The Royal Mint Responsibly Sourced Physical Gold ETC now has more than half of its physical gold backing from 100% recycled sources.
HanEtf head of research, Tom Bailey, recently shared insights into the innovative approach to incorporating recycled gold for the exchange-traded commodity (ETC), which the company started doing in 2022.
"It's the first gold ETC to do so," Bailey told Proactive. "The news is we've now surpassed 50% of the gold backing ETC being recycled. It's quite a nice landmark milestone for this product in terms of the percentage of the gold in there that is certified coming from 100% recycled sources."
The introduction of recycled gold, which is partly sourced from electronic waste and surplus gold waste from bullion coins, aligns with a growing demand among investors for sustainable and environmentally responsible investment options.
HanEtf's initiative addresses concerns related to the energy-intensive nature of gold mining, which has historically been a deterrent for ESG-conscious investors.
As recycled gold is around 90% less CO2 intensive than mined gold, he says, this significantly reduces the carbon footprint associated with gold backing and means the ETC offers a unique option for those looking to diversify their portfolios without compromising on sustainability principles.
"Since the introduction of recycled gold, we saw very strong AUM growth. Investors found that this element of the recycled back aspect was a key driver in those investors deciding to allocate to our gold ETC rather than the other options," Bailey said.
Gold's role as a non-correlated asset, meaning it does not move in lock-step with equities, and a safe haven during times of economic uncertainty and geopolitical risk further enhances its value in a diversified portfolio.
Bailey also highlighted the historical performance of gold in inflationary periods and its appeal as a hedge against market volatility.
The recent surge in gold prices, reaching and maintaining levels above $2,000 per ounce, underscores its relevance and potential for investors
Gold reached those all-time highs towards the end of last year and prices have held up relatively well since, Bailey noted.
"I think a lot of that reflects that geopolitical risk in the price. And obviously, with the likelihood of rate cuts coming down the line, gold's appeal increases when the potential return from bonds declines. So there's kind of two factors."
"And the outlook for gold depends on where the Fed goes next and therefore where the US economy goes.
"But it does seem to be the case that we will see some rate cuts this year, which have the potential be positive for gold," he said.