We're working to make gold fungible...a perfect global currency: WGC CEO

In a Q&A, David Tait says the council will launch a self regulatory organisation for the Indian gold industry

David Tait, Chief Executive Officer, World Gold Council (WGC), tells Rajesh Bhayani in an exclusive interview, that the council will launch a self regulatory organisation for the Indian gold industry. Edited excerpts:

What are the major focus areas for WGC now, with gold on an upward trajectory?

I have converted the WGC into a three-pillar organisation--marketing, research and sales. Here, sales means selling a story, (and) building a case for gold with institutional investors. The sales team will use our research to build its case and marketing efforts will also be in sync with that.  

There was a cut in the marketing budget and mines were also giving up their memberships. How is the scene now and do you see further consolidation in the mining space?

During the past three years we have seen a consistent increase in membership and now the number of members have risen from 24-26 to 34 despite consolidation. And I see these numbers growing. I can’t comment on the members' plans. However, as an apex body, we have been working on a project to make gold accessible 24x7. As a part of that, we have launched a project in collaboration with the London Bullion Market Association (LBMA) to develop and implement an international system of gold bar integrity, chain of custody and provenance with the aim of increasing the trustworthiness of the gold that they buy and sell--that it is genuine and has been responsibly and sustainably sourced. We have brought together representatives from the global gold supply chain to launch a pilot phase of the project.

The project with the blockchain-backed ledger will register and track bars, capturing the provenance and full transaction history.

Over time, the plan is to be able to track the gold across the entire supply journey from mine to vault, and ultimately to jewellery manufacturers. The aim is also to be able to track the jewellery made from that gold.

The idea is to eradicate irresponsible gold mining, follow all human standards and norms and ensure no criminalisation is involved.

What are the plans for the Indian market?

We are launching a self regulatory organisation (SRO) for the gold industry, which will build trust among buyers about purity and also help all industry participants to come together. They will develop codes of conduct for the industry. This body will be headed by reputed and independent persons and an eight-member committee that will include leading industry personalities from all spheres. They will also be responsible for enhancing the credibility of the body. As an apex industry organisation, they will be able to represent the industry’s case before the government and work with the it in the interest and development of the gold industry.

When will it be launched?

We plan to launch the body before the close of this year. Initially, for 2-3 years we will have to support it, after which it will start generating income. The initial investment for the project is not insignificant.

What new measures are being taken by the WGC to consolidate the case for gold?

Our data shows that 48 per cent of consumers don’t trust gold, and 60 per cent don’t understand the market. So, we are spending on marketing as well and the aim is to improve trustworthiness among Indians for gold. If we can increase this you can imagine the impact it can have on the metal.

Which other areas is WGC working on to build a case for gold and achieve the target of the gold 24x7 plan?

We are working to make gold fungible. At present markets various in countries don’t talk to each other and hence there is a lack of confidence among global investors. There is a need for market wide uniformity.

So after bullion integrity, another plan is of tokenisation or digitisation of the metal to arrive at a uniform standard of gold for the world. When this happens, it will be like a global currency or bring back gold standards. Not distinguishing dollar but creating a token fully backed by gold. This could be the perfect currency.

How do you see volatility in gold ahead?

As of now, from the geoeconomics and geopolitical standpoint, everything is in favour of gold. This is apart from the tokenisation plan which, when it happens, can significantly impact gold demand.

WGC had invested in a digital gold venture in India, picking up equity with the intention of developing that market. Do you plan more such investments in ventures in India?

Nothing is on the table other than SRO, but we are here to support new things in India. There is a need to reform the OTC (over-the-counter) market and hence the need for investing big in the clearing system. We are yet not into crypto. Even for gold integrity, you will hear in the next five days about our new initiatives as part of 24x7--at a global level. For India, as of now the focus is on SRO. Its success depends upon how people connect and they need to connect with a commitment to develop the gold market.

As you mentioned, markets globally are not communicating among themselves. How can it be done?

It may be an ambitious programme but three weeks ago, as part of the WGC initiative we met to consider an overarching body for the global gold industry. I could bring together for the first time top-20 global leaders, including leading exchanges and all types of players of the global gold industry, to discuss the future course for the sector. This was a historic event. This G-20 (gold 20) like body can discuss future technology, tokenisation and anything that may be needed. In the next six months, I believe that the body can move into an international forum like a parliament to decide the course of the gold industry and run it as a self regulator in consultation with the industry. If this happens, the international regulators will look at the gold industry in a much different way.

How will the international bullion exchange set up at Gift City, which is expected to soon start operations, help the Indian gold industry?

This will be a game changer especially when most exports and imports start happening through that exchange. This can change the dynamics of the bullion industry of this country. This will make it easy to identify which gold came from where and distinguish between responsible gold and other gold.

For India's SRO, development of the institutional industry over here coming through the international exchange is important.