Gold investment principles by World Gold Council

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The World Gold Council recently released a set of principles to help investors in the market. It encourages retail investors to increase their trust in gold. It also drive demand across the gold industry.

Fairness and integrity

The First principle is Fairness and Integrity. It represents the fair marketing and promotes offers clearly to customers. It also ensures safety to avoid potential risks.

A provider must also act with integrity in providing clear information about the products. They must disclose all the legal parameters. 

They also should provide education and training to the clients about the products they offer. Charging fair price or fee is another factor.

Transparency

Clear information about the fees, terms and conditions must be provided. Including operational costs such as gold delivery costs.

It should include change in fee components, base and purchase prices and investor rights. 

Protection of client assets

The third and one of the most important principles is the protection of client assets. It applies to cash held and investment gold, that is not collected or delivered.

Record keeping is one way to secure and protect the assets from fraud or theft. Adequate insurance for safeguarding all the metal holdings is also necessary. 

Gold sourcing responsibility

A provider must source gold of high integrity from trustworthy suppliers, whilst considering Environmental, Social and Governance (ESG) criteria.

Environmental, social and governance criteria (ESG) standards are necessary for ensuring the quality of products. It means conducting the business with respect for the environment. 

Employees, stakeholders and other business partners should be treated well. They must commit to relevant ESG standards. Such as those established by the World Gold Council, LBMA or the Responsible Jewelry Council.

Regulatory compliance

A provider must adhere to all applicable and local laws such as VAT and GST. They must adhere to global and local regulations. 

Also must adhere to all applicable regulations. This includes Anti-Money Laundering (AML), Know Your Customer (KYC), Customer Due Diligence (CDD) and Anti-Terrorism Financing (ATF).

The providers must reject prohibited investors and subject high-risk investors to enhanced CDD.

Commercial Prudence

Adequate financial sources must be maintained to meet liabilities. Resources must have safety buffers for unexpected events.

The provider must be prepared for unexpected wind-down scenarios, such as company collapse. Proper decision making and analysis are necessary in such situations.

Operational professionalism

A sound and proper risk management system within the organization is important.

Ensuring physical protection of assets is another way. Such as alarms and locks. It will prevent robberies, cyber attacks and other physical burglary. Updated cyber security implementation will prevent this to a certain extent.

Outsourced projects must agree on the quality of services and document these in Service Level Agreements (SLAs).

Other guidance: Gold bars

Gold bars typically require a purity of 99.5% or higher. In the UK and EU, bullion bars of that purity and with weights accepted by bullion markets are considered investment gold.

The UK and EU define investment gold coins as those coins with a purity of at least 90% and minted after 1800. They are currently or have been legal tender in their country of origin.

Gold coins

Coin’s grade refers to the coin’s condition or appearance. It is generally determined by strike, preservation, lustre, color and attractiveness.

Gold Jewelry

Gold investment Jewelry should be of high purity, depending on the market. This could mean at least 21 karat and go up to 999.9 gold.

The jewelry should include a hallmark as is mandatory or common in the market. It should also have information on buy-back options.

Check out spot gold prices in your local currency.

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