Increasing demand and new ventures in the gold market

In a period of economic and global uncertainty, gold is seeing an onrush of attention and innovation, reports Harriet O’Brien.

The World Gold Council (WGC) has announced that in the first quarter of 2022 gold rose 8 per cent, its best quarterly performance since Q2 2020. It was among the highest achieving assets, especially compared with weaknesses in both equity and bond markets. At a time of economic volatility, gold has proved a reliable source of diversification and wealth preservation, WGC commented, adding that inflows into gold ETFs totalled USD17 billion in March, the highest quarterly total since Q3 2020. 

While the geopolitical turmoil in Europe remains a driver, WGC continued, the opposing forces of inflation and rising rates will probably be the strongest influences on gold in the second quarter. 

Bullion Vault, the online and smartphone platform for physical precious metals trading, reports the number of people buying securely stored and insured gold rose by 54.3 per cent in March, the fastest monthly increase since the outbreak of the pandemic ‒ two years ago. The number of sellers rose less quickly, growing by 22.8 per cent to reach its highest count since the record of August 2011.

Alongside the performance figures are new initiatives in the gold market. In March, the Royal Mint and Quintet Private Bank launched a partnership to introduce recycled gold in an exchange-traded commodity. Backed in part by bars made from recycled gold, the Royal Mint Physical gold ETC will be listed on the LSE with ticker RMAU.  James Purcell, group head of sustainable investment at Quintet says: “We are committed to supporting people and planet by investing in innovation. As a firm that places sustainability at the heart of our business and as the driving force behind our clients’ investments, we are very happy to partner with the Royal Mint, which has a deep commitment to sustainable practices.”

The new scheme follows on from the Royal Mint’s 2021 disclosure that, as part of its bid for greater sustainability, it would be extracting gold from electronic waste such as disused smartphones and laptops.  
Sustainability is also a driver of another collaboration in the gold market. Also in March, WGC and the London Bullion Market Association began a venture that will create an international system of gold bar integrity. The aim is to help investors trust that their gold is not only genuine but has been sustainably and responsibly sourced. 

In the first phase of this initiative two distributed ledger companies – aXedras and Peer Ledger  –  are demonstrating technology that will record the origin and chain of custody of gold bars. The blockchain-backed ledger will track bars and capture provenance and transaction history. The long-term objective is for all the major participants in the gold industry to use this technology, digitising the supply chain of gold bars. A global ecosystem will ensure that gold bars are registered and tracked, from mine to vault and onwards.

David Tait, chief executive of WGC, commented: “Investors want to know their gold has been responsibly and sustainably produced and tracing the origin of gold bars will help enforce the highest standards across the entire supply chain.”