What are the Retail Gold Investment Principles (RGIPs)™?
The Retail Gold Investment Principles (RGIPs) provide high-level, best practice guidance for providers of all kinds of retail gold investment products, but are particularly aimed at those not deemed to be regulated financial products (i.e. registered funds). The RGIPs and accompanying guidance will also be adapted to cover regional variations in specific market participants, practices and local laws.
Why has the World Gold Council developed the RGIPs?
There is currently no recognised body, standards setter or globally aligned principles of best practice for this segment of the market. However, there is a broad recognition that the market needs to evolve in order to be effective, efficient and wholly trusted by both existing and prospective investors.
Why are the RGIPs important to the industry?
Global adherence to the RGIPs by the industry is key to fostering greater confidence in retail gold investments, especially amongst first-time retail gold investors. Additionally, this should also lead to a higher demand for products and greater diversity, which will help to grow the market and benefit both investors and the overall industry.
How were the RGIPs developed?
The World Gold Council developed the RGIPs in close collaboration and consultation with industry stakeholders, across different product categories and regions, to ensure that they would be universally applicable. International co-operation is essential for this type of undertaking in order to ensure both the quality and suitability of the RGIPs, but also for later implementation in the market.
How will the RGIPs help investors?
The RGIPs built on earlier work that resulted in the publication of the Internet Investment Gold (IIG) Product Provider Guidance and the accompanying IIG Investor Guidance. The latter has now been broadened into Retail Gold Investment Investor Guidance to further educate investors about all retail gold products, the RGIPs and what these mean from an investor perspective, as well as making them aware of the presence of scams and fraudulent behaviours in the market and how to identify trustworthy providers.
Why is the World Gold Council best positioned to develop the RGIPs?
The World Gold Council has championed the modernisation of the gold market globally over the past 30 years, working with governments, international agencies and policymakers to help reduce barriers and improve access to gold. We develop globally recognised standards that create clarity and consistency where it is lacking and reinforce trust across the gold value chain.
Will the World Gold Council collaborate with global stakeholders to roll-out the RGIPs?
With support from the World Gold Council, the RGIPs will be rolled out by the industry, for the industry; laying the foundations for establishing best practice globally As a first phase, we will work with key stakeholders on a region-by-region basis to best define how the RGIPs are aligned with local market practices.
Initially, the RGIPs will be voluntary, so there will be no audit or public endorsement. However, we believe that conforming with these practices will strongly benefit product providers and investors. Over time, we expect investors and other stakeholders to push for implementation of the RGIPs, which may come via the formation of regional industry organisations.
As a global product provider can I leverage the RGIP documentation to demonstrate to investors how my business practices, products and operations adhere to the principles published by the World Gold Council?
The World Gold Council openly encourages product providers to use the RGIPs and Investor Guidance documents, as published on retailinvestment.gold, to demonstrate how they meet, or go beyond, the best practice principles and to ensure their clients clearly understand the products in which they plan to invest.
Please do:
- Alert your investors to the RGIPs and Investor Guidance (or parts thereof) via redistribution through your own channels including company websites, newsletters, social media etc.
- Demonstrate to investors, perhaps in alignment to your own customer charter, how your business practices, products and operations meet, or go beyond, those prescribed in the RGIPs.
- Always backlink to retailinvestment.gold enabling your investors to read the material in full and directly on the World Gold Council’s retail investment website.
- Always include the following disclaimer if you use all or a portion of the RGIPs on your website or in other materials:
- We recognize the framework set forth in the Retail Gold Investment Principles (RGIP)™ which are available here. This linkage does not constitute an endorsement or an approval by the World Council of our retail sales activities or conduct.
- Provide a download of the associated RGIP and Investor Guidance PDF documents from your company website or other notifications.
- Attribute all reuse of the RGIPs and Investor Guidance to the World Gold Council at all times.
Please do not:
- Reuse the RGIPs, Investor Guidance or retailinvestment.gold in any way that:
- Misrepresents the purpose for which they have been published.
- Infers a partnership or joint initiative between your company and the World Gold Council.
- Infers any form of endorsement of your product or business by the World Gold Council.
- Infers any form of accreditation or mark of trust awarded to your business or product by the World Gold Council.
