Franklin Templeton Holdings, a