Gold can now answer the needs of the sustainably-conscious investor who wants to invest in the commodity but with a clearer picture of how it is mined, smelted and delivered, says Marie Jacot-Cardoen, global head of distribution at Edmond de Rothschild Asset Management.
In times of crises and market uncertainty, gold has always offered a number of attractive portfolio diversification characteristics, but now with the innovative new strategy we are launching there can be a greater surety in its origins.
From mines to safes…
Despite a turbulent market context, we continued to innovate our offering and combined our expertise with a renowned Norwegian investment management company, to be the first to launch a new type of product named EdR Certified Origin Physical Gold Public Limited Company. The strategy aims at issuing gold securities which enable professional Investors to have access to the physical gold market, while incorporating a full supply chain traceability approach guaranteed by different technologies including blockchain, from mines to safes.
A verified process of traceability
This new product invests in physical gold whose supply chain has undergone a thorough analysis, notably an evaluation of mines, mining companies and smelters. To identify potential candidates for inclusion, gold's supply chain is rigorously assessed using over 60 criteria.
With an objective of full traceability in the supply chain, the investment team evaluates companies according to environmental criteria, but also monitors various aspects such as security & human rights, social & jurisdiction risks and business ethics & transparency, thus ensuring a large coverage of the targeted companies. In parallel, country risk is also determined by reviewing social and environmental norms.
After evaluating roughly 100 mining companies and sites, the strategy launched with just four companies and 12 sites - testament to the team's stringent selection approach to ensure full traceability.
Candidates were evaluated on many fronts, like their use of renewable sources for energy generation and emission reduction targets, or certifications on environmental management (ISO 14001), health & safety and cyanide management (ICMC). Strategies implemented to avoid a repeat of past controversies such as onboarding safety training programmes for employees, were also closely monitored. Local community investment strategies like the development of health programmes or indigenous procurement policies for example, were among elements assessed in the selection process.
The evaluation process of the physical gold's full supply chain is verified by a third-party auditor. The Responsible Investment team at Edmond de Rothschild Asset Management, advising Edmond de Rothschild (Suisse), is composed of four experienced professionals with an average experience of over 26 years and rates each Smelter, Mine and Mining Company.
The vault of the former Swiss National Bank
The high conviction investment strategy provides investors with access to the physical gold market - one of the purest way to invest in gold today. Furthermore, appetite for the yellow metal can intensify in periods similar to the current environment where uncertainties reign. The gold securities are structured as an ETC (Exchange Traded Certificate), with a daily liquidity, available in multiple currency share classes and with redemption options to meet the different needs of professional investors. The physical gold is stored at Edmond de Rothschild's Geneva headquarters in the high security vaults of the former Swiss National Bank.
A rich heritage in gold markets
The launch of this new gold investment strategy with certified origins is a continuation of the Rothschild family's long and rich history in gold dating back to the 1800s, in particular in gold refinery circa 1830s and with the acquisition of London's Royal Mint Refinery in 1952. More recently, in 2008, the Edmond de Rothschild Group created a gold equity fund that built a sound understanding of gold's supply chain. Seven years later, it launched a physical gold fund with the gold ingots stored in Edmond de Rothschild's vaults.
EdR Certified Origin Physical Gold Public Limited Company is another innovative idea adapted to the current context. The strict investment approach is one of the most important strengths of the product. Knowing the origin of the gold through a rigorous traceability process is a priority in order to offer a solution that meets the clients' requirements and in seeking the highest standards amongst our competitors.
By Marie Jacot-Cardoen, global head of distribution at Edmond de Rothschild Asset Management
