“Gold endures as a standard of value. From the Golden Rule to the Olympic gold, it has commanded far more respect than any other substance in human history” writes Peter Bernstein in his book, The Power of Gold.
While gold no longer plays the currency role it once did, its importance to investors has not diminished. According to UBS report in 2020, the average family offices hold 3% of assets in gold and that 49% of them intend to increase their holdings. For many investors, the precious metal is an important part of a diversified portfolio often acting as portfolio insurance for turbulent markets.
However, while gold is a favoured commodity, many investors want to improve the environmental impact of their portfolios. According to a report from Bloomberg Intelligence, assets broadly defined as having some sort of sustainable remit are on track to exceed $50 trillion by 2025, representing more than a third of the projected $140.5 trillion in total global assets under management. 
This presents a potential contradiction to investors. One the one hand, gold is a core part of a diversified portfolio, according to many. On the other hand, investors want to reduce the environmental and social damage caused by the assets in their portfolio. The process of mining and extracting gold is seen as potentially environmentally and socially adverse. With this in mind, several attempts have been made to make gold greener.
One solution to this is to increase the role of recycled gold in investors’ portfolios. Many investors gain physical exposure to the spot price of gold through exchange-traded commodities (ETCs) that are backed by physical gold bars which are held in custody. If a portion of those gold bars were to be made up of recycled rather than mined gold, the environmental impact of holding gold is potentially reduced.
What is recycled gold?
There is around 205,238 tonnes of gold above-ground. This is roughly equal to the total amount of gold mined throughout human history. However, comparatively little of this gold is repurposed or recycled. Typically, recycled gold only accounts for 25% of global supply each year. 
Recycled gold can be split into two segments: recycled jewellery and recycled industrial gold. Jewellery accounts for roughly 90% of the total supply of recycled gold and industrial gold around 10%. Industrial recycled gold is mostly taken from e-waste electrical and electronic equipment such as computers and mobile phones. As a result, an increasing amount of recycled gold comes from industrial sources. 
Gold used in both jewellery and electronics is typically mixed with other elements. Therefore, recycled gold requires refining in order to separate the gold from the other materials. This is a complex process requiring the use of various chemical processes. However, specialist companies are able to carry out this process without degrading the quality of the gold. This gold can then be repurposed, including to create new high standard gold bars. 
Gold mining and the environment
All of our economic activities have an impact on the environment. However, some do more damage than others. Typically, mining is seen as an activity with a higher environmental impact. When it comes to gold, the mining process entails shifting huge volumes of natural material. This can cause damage to local ecosystems. The amount of rock that must be moved to obtain 1 kilogram is also increasing. This is due to the ratio of gold to rock declining, as accessible gold mines become exhausted. 
The gold mining process is also very energy intensive. The extraction and grinding of ore requires almost 90,000 KJ per gram of gold produced. That is equivalent to about one day of electricity use for the average American home. Therefore, there is a strong case for increasing the amount of gold we recycle. In theory, almost the entire stock of gold ever mined in human history (205,238 tonnes) can be recycled.
However, while the case for recycled gold is strong, it should be noted that gold is a comparatively less environmentally damaging metal to extract compared to other mined metals. As the table below shows, gold requires 0.9 kilograms per US dollar mined. That is roughly the same as copper and lead and 10 times less than aluminium. 
At the same time, the majority of greenhouse gas emissions that are released during the mining process of gold are due to electricity generation and consumption. Therefore, as the world continues to decarbonise its energy supply, gold mining will potentially get less environmentally damaging. According to the World Gold Council, the emission intensity of power used in gold production will reduce by 35% by the end of this decade, thanks to energy supplies becoming less reliant upon fossil fuels.
Drivers of Recycled Gold Growth
There are strong drivers for recycled gold. Computer and mobile phone adoption is growing rapidly around the world and these devices use gold. As a result, there is a growing amount of discarded phones and other e-waste. Some large hardware manufacturers have started to use only recycled gold. For example, Apple now uses 100% recycled gold in the plating of the main logic board and the wire in the front camera and rear cameras. According to Apple, 2.6 million tonnes of mined rock equivalent have been avoided by using recycled content in the iPhone 13. 
Nevertheless, according to the UN’s Global E-waste Monitor 2020, 53.6 million tons of electronic waste was generated globally in 2019, a record number. However, only one sixth of this was recycled and recovered.
E-waste that is not recycled is either dumped or burned rather than collected for treatment and reuse. According to Quintet, this means that around $57billion of gold, silver and other precious metals went unrecovered. Therefore there is a strong economic incentive for companies to build their capacity to recover and recycle this gold. For example, Glencore harvested nearly 100,000 pounds of precious metals from electronic scrap in 2020, according to the company’s 2021 sustainability report. 
However, the move towards more recycled gold is also part of a wider vision for a so-called circular economy. The circular economy refers to the framework of three principles to produce a more sustainable economy: eliminate waste and pollution, keep products and materials in use and regenerate natural systems. Indeed, the UN’s sustainable development goal 12 “responsible consumption and production” specifies reducing waste generation as a core part of transitioning to a circular economy. 
Drivers of Recycled Gold Growth
With all of this mind, The Royal Mint Responsibly Sourced Physical Gold ETC (RMAU) aims to increase its use of recycled gold on a best endeavours basis. RMAU is the only gold ETC to be backed by a sovereign mint. The Royal Mint has an extensive physical coin and bar business.
This development is an important milestone in The Royal Mint’s recycling journey, following an announced in 2021 of a partnership with Canadian clean tech start up Excir to introduce technology to the UK that will recover and recycle gold and other precious metals from electronic waste. 
Due to RMAU being managed in partnership with The Royal Mint, it is able to ensure that it makes use of recycled gold. The involvement of The Royal Mint means the ETC has much more control over its supply chain. Therefore, RMAU can ensure a portion of the gold held in its custody is recycled. RMAU will be the first gold ETC or ETF globally to incorporate recycled gold as a sizeable portion of its holdings.
The recycled and the residual gold bars held by RMAU gold will be 100% responsibly sourced, meaning it has been processed through the London Bullion Metals Association (LBMA) as a “good delivery bar” that meets the LBMA’s responsible sourcing policy. The LBMA’s good delivery system sets the standards in terms of metal quality, ethical trading and responsible sourcing. Only bars that meet these standards are included on the ‘good delivery’ list. RMAU is a 100% backed by post 2019 LBMA good delivery bars which is currently the highest standard under their responsible sourcing standards.