Britain’s coin producer said its exchange traded commodity (ETC) will be backed, in part, by bars made from 100% recycled gold.

The first tranche of 100% recycled bars will be made from surplus gold from bullion coin production with these added to the ETC over time. The percentage of recycled gold held in its secure vault will also be based upon future demand for the ETC.

All gold bars used for the ETC are post-2019 London Bullion Market Association (LBMA) “good delivery status” which is a quality standard relating to weight, purity and physical appearance. They will continue to be 100% backed by post-2019 LBMA responsibly sourced physical bars. However, some gold will still be mined.

Gold can be infinitely recycled with no degradation in quality so the Royal Mint said, “such a product may represent an attractive investment opportunity for individuals seeking exposure to an innovative, recycled product”.

The move comes after the Royal Mint announced last year that it would be extracting gold from electronic waste such as laptops and smartphones to “continue its sustainability journey”.

As part of its partnership with Quintet Private Bank, $170m will be allocated for the recycling scheme.

According to ETF issuer HANetf which has worked with The Royal Mint since the ETC launched in 2020, this makes the Physical Gold ETC the “world’s first gold ETC or ETF ever backed by recycled gold bars”.

RMAU ETC (as listed on the London Stock Exchange) securities can be redeemed in exchange for physical gold bars and coins, with delivery and storage provided by The Royal Mint at its secure vault in Wales.

‘Not an entirely green gold proposition’

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Recycling is very en vogue as part of a broader drive towards a more sustainable future – so too is gold, which is widely perceived as ‘safe haven’ investment amid the current heightened levels of stock market volatility.

“The new proposition by the Royal Mint combines both elements and neatly bundles them into an exchange traded commodity investment – making it an easily accessible and, with a total expense ratio of 0.22% a year, a relatively cheap way to invest in gold. The ETC could turn the heads of environmentally conscious investors seeking a sustainable play on gold.

“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.”

‘Supporting people and planet’

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

James Purcell, group head of sustainable investment at quintet, said: “We are committed to supporting people and planet by investing in innovation. As a firm that places sustainability at the heart of our business and as the driving force behind our clients’ investments, we are very happy to partner with The Royal Mint, which has a deep commitment to sustainable practises. We are excited about today’s announcement and look forward to building upon this impactful partnership.”

The Royal Mint’s gold-backed exchange traded commodity (or ETC), launched in 2020. ETCs are similar to exchange traded funds (ETFs) but they track a specific commodity rather than shares.