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Buyers Guide

It is necessary for all participants in the gold industry to adopt policies and processes that combat systemic or widespread abuses of human rights, avoid contributing to conflict, comply with high standards of anti-money laundering and negate terrorist financing practices.

Rand Refinery – Responsible Gold Policy

Rand Refinery is committed to ensuring that ALL gold, in any form, that is processed through our operations is Responsible Gold and, hence, conforms to the “OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas” (OECDG).

Statement

“Rand Refinery is opposed to activities which, directly or indirectly, finance or benefit armed conflict and the extreme levels of violence which contribute to abuses of human rights.”

Consequently, Rand Refinery commits to refraining from knowingly sourcing gold and silver bearing material from regions and operations which contribute to the financing of conflict and further commits itself to comply with the relevant United Nations sanctions, recommendations and protocols from other appropriate supra-national bodies in this regard. 

In the event that gold and silver bearing material is sourced from conflict affected and high risk areas, Rand Refinery will neither tolerate nor by any means profit from, contribute to, assist with or facilitate the commission by any party of any forms of inhuman treatment, any form of forced labour, use of child labour, gross human rights violations, war crimes or other crimes against humanity. 

Rand Refinery will not tolerate any direct or indirect support to non-state armed groups through the extraction, transport, trade, logistical assistance, handling or export of gold and silver bearing material by such groups or their affiliates. 

Rand Refinery will apply a robust “Know Your Customer” policy in order to identify upstream suppliers where dealings with such suppliers would be in contravention of this policy, would represent money laundering or other related criminal activity. Rand Refinery will not engage with suppliers identified in this way and will not accept refining or smelting deposits from such suppliers.” 

Mechanism

The London Bullion Market Association (LBMA) has developed a Responsible Gold Guidance (RGG) which will enable refiners to institute all of the requirements of the OECDG by following the five steps framework:

  1. Establish strong company management systems,
  2. Identify and assess risk in the supply chain,
  3. Design and implement a management strategy to respond to identified risks,
  4. Arrange for an independent third-party audit of the supply chain due diligence,
  5. Report on supply chain due diligence.

Rand Refinery will adhere to the requirements of the LBMA RGG.

NB Adherence to the LBMA RGG is compulsory for all refiners who wish to maintain LBMA Accreditation.

Chain of Custody

Rand Refinery will develop and maintain systems that will allow full traceability throughout our processes to support a current and future product portfolio that represents our commitment to the development of bespoke Responsible Gold products. These systems and processes will also be subject to independent third party audit.

Other Initiatives

In order to ensure that Rand Refinery maintains a leading position within the gold industry with respect to Responsible Gold it is necessary to become involved with other relevant and appropriate initiatives. These will include – but are not limited to – the following:

  • Support for the World Gold Council (WGC) Conflict-Free Gold Standard,
  • Membership and support of the Responsible Jewellery Council (RJC),
  • Support for the OECD, particularly the working group for the implementation of the OECDG.

Disclosure and Awareness

This Policy will be made available to the public and form part of public and employee awareness campaigns.

What is Gold

Gold is a rare metallic element with a melting point of 1064 degrees centigrade and a boiling point of 2808 degrees centigrade. Its chemical symbol, Au, is short for the Latin word for gold, ‘Arum’, which literally means ‘Glowing Dawn’

The malleability of Gold means that a single gram of gold,roughly the size of a grain of rice, can be flattened into a sheet that covers 0.92 square meters. It`s also the most ductile of all metals, which means it can be drawn out into the finest, longest wire of any metallic element. Gold also conducts heat and electricity, and lasts longer than all conducting materials.It`s highly reflective, incredibly dense and able to resist rust, corrosion and oxidation.

The shine, colour and workability of this gold makes it simply irresistible. Today, advancements in science have proved just how valuable gold really is and reinforced society`s natural passion for this material. Beyond its obvious beauty and luster, the very properties of gold give it value that exceeds that of virtually all other metals.

