The integrity of the global gold supply chain has been the subject of intense scrutiny of late, following a damning report by Swiss nongovernmental organisation SwissAid earlier this year, which claims that illicit gold trade amounts to between $23-billion and $35-billion a year.
However, the introduction of technologies such as the geoforensic passport, optical AI and blockchain – along with the updated Responsible Gold Guidelines (RGG), the more stringent Know Your Customer (KYC) Guidelines and the Organisation for Economic Cooperation and Development’s (OECD’s) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas – means that much of the framework needed to stymie illicit gold trade already exists.
Further, international gold industry association the World Gold Council (WGC) aims to increase the scope and effectiveness of this framework through initiatives such as the Gold Bar Integrity (GBI) platform, which forms part of its broader Gold247 vision.
Gold247 is meant to enhance supply chain management, while simplifying gold trading processes and increasing access for all stakeholders, including central banks, bullion centres, subsistence gold miners, smaller refineries and potential investors, explains WGC CEO David Tait.
He says that the ultimate goal is a “truly global network where anyone who sits outside the database should be very worried, as the very thought of procuring gold from outside of the system would be unthinkable”.
The realisation of such a network is nearly in sight, although both Tait and Argor-Heraeus co-CEO Robin Kolvenbach agree that general fragmentation, both from a regulatory and technological perspective, leaves room for improvement.
The GBI, AI and Blockchain
An integral part of the Gold247 vision is the GBI platform, which encourages the adoption of technology to enhance transparency and traceability throughout the entire supply chain.
The GBI pilot – which was jointly launched by the London Bullion Market Association (LBMA) and the WGC and ran from March to July 2022 – helped define the scope of the platform’s database. It also revealed longer-term goals, such as expanding the platform to include other gold products, secondary market materials and other precious metals, in addition to incorporating KYC requirements and other due diligence processes when on-boarding customers.
More than 30 participants took part in the pilot, including Rand Refinery and Argor Heraeus.
“We see the GBI as a crucial step forward in preventing ingress of illicit material into the LBMA gold ecosystem,” says Rand Refinery CEO Praveen Baijnath.
Argor-Heraeus co-CEO Hans Deutsch agrees, expanding on his company’s involvement in the GBI by citing its work with Swiss software company aXedras and US-based software company Alitheon – both of which are recognised by the LBMA.
He notes that the company uses aXedras’ Bullion Integrity Ledger, which helps to create “immutable provenance information”, while Alitheon’s software allows it to verify and trace its physical products.
“If you put these puzzle pieces together with geoforensic data analysis, you get strong systems that can ensure that no illegal gold is entering that supply chain,” adds Deutsch.
To illustrate the benefits of Alitheon’s optical AI solution FeaturePrint, Alitheon CEO Roei Ganzarski compares it to a human fingerprint.
“Fingerprints are unique; they are inherent and they are persistent,” he says, explaining that rather than using proxies, “like barcodes, stamps, tags, markers or tokens” – which can be removed, or faked or stolen to pass off counterfeit goods as the genuine article – FeaturePrint essentially creates a “digital fingerprint” based on the attributes and features that are inherently unique on each product owing to the manufacturing tolerances of that specific product.
Even gold bars produced by the same machinery in the same refinery, using the same moulds, have unique, inherent characteristics that are undetectable by the human eye, making them distinct from all others, “just like human identical twins still have slightly different fingerprints”.
While the bars are made to specific tolerances – in terms of weight, size and gold content – the individual products can fall anywhere within the manufacturing tolerance band.
FeaturePrint combines machine vision and patented algorithms to codify these inherent attributes to create a unique digital identity that can be used to “irrefutably identify, authenticate, and trace” a bar of gold or any other physical item. Any company or individual with the software can use a standard off-the-shelf digital camera or a mobile phone to identify, authenticate and trace an…
Read More: Digitalisation bolsters gold supply chain security, but there is room for