Interactive Investor

Investors will now own recycled gold in this popular fund

24th March 2022 10:25

Sam Benstead from interactive investor

Royal Mint is boosting the sustainability credentials of its $500 million Physical Gold ETC. Here’s what you need to know.

Investors can now hold “green” gold in their portfolios for the very first time.

The Royal Mint, the government body that produces coins in the UK, will extract gold from electronic waste such as laptops and smartphones and add it to its vaults.

It will form part of the gold that investors own via its Royal Mint Physical Gold ETC (LSE:RMAU), an exchange-traded commodity listed on the London Stock Exchange. However, it did not specify when gold from recycled electronics would be added to the portfolio.

The first tranche of recycled gold bars, totalling 50,000 ounces, will be from surplus gold from bullion coin production and will be added to the portfolio in the coming weeks. This will account for about 17% of the total gold held by the ETC, according to interactive investor calculations.

The rest of the gold is responsibly sourced and more recycled gold will be added depending on demand for the fund. Custody of gold is at The Royal Mint’s vault in Wales.

Unlike many other commodities, gold can be infinitely recycled with no degradation in quality. This allows investors to participate in the “cyclical economy” without giving up any standards in the precious metal they own.

The Royal Mint partnered with Quintet Private Bank, a wealth manager owned by the Qatari royal family, for this innovation in sustainable investment. The bank invested $170 million (£130 million) into the fund.

Myron Jobson, senior personal finance analyst at interactive investor, said: “The ETC is not an entirely ‘green gold’ proposition as it first appears as the first tranche of the recycled gold bars will come from gold from bullion coins.

“The bars from gold recycled from electronic waste such as laptops and smartphones come later. Also, one wonders how much dirty energy is required in the process of creating the gold bars.”

Over the years, the precious metal has proved its value when it comes to protecting portfolios from sharp falls in equity markets. It is therefore a good diversifier – although it is sensible to keep exposure low, at around the 5%, as the gold price tends to be volatile.

Gold has also historically been a good hedge against inflation. The theory is that as governments and central banks cannot simply print more gold, as they can currencies, gold’s value is preserved.

HANetf, a passive fund group which markets the Royal Mint fund, said it was the first time that investors could own recycled gold via a listed investment vehicle.

Andrew Dickey, director of precious metals at The Royal Mint, commented: “We’re delighted to work with HANetf and Quintet to champion responsible sourcing and circular economy practices.

“We already reuse a portion of our gold onsite to form gold bars, but this is the first time we have produced a dedicated recycled product for use within our ETC offering.”

RMAU ETC shares can be redeemed in exchange for physical gold bars and coins, with delivery and storage provided by The Royal Mint, a unique feature of the fund.

The ETC costs 0.22% in annual fees and has £455 million in assets

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