Why is Gold so valuable

When considering the aesthetic value and functional properties of gold, it`s easy to see why it`s so valuable.It`s also relatively scarce and difficult to extract from the earth. Today, miners devote enormous resources to locating and extracting even small deposits of this metal.For every 250 trucks containing 20 tons of rock and dirt extracted from the earth, miners can expect to find just about 20 grams of gold.

Did you know

1. 100 million people across the world depend on gold mining for their livelihood.

2. If turned into 5 micron wire (about one twentieth the thickness of a human hair) all of the world`s existing gold could be wrapped round the earth 7,2 million times.

3. Of the 127,000 tons of refined gold in the world, 42,000 have come from South Africa since 1886.

4.The original meaning of bullion was “melting place” or “mint”, probably from the french bouillon: boiling.

5.”Fineness” is a measure of gold purity, usually expressed in parts per thousand eg. 995/1000 or 99,5% pure.

6.24 carat gold (or pure gold) has at least 999 parts pure gold per thousand.

7.At 2,300 troy ounces, the Welcome Stranger, found near Moliagul,Australia, in 1869, is thought to be the bigest gold nugget ever discovered.

8.Gold is measured in troy ounces. At 31.1 grams, a troy ounce is slightly heavier than avoirdupois ounce commonly used elswhere (28.35 grams). The word troy comes from the French city of Troyes, where this was a unit of weight in the middle ages.

9.At 350 to 430 troy ounces, a London Good Delivery Bar sets the standard for a “typical” gold bar.

Gold as money

Gold has always played an important role in the international monetary system. Gold coins were first struck on the order of King Croesus of Lydia (an area that is now part of Turkey), around 550 BC. They circulated as currency in many countries before the introduction of paper money. Once paper money was introduced, currencies still maintained an explicit link to gold (the paper being exchangeable for gold on demand).

Why invest in Gold

Gold has unique properties as an asset class. Modest allocations to gold of 2 per cent to 10 per cent can protect and enhance the performance of an investment portfolio.* A 5 per cent to 6 per cent allocation is optimal for investors with a well-balanced 60/40 portfolio.*

Retail buyers are embracing gold’s investment properties. Overall investment in physical gold bars and coins during the first three quarters of 2013 rose 36 per cent compared to the first three quarters of 2012. Even so, gold still only makes up less than one per cent of investors’ asset allocations.

Investors of all levels of experience are attracted to gold as a solid, tangible and long-term store of value that historically has moved independently of other assets.* Our analysis shows that gold can be used in portfolios to protect global purchasing power, reduce portfolio volatility and minimise losses during periods of market shock. It can serve as a high-quality, liquid asset to be used when selling other assets would cause losses. National central banks, stewards of the world’s largest long-term investment portfolios, use gold to mitigate portfolio risk in this way, and have been net buyers of gold since 2010.

Gold has also become more readily accessible, due to the development of a range of products, which investors and advisors can include in their own and their clients’ portfolios. The diversity of gold-backed and gold-related products means that gold can be used to enhance a wider variety of individual investment strategies and risk tolerances.

Investors also make use of gold’s lack of correlation with other assets to diversify their portfolios and hedge against currency risk.

Saving for the future

For small savings or a more substantial long-term investment, buying gold or gold-backed financial products protects wealth and can increase risk-adjusted returns. Having a small amount of gold within a balanced investment portfolio can potentially reduce its overall risk, helping to protect against market shocks.

While it is reassuring to have a physical asset of enduring value, investors buy gold for many other sound financial reasons.

Gold helps protect the value of money

Gold is a tangible asset which cannot be printed at will. As such, it protects against inflation and currency devaluations. For example, in 1971, a family in the US could buy a house with US$25,000. Today, US$25,000 is not enough for a mortgage deposit. By contrast, 700 ounces of gold (the equivalent of US$25,000 in the 1970s) can buy a US$1 million property today. A growing body of research has shown that having a portion of savings in gold can improve purchasing power over the long term, especially as the real value of most major currencies declines.

