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Bringing About Traceability to the Gold Industry

By Abhinav Ramesh, Director, Chainflux

Published on March 20, 2020

The gold industry is, in general, a late adopter of innovation. Despite the technological advances and best practices the industry has embraced in recent years, the gold industry globally remains loosely organised, dispersed, and an OTC-based market. From the mine, gold follows a sketchy path to reach the end consumer.

Artisanal, or small-scale, mining is still rife with exploitation due to poor safety conditions, unfair wages and the use of child labor. Aggregators from the mines have a large say in price determination for dore. When the product is shipped to the customer, it is sometimes mixed with dore from unknown sources. Regulators are becoming wary of this and are looking to implement more stringent sourcing guidelines and to increase transparency in the procurement of dore. In many cases, gold production and trade are known to contribute towards perpetuating illegal activities like gold smuggling and financing of illicit activities. This stems from the fact that gold is highly fungible and cannot reliably be traced to its last owner. In markets where the gold industry is relatively well-organised, it is a fact that despite following more or less “set in stone” technology-supported supply chain practices, gold passes through a succession of middlemen and undergoes transformation multiple times without satisfactory documentation. As a result, refiners, bullion producers and jewellers cannot effectively support and uphold responsible sourcing practices since there is no reliable basis for ascertaining the origins of the gold they hold.

To address the gold sector’s severe traceability shortcomings, there is an increasing interest in embracing blockchain technology to guarantee the provenance of gold, from its source to the point of sale.

GOLD’S JOURNEY FROM MINE TO CONSUMER

FROM MINE TO CONSUMER: TRACKING GOLD USING BLOCKCHAIN

Blockchain is a technology popularly associated with cryptocurrencies like bitcoin. However, it is also the technology that provides a foundational database for all supply chains – from food to retail, and now precious metals. Blockchain is essentially a shared database on which any kind of information – for example, transactions, ownership records and certifications – can be stored. All information submitted to a blockchain is consolidated into “blocks” of data that are “chained” together using sophisticated cryptography, a log of it shared with every node connected to the network. This is what makes it impossible for someone to edit, delete, or modify data submitted to a blockchain.

The decentralised and secure nature of blockchain technology makes it ideal for the gold industry. In addition to data storage, self-executing programs or “smart contracts” can be written on the blockchain to automatically initiate transactions and transfer the ownership of goods and services without relying on any paper documentation. This greatly reduces the time it takes to take an item (say, gold) from one entity and move it to another in a fully transparent and compliant way.

Blockchain, in this way, effectively addresses trust, or rather the lack of it, between two or more transacting parties. It helps paint a clear picture of the path a transaction (i.e. the transfer of gold from one entity to another) has followed by capturing relevant information each point of transaction, transformation, and transfer, thereby establishing an unbroken chain of custody.

Because of this, blockchain can be sufficiently trusted to transmit data downstream and upstream during an item’s movement across a supply chain.

Specifically for gold, blockchain can be used to not only underpin, but also promote, standards like the Good Delivery Standards established by the London Bullion Market Association (LBMA). Among others, blockchain-enabled, internet-available platforms can be used to bring together and incentivise the many disparate stakeholders on the gold supply chain – from miners and refiners to logistics providers, bullion brokers and jewellers – to share and record information with everyone participating in the network. This way, at every step of gold’s journey on the supply chain, relevant parties would be able to ascertain whether the information by entities before them is sufficiently reliable before deciding to take consignments forward. Pressure from end consumers is already forcing gold jewellers and bullion dealers to aggressively seek provenance information from the source. This can further be leveraged to bring gold industry players on board such a platform to help improve gold’s traceability. In the long run, by storing and producing near-perfect data, blockchain-based traceability will also make it increasingly difficult for unverified gold to enter circulation, which will help curb illegal activities.

BLOCKCHAIN CAN BE SUFFICIENTLY TRUSTED TO TRANSMIT DATA DOWNSTREAM AND UPSTREAM DURING AN ITEM’S MOVEMENT ACROSS A SUPPLY CHAIN

BRINGING ABOUT THE TRANSFORMATION

What blockchain promises is a transformational change in the way gold is sourced and sold. While these are still early days of the technology, there’s merit in encouraging the exploration and development of proofs-of-concept focused on increasing trust and transparency in the gold industry.

There’s already a growing interest among leading gold importing and exporting nations, including India, to build solutions that not only transmit data downstream but also upstream (i.e., from end consumer to jewellers and then on to refiners) on blockchain. The need is not just for an end-to-end system, but a circular one wherein gold can be tracked from the moment it is mined to when it is processed, bought and resold on the open market. This will ensure responsible gold buying and selling practices.

One such example is Chainflux’s Shine platform, which acts as the SWIFT equivalent for the gold industry and is built on a private blockchain consortium network. It is a closed network where gold can be exchanged, traded, refined, and converted to jewellery. Shine provides seamless and fast transactions, and has privacy layers to hide information such as price, network access and node access configurations, and incentive mechanisms for all parties to participate in the network. Shine is being piloted with one of the largest exchanges in the world, and is working with the World Gold Council and the Indian Gold Policy Centre to pilot it within the Indian gold ecosystem.

ABHINAV RAMESH is an entrepreneur in the fintech and blockchain space. He is a former management consultant and research fellow in neuroscience. He runs WandX solutions, a blockchain products company out of Bangalore, India. Wandx solutions has partnered with the Indian Gold Policy Centre and the World Gold Council for the blockchain platform Shine, which aims to bring about traceability within the gold supply chain, initially in India, then the world over. Abhinav enjoys sports, and is an ironman finisher.

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Singapore Bullion Market Association Secretariat-Lee-Jia-Yi

Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

SECRETARIAT SBMA-Emily-Oh

Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

SECRETARIAT SBMA Clara-Chang

Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

SBMA Committee-Photo-john-levin

Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

SBMA Secretariat-Fabian-Lew

Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

SBMA-margare-secretariat

Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

SBMA-Albert-secretariat

Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

SBMA-Shaokai-Fan

Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

SBMA-Committee-Alan-Liew

Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

SBMA-Committee-Nikos

Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

SBMA-Committee-khun nuttapong

Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

SBMA Committee-Photo-Raman-Walia

Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

SBMA Committee-Photo-Andrew-Clarke

Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

SBMA Committee-Photo-Kazuya-Naoki

Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

SBMA Committee-Photo-Vinh-Nguyen

Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

SBMA Committee-KL-Yap

Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.