GROWTH & INNOVATION IN GOLD: THE ABC STORY

By NICHOLAS FRAPPELL, Global Head Institutional Markets, ABC Refinery

The ABC story continues to be one of growth, whether via the primary feeds we receive from top-rated producers, growth in client development, or innovation.

Asia is a market of profound importance to us, with a range of demand centres for gold products that span retail savings, investment and some of the most advanced technological consumers in the world serving the electronics and renewables sectors. Asia is also notable in that the region benefits from strong financial and distribution hubs, with Singapore in particular benefiting from network effects owing to many sizeable local participants, and coordination between the private and public sectors.

Innovation

Last year, we wrote about developments in assuring gold provenance, and this year marks a milestone in the technological development in that field, with ABC Refinery releasing a new app, ProvCheck, that enables the quick and straightforward verification of bar origin, authenticity, and ESG credentials in a way that doesn’t rely on adding any additional substances to the bar itself.

We built ProvCheck using the latest machine learning techniques to authenticate and provide comprehensive information of bullion products without the requirement of precise framing or lighting conditions seen in similar tools. Innovations such as these are important because they easily and rapidly provide assurance to holders of physical gold, which is the underpinning of the wider market, and which is itself a fundamental trust issue for asset managers in both the private and public sectors.

More and more consumers in both the private and public sectors are seeking assurance about provenance and what it tells you about the sourcing of gold in environmental, governance and ethical terms. That is something the market was perhaps undervaluing half a decade ago and is increasingly aware of now. Accordingly, the market is attaching a higher value to this offering.

The development of ProvCheck has seen the creation of a system which scans dore at site and at the refinery, storing the information on an immutable ledger. This digital handshake ensures the dore we receive is one and the same as that sent by our suppliers, ensuring nothing nefarious takes place along the way. We then rigorously track the flow of metal through the process, enabling us to identify the origin of our bullion products. These final products are similarly scanned into the system, with the mine to market supply journey all written on an immutable ledger. This supply chain information is supported by our irrefutable origin chemical fingerprint database.

ProvCheck also currently records the carbon footprint of our products, with an embedded capability to report on additional ESG related fields as the information becomes more widely available. We have built upon this reporting and are embracing change by additionally building a tool that enables us to offset those emissions using Australian Carbon Credit Units sourced from projects that positively impact the communities that we source from. This carbon neutrality is then similarly recorded on ProvCheck’s immutable ledger.

Primary Sources of gold

To that end, ABC’s refinery’s growth in output from primary mine sources with known, high-value sourcing, is an important supply link to the important physical markets in Asia. We believe that consumer preferences in the Asian market will follow the growing awareness and desire for provenance checking, particularly as a younger generation of savers, investors, and jewellery buyers think about their spending choices.

This change in awareness and consumer choice is likely to spread to family offices as new generations steer decisions in the ultra-high net worth sector, as both consumers and investors weigh up environmental and governance consequences of their investments.

Physical product innovation

ABC continues to innovate with a growing presence in minted products and a new range of Australian “Untamed Landscapes” that reflect the unique beauty of local fauna. These new minted products are produced using technology that reduces waste and reduces the thermal footprint of each piece.

The Australian market

The Australian market continues to see robust demand for physical metals, with our sister company ABC Bullion seeing near-record levels of new client activity and sales of gold and silver to retail investors in Q1 2025.

Accessibility is also driving the adoption of gold and silver in client portfolios, with products like the ABC Bullion Gold Saver seeing a greater than 100% increase in clients using this product in the last twelve months.

The market also continues to see healthy levels of two-way flow, with longer-term bullion holders, many of whom bought gold and silver taking advantage of a near AUD $5,000/oz (S$4,218/oz) gold price, and a near AUD $55/oz silver price to trim their holdings.

Gold Index in USD and AUD Since APPMC 2024

Anecdotally, these sales are far less driven by a belief that gold and silver will soon peak, with clients typically stating that their motive to sell is a desire to maintain target weight allocations in their portfolio, with the recent dramatic outperformance of gold and silver seeing its share, or allocation, within portfolios increase accordingly. Reports such as these from clients are positive because they reinforce the growth in sophistication around users of gold as a risk diversifier in turbulent times and a willingness to proactively manage their exposures in a considered way.

That makes a great deal of sense when looking at gold in the context of moves in bonds, equities and FX, as opposed to seeing precious metals in an entirely gold- or silver-centric manner. Given the high levels of economic uncertainty everyone is exposed to via changes to US policy settings which are often changed after the fact, we expect gold to remain a focus of Australian investors.

Summary

ABC Bullion, ABC Refinery, and the Pallion Group have long had strong links with the precious metals markets in Asia and Oceania. We believe that gold’s qualities as a store of value, means of exchange, and beauty of adornment that have been noted by humanity for thousands of years can still be transformed.

It can be mined better, refined better, and worked in better ways, and distributed in a manner that leaves a lighter touch on the environment, leaves a richer endowment for our children, and fulfills its investment function in ways that not only enhance value but also security – the knowledge that consumers know and trust where their gold is from.

NICHOLAS FRAPPELL is the Global Head of Institutional Markets at ABC Refinery. He has extensive experience in precious metals trading, having worked in London, Tokyo, Singapore, Hong Kong, and Sydney. Nick holds a Masters in Finance from the University of London and is the Chair of the LBMA membership sub-committee. He also co-hosts the ABC Refinery “Pod of Gold” podcast and will speak at the 7th APPMC 2024 Conference on the Precious Metals Price Outlook Panel.