Gold performs under pressure

In turbulent times, gold is resilient. The amount of available gold is constrained and cannot be expanded at will, as is the case for fiat currencies through expansionary monetary policies – especially in times of financial and economic crisis.  Additionally, unlike a stock, where the underlying company can go out of business, or a bond, where the issuer may default on a coupon or redemption payment, gold has no credit risk.

The long-term outlook for gold is strong

Demand for gold continues to outstrip supply. Jewellery and technology applications make up more than 50 per cent of demand, and most gold is bought in the world’s fastest-growing emerging markets. China and India account for more than half of all gold purchases, annually.  Newly-mined gold can only meet about two-thirds of current global demand. In addition, central banks are no longer net sellers of gold, so the rest of the demand is currently fulfilled with recycled gold. With demographic and economic trends predicting increasing wealth and expanded populations in the world’s two largest gold markets, gold demand has the potential to continue rising.

Gold is a hedge against inflation

Inflation rates in major developed and developing economies are expected to rise, in part as a consequence of the financial crisis and subsequent mitigating actions such as quantitative easing.  Historically, gold has been a hedge against inflation. It has retained its value through geopolitical shifts and market turbulence, outperforming most major currencies and many real assets.

It is an effective balance against currency risk

Over the last decade, economic slowdowns and competitive pressures have led several major economies to devalue their currencies or print money as stimulus. A debased currency can be a serious threat to an investor’s portfolio. Because the forces that determine the price of gold – limited supply and diverse, growing demand – are independent of, and in many cases opposed to, the forces that determine the price of other investments, gold can be a true portfolio diversifier. Typically, gold is not correlated to other major asset classes, and is  negatively-correlated to the US dollar. It can be used effectively to manage currency risk in an investment strategy.

It delivers a return when other assets falter

Historically, gold has demonstrated a valuable ability to go up when other assets are going down. It can help mitigate investment losses when unpredictable market disruptions occur. For example, a portfolio with a five per cent gold allocation experienced an increase of one per cent during ‘Black Monday’ (19th October 1987, when stock markets around the world crashed), versus the same portfolio with no exposure to gold. This is in part due to the fact that gold moves with a degree of independence from other asset classes, but also partly due to a ‘flight to quality’ in times of economic crisis.

Currency hedge

The stresses on the financial system since the credit crisis in 2008 have undermined confidence in the world’s major currencies. A change in the balance of the world economy has led to a widespread belief that the Chinese renminbi will take on a larger role in the global monetary system. The World Gold Council has published research into the function that gold will play during the transition to a multi-currency system.

Gold’s typically strong inverse correlation with the US dollar and many other developed-markets’ currencies make it a valuable hedge against short- and long-term fluctuations in the value of major currencies. Because it normally also holds its value against major currencies, gold is also effectively used as an inflation hedge.

Risk management

Investors can benefit from gold’s role as a diversifier. Gold can be used to reduce portfolio volatility, minimise losses during periods of market shock, and serve as a high-quality liquid asset when selling other assets would incur large costs or losses.

Gold has very low correlation to most assets over the long run, making gold’s contribution to portfolio volatility small. In fact, in most instances, gold helps to reduce volatility significantly. The 24-hour nature of trading and the range of investment channels for gold mean that its markets are deep and liquid. Gold is virtually indestructible, meaning that nearly all of the gold ever mined still exists today. Much of it is in tradable form, meaning that sudden excess demand usually can be satisfied relatively easily. Unlike debt instruments, investments in gold do not depend on an underlying company or sovereign which can default.

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ISA Gold is situated in the Office Towers at Sandton City, one of Africa's leading and most prestigious shopping centres.

Tel: 0861 BUY GOLD
Tel: 011 784 4071
Email: sales@isagold.com

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