarily less liquid

febbraio 2022

Article | HANetf Outlook 2022: Covid; gold; crypto and more

gennaio 2022

The Royal Mint ESG Credentials

maggio 2021

Five Things to Know about Investing in a Gold ETC

agosto 2020

Don’t Look | The Case For Non-Transparent Active ETFs

giugno 2020