World Gold Council Launches Retail Market Regulating Principles

Gold has skyrocketed past US$2,000/oz for the first time in history and investors are as eager as ever to procure a share of the safe-haven metal. While products like gold-backed ETFs are regulated, providing investors with certainty and protection, other products like bars, coins and jewelry tend not to be regulated. To address the issue, the World Gold Council (WGC) has announced the launch of its new Retail Gold Investment Principles (RGIPs). The principles are designed to set the bar for product providers across the global retail gold market and further encourage retail investors to place their trust in gold.

The WGC stated that the RGIPs will provide high-level, best practice principles for providers of all kinds of retail gold investment products and, through their adoption, ensure the highest levels of fairness, transparency and integrity are instilled across the market. It is envisaged that the adoption of best practices will lead to greater trust, benefiting customers and product providers alike, creating value and driving demand across the industry, the WGC added.

As part of the drafting process for the principles, the WGC ran an open consultation to seek input from product providers across the industry. Experts from over fifteen countries spanning all sectors of the retail gold investment market provided valuable feedback on both the structure and terminology of the RGIPs, the WGC noted.

Furthermore, to support retail investors and provide them with knowledge and understanding of gold investment, the WGC published an updated set of investor guidance: The Retail Gold Investment Investor Guidance. This has been broadened to educate investors on the range of investment models for retail gold products and includes a summary of the RGIPs and what these should mean from an investor’s perspective. It also alerts investors about the dangers of scams and fraudulent behaviors in the market and how best to identify and guard against them, the WGC pointed out.  

“We have taken time over the past year to engage with a wide range of industry stakeholders representing different global regions and a diverse range of business models to understand how we can best support the retail gold investment industry. Our common objective is simple: make sure that investors, especially those considering gold for the first time, have absolute trust in the products they are offered and the providers with whom they chose to transact. Through this industry engagement it was clear to us that the market would benefit from a globally aligned set of best practices to ensure an effective, efficient and trusted market overall and we believe the principles do just that,” said David Tait, WGC CEO.

The RGIPs are as follows:

1. Fairness and integrity. A provider must treat customers fairly and act with integrity, from information and service provision to transaction completion.
2. Transparency. A provider must be transparent about prices and key terms and disclose other material information related to product features.
3. Protection of client assets. A provider must ensure adequate protection of customers’ gold holdings and other assets including cash held on behalf of customers.
4. Responsible gold sourcing. A provider must source gold of high integrity from trustworthy suppliers, whilst considering Environmental, Social and Governance (ESG) criteria.
5. Regulatory compliance. A provider must adhere to all applicable regulations and local laws.
6. Commercial prudence. A provider must not take excessive risks and should be prepared for various eventualities, including a company wind-down.
7. Operational professionalism. A provider must conduct their business with due skill, care and diligence and manage key risks.