- Could result in confusion, unfairness or detriment to your investors.
- Reword the RGIPs and Investor Guidance as drafted and published by the World Gold Council.
- Use any marks or logos of the World Gold Council.
By making use of the RGIPs you confirm your adherence to the above guidelines.
Are the RGIPs attempting to add or replace regulatory frameworks as and where they exist today?
No. The RGIPs are not rule-based but, rather, are intentionally drafted as broad principles of best practice. However, we will engage with regulators to inform them about the global principles and encourage them to recognise how adoption and adherence by the industry can benefit both the product providers and retail investors. Our aim is not about seeing new regulations being implemented, but rather acknowledgement of the RGIPs and the work we are undertaking with the industry. And hoping, that recognition of this, in certain jurisdictions, may enable regulators to change their (negative) guidance on retail gold investments.
Glossary
Allocated gold: An ‘allocated’ account is an account with a bullion dealer to which individually identified gold bars or coins owned by the account holders are credited. The gold bars or coins in an allocated account are specific to that account and can be uniquely identified.
Basis price: The basis price for gold is equal to the local trading price.
Blockchain: A blockchain is a type of decentralised digital ledger, used as an alternative to centralised record-keeping. The ledger may be distributed publicly to anyone, or limited to authorised, ‘permissioned’ participants. Blockchains are cryptographically secured, ideally resulting in immutable transaction records whose authenticity can be verified by different participants. In the case of tokenised gold, an individual investor’s allocated gold holdings are recorded on a blockchain to prove ownership and facilitate transfer of ownership.
Gold hallmark: Gold hallmarks originated to show the purity of gold in a piece of gold jewellery and included the mark of the assaying office that certified the purity of the gold. Later, trademarks that showed which goldsmith had manufactured the product were added.
High-risk investor: High-risk investors are defined as investors where the product provider has reason to assume an increased probability of money laundering or terrorist financing activities.
Melt value: The melt value refers to the value of the gold or other metals of an object such as a bullion bar, a coin or a piece of jewellery.
Pool allocated gold or fractional allocation: Pool allocated gold accounts provide investors with co-ownership in one allocated gold bar or a pool of allocated gold bars. Pool allocated gold is fully backed by physical gold. Investors own a fraction of the overall pool of allocated gold but are not allocated individual bars.
Professional custodians: Trusted custodians could be vault operators, which are members of reputable trade bodies, such as the LBMA in London or the SBMA in Singapore. They could also be a type of custodian that serves in such capacity for exchanges and other regulated infrastructure providers.
Prohibited investors: An individual or entity on any relevant list of prohibited persons and entities, such as the List of Specially Designated Nationals and Blocked Persons administered by OFAC (Office of Foreign Assets Control of the US Treasury) in the US.
Purity or fineness of gold: The content of pure gold – or fine gold – of a gold bar, coin or other object is called fineness. Gold objects often contain some alloys or impurities. One measure for the fineness of gold is carat. Carats indicate the gold parts per 24. 24 carat gold is almost pure gold (99.5-99.9%).
Settlement: The settlement date is the date when the ownership of gold changes from seller to buyer. On this date, the buyer has to pay for their purchase and the seller has to deliver the gold to the buyer. The settlement period is generally one or two days. The term ‘settlement risk’ refers to the risk that the counterparty fails to deliver gold when the investor has already paid for it (or that the investor fails to pay for their gold once it has been delivered).
‘Spot price’ and ‘premiums’: The ‘spot price’ of gold typically refers to the price of one troy ounce of gold on global gold markets. Depending on the form or type of gold bullion that investors purchase, there will be additional ‘premiums’ or ‘mark-ups’ to be paid. In general, the premium paid on a small bar or coin will be relatively higher than on a large bar.
Unallocated gold: In an unallocated account, a customer does not own specific bars or coins but has a general entitlement to a set amount of gold. The investor is not the legal owner of any physical gold; instead they are a creditor of the provider.
Abbreviations
AML – Anti-Money Laundering
ATF – Anti-Terroism Financing
CDD – Customer Due Diligence
KYC – Know Your Customer
LBMA – London Bullion Market Association
OECD – The Organisation for Economic Co-operation and Development
SBMA – Singapore Bullion Market Association