The Gold bullion database will streamline accessibility, keeping the yellow metal’s promise of rising to an asset class

David Tait, Global CEO, World Gold Council, feels that the time is right for unified efforts in creating a database for gold globally. He speaks to Samit Bhatta, publisher, Retail Jeweller World, about how this will put an end to nefarious practices, and build more faith in gold as an asset.

What are the key trends and developments in the Global Gold Bullion and Jewellery industry? How will 2022 and 2023 pan out?

2022-23 is going to be focused on gold supply integrity, provenance, chain of custody, and building a database globally, on which, for the very first time, the industry can rely. It has never happened before. In the last two weeks, London Bullion Market Association (LBMA) and World Gold Council announced that we were creating the database which will have every gold bar ever in it. The world can refer to every gold bar, its story, ESG credentials, where it comes from.   Consequently, the industry is creating a great foundation to incorporate new, better, and advanced technologies. The next two years are focused on accessibility to gold and gold bullion integrity and ultimately producing a technology that will make gold tangible cross the world.

What are the major issues regarding accessibility to gold and how does WGC’s Gold 24/7 initiative address the same?

To be honest, there are many avenues and access points to gold in the world, but what is becoming increasingly apparent to us is that the high degree of trust issues regarding those access points. We discovered that 48% of gold participants don’t inherently trust the product and 60% people don’t understand the product. There are a multitude of other statistics that are unfavourable which we hope to change. We developed this 24X7 project that focuses, first of all, on accessibility to change those trust dynamics and provide gold with the opportunity to be purchased through various means such as your iphone right away through to any form. It will focus on gold bullion integrity, firstly by creation of a database of gold. This will be the one-stop shop to check credentials. It will also be aligned with a state-of-the-art security feature when taken together and viewed on a distributed ledger technology, and where the gold bar needs to go through an ecosystem, updating constantly. This is how the entire industry can come together and lean on gold. Third thing is fungibility, where we want the markets of the world to be connected to each other with no obstacles, by creating a digitised equivalent of all gold in that ledger and arrive at a standardised product for all markets of the world. We are creating a whole new asset class for the very first time to many. As we do that, many of the capital impediments that many suffer when they trade, will drift away. That is an exciting prospect. People are underestimating the demand that I think that will create.

What are the salient features of the global RGIPs? Please share WGC’s steps taken to enforce these principles.

The Retail Gold Investment Principles were born in India. In India, we are in the process of creating an Self-Regulatory Organization (SRO) which manages to draw together all the stakeholders from this country. We are very proud of it. It’s been very inclusive. We have listened to all. It’s critical as the industry in India comes under one unified banner and elects a body that faces the government in a very mature and adult way. This has moved the industry forward. That process and concept is being adopted globally. For instance, in Germany we have managed to distribute the data and the process and are gathering an SRO in the country. The principles have been adopted by the German Landesbanks. It’s an amazing development. We have moved on, and will release in Singapore and Australia, along with USA. In USA, it has been difficult because there are many fragmented entities who were scattered until we approached them. My intention is to draw the SROs across the board and represent them in the global scenario.

How has mandatory gold hallmarking impacted India in organising the industry and what is your vision on this initiative?

It boils down to trust. One of the things that has hindered this industry to varying degrees is the degree of lack of trust in various quarters. Its true that the Bank of England and the FCA websites say that one should beware of buying gold from the internet because it could be a scam. This is something, that from the WGC perspective, I think needs to change. I applaud the effort of hallmarking or anything that is done to give a prospective buyer greater confidence about gold’s purity. Its an obvious step in the right direction. Anyone saying otherwise is in the wrong business. This is where joining a global body will help in unifying such efforts. It will give gold credibility, not just with the public but with governments and regulators.

How important is provenance of gold, apart from its quality, in trade? How will the gold bar integrity programme benefit Global and Indian gold trade?

Provenance is becoming increasingly important to many members of the public, investment firms and asset managers. They want to know where the gold has come from, whether it has been responsibly sourced, that it is sustainable and has the apt climate credentials and frankly what it is. When I came into the industry, I was baffled by the lack of uniformity in gold bars. We had different sizes, shapes, origins, we had fraud with lead and tungsten dressed up as gold bars. This had to change. To do this, we needed a provenance record for a gold bar that can be input into the bar and the system tracks from the dire to the refiner and into the ecosystem. The gold bar can be tracked in a digital ledger which is constantly updated. The combination of the database and the gold bar security features mean that eventually, not far away, we can have an impenetrable ecosystem, to grow and squeeze out nefarious practices in the industry. There are spots in the world where there is criminal exploitation and we can stop this by denying them access to the market. Public trust will thereby grow.

In the last two years, we have seen gold being the largest consumer preferred product which no one expected. The biggest reason that retailers cited was the WGC campaign on “You are Gold”, which led millennials to believe in gold, not only as an investment but a desired product. Will you continue such campaigns with the GJEPC? Even the Middle East is clamouring for such initiatives. Will they happen?

The short answer is yes. There are a combination of things that have boosted gold. Firstly, the “You are gold” campaign, which was a fantastic initiative, very sleek and timed correctly. It moved the audience, more of which will come. Secondly, I think there was a natural bounce back, enthusiasm to get back to reality. There was accumulated income due to lockdown. In UK we saw the Covid release lead to exuberant buying. We plan to continue with “You are Gold” campaign, particularly tied to and woven with RGIPs. Those two will factor as one element. For the Middle East, we have had discussions with the Dubai and UAE authorities about the bullion integrity problems and provenance. From the conversations I have had, the region seems very keen on supporting provenance and integrity in the gold industry. The Middle East is a hugely important part of the gold ecosystem hence it is crucial that we work to a common goal.

Courtesy: Retail Jeweller World Exclusive