World Gold Council members recently agreed to release refinery partner names and locations in an effort to enhance global supply chain transparency in the gold industry. All 33 members, accounting for the greater majority of the global gold-mining industry, have agreed to multiple transparency-related measures. Such measures include stating all operations relating to primary revenue streams, joining the Gold Bar Integrity Programme, and offering “core data” on any gold produced for refinery partners.
The Gold Bar Integrity Programme digitally monitors gold moving through the global supply chain in an attempt to provide greater industry alignment for future market growth. With all members agreeing to join and participate in the GBI Programme, we should see most traded gold entering “at source,” offering a major transformation in the digitalization of the industry’s supply chain.
The World Gold Council sees this step as a transformative movement, providing the gold industry with a “robust and verifiable ledger of responsibly-mined gold, which will create significant opportunities for new product development and increase gold’s attractiveness as a trusted asset.”
Prior to this shift, a lack of tracking and traceability clouded the gold supply chain. Due to the asset’s infinite level of recyclability, understanding where the mineral moves through the supply chain can become overwhelmingly complex.
The new agreement will, hopefully, remove some of the unnecessary filters, offering better trading security and ultimately making the asset more attractive. This isn’t the first step in this direction, though. Last year, the World Gold Council launched a pilot program testing blockchain technology for enhancing transparency.
All members have now agreed to disclose refinery partners and join the GBI Programme, something that has “previously never been done.”
“I am delighted that our members have committed to lead the way in transparency. Pursuing enhanced supply chain transparency is good for the companies who produce, the communities who benefit from employment training and skills, and investors and consumers, who can be assured their gold has been responsibly produced and responsibly traded,” David Tait, the CEO of the World Gold Council, explained in a statement.
The gold mining industry has taken many steps away from the irresponsible mining practices of the past. Today, the industry remains committed to supporting local communities, prioritizing safety, and practicing sustainability–all pillars that traders can be proud to buy into.
“The responsible gold mining industry should be rightly proud of the positive impact it has on the communities and countries where gold is mined,” Tait continued.
The MHI’s 2023 Annual Industry Report on supply chains shows that the World Gold Council’s efforts to improve transparency technology are part of a greater worldwide trend.
According to the study, approximately 74% of supply chain leaders are investing in technology innovations to improve transparency, with around 90% planning to spend $1 million in the near future. These figures show an increase of 24% compared to last year’s study. Approximately 36% plan to spend over $10 million on supply chain advancements, displaying a 19% increase from last year.
Such investments include solutions for improving supply chain resilience, sustainability, and transparency while working on the current labor shortage. Survey respondents plan on implementing solutions within the next three to five years. Most believe that true transparency will require blockchain technology and advanced analytics.
Survey respondents believe that blockchain technology may also improve other aspects of the supply chain beyond transparency, like invoice management, contract performance management, inventory management, and collaborative forecasting and planning.
“Sustainability will become a key competitive advantage in the future. Investments in sustainability and transparency help reduce risk exposure and build loyalty with customers and employees alike,” John Paxton, the CEO of MHI, explained.
When looking at the tech from this perspective, it’s clear why the World Gold Council is taking steps toward adopting such well-rounded transparency solutions.
For many years, gold carried the reputation for being one of the “most destructive industries in the world,” according to environmental, social, and corporate governance group, Earthworks. Earthworks’ argument for this statement is how gold can affect local communities, workers, and the environment.
The World Gold Council is actively reversing this trend by enhancing transparency, sustainability, and safety in the industry. Today, major and minor corporations are protecting local communities, enacting strict safety codes, practicing sustainability, and committing to the Gold Bar Integrity Programme.
This recent agreement is likely just the first step toward improving transparency in the gold industry. The World Gold Council will likely continue refining strategies to improve the supply chain.
As always, gold investors should consult their financial advisors before making any portfolio moves.