(Kitco News) - After a difficult 2023, impending interest rate cuts will make gold more attractive, and one UK-listed fund is also helping investors improve their portfolio’s Environmental Social Governance (ESG) standing.
Last week, the Royal Mint’s Responsibly Sourced Physical Gold ETC (LSE: RMAU), announced that half of its gold holdings are now comprised of 100% recycled gold.
HANetf, the firm behind the physically-backed exchange-traded commodity, is the world’s first ETP to be backed in part by recycled gold bars. The fund achieved its 50% target two years after its launch.
“Thanks to the unique partnership with The Royal Mint, there is close control over the ETC’s supply chain, allowing for the percentage of recycled gold to steadily increase,” the fund said in a statement. “The Royal Mint intends to continue to add recycled gold bars as the ETC continues to grow with the target of remaining at over 50%. RMAU also gives investors the opportunity to access gold that aligns with their values.”
HANetf noted that gold mining is an energy-intensive process, potentially creating significant carbon dioxide, but recycled gold has a carbon footprint that is more than 90% smaller than mined gold.
“Gold can be infinitely recycled with no degradation in quality,” the firm said. “This allows investors to access gold while reducing the emissions footprint of their portfolios.”
In an exclusive comment to Kitco News, Tom Bailey, Head of ETF Research at HANetf, said that despite the challenges in 2023, gold is in a unique position to benefit from rate cuts from the Federal Reserve, even as expectations for aggressive easing has been pared back.
“We believe going into 2024, the investment case for gold remains strong. Its role in a diversified portfolio remains unchanged. At the same time, the opportunity cost of gold decreases if we see rate cuts, making gold relatively more attractive. Added to that, the geopolitical situation appears tense, with gold benefiting from investors seeking a safe haven,” he said.
At the same time, Bailey noted that demand for ‘greener’ gold is expected to grow.
“We believe RMAU offers a way for investors to have physical gold exposure that aligns with any sustainability or ESG requirements they have,” he said. “By providing investors with a way to access physical gold but with a large portion being certified recycled gold, we believe investors need not sacrifice their retirement for the environment.”
RMAU’s milestone comes after Pandora, the world’s largest jewelry brand, said it is now sourcing only recycled silver and gold for all its products.
HANetf also noted that last year Apple (Nasdaq: AAPL), said it plans to use 100% recycled gold in its circuit boards by 2025.
“Outside of financial services, there is increasing awareness of the importance of recycled gold,” the firm said in the announcement.