Weigh up this sustainable gold ETC from the Royal Mint

Hands holding a gold bar wrapped in the FT — Gold: frustrating, but worth having

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The price of gold has been on a tear this year; it had gained a fifth by the start of September. But its recent stellar performance notwithstanding, for many investors, gold is a vital piece of insurance in their portfolio. As the old saying goes: “Gold is money, everything else is credit.”

Gold is the only monetary system that has been with humanity for most of its history on earth. Therefore history and stability are the key reasons you buy and hold physical gold. Historically, if investors wanted exposure to gold, they would have had to purchase physical bullion themselves. This can be complicated and makes buying and selling to maintain a target weighting in a portfolio tricky.

Many investors now use physically-backed exchange-traded commodities (ETCs). Investors can buy shares in an ETC, just as they would in an exchange-traded fund (ETF), to gain direct exposure to the price of gold. The Royal Mint was established in 886, over 1,100 years ago, and has been intimately involved in gold markets since. Alongside its coin and bar offering, the Mint has produced an ETC to leverage gold’s history and stability: the Royal Mint Responsibly Sourced Physical Gold ETC (LSE: RMAU). Below I will outline three of the key features of RMAU.

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Using a gold ETC managed by The Royal Mint means tapping into that long and storied history, while the gold you have gained exposure to is stored in The Royal Mint’s vault in Llantrisant, Wales, one of the world’s most secure. This is in contrast to the vaults of a financial institution, as is the case for other gold ETCs. As a result, the gold is outside the financial system and away from big cities.

Gold goes green

Another key point about the RMAU ETC is sustainability. In 2022, the RMAU ETC was the world’s first to ensure it was partly backed by certified 100%-recycled gold bars. At present, around 60% of the gold backing the ETC is 100% certified recycled. Gold mining is energy-intensive. But recycled gold can be more than 90% less carbon-intensive than mined gold. We’ve seen electronics firms such as Sony and jewellery brands including Pandora commit to using recycled gold. Why should investments be any different? At the same time, all of the bars are 100% backed by the LBMA (formerly named the London Bullion Market Association), the independent precious metals authority, and responsibly sourced. This sustainability focus is part of a wider sustainability commitment across The Royal Mint.

Finally, physical gold ETCs are physically backed. But RMAU actually allows the investor to get their hands on the gold they are investing in. An investor in the RMAU ETC can exchange their shares in the ETC for gold itself. If an investor wants to do this, they can select from the various gold cuts available from The Royal Mint, from Sovereign and Britannia gold coins to multiple-size bars, depending on the value of their investment. Gold is supposed to be a safe-haven asset, so knowing you can physically call in the actual gold, should you so desire, offers great peace of mind.

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Hector McNeil is a veteran of the ETF industry, establishing Susquehanna’s ETF desk in Europe, before co-founding ETF Securities in 2005. In 2011, Hector founded Boost ETP with Nik Bienkowski which, in 2014, became WisdomTree Europe with Hector as Co-CEO.

Following the buyout of Boost ETP by WisdomTree Europe in 2016, Hector stepped down as Co-CEO to establish HANetf, with business partner Nik Bienkowski. Since the first ETF launch in 2018, HANetf has accumulated over $4.2 billion in assets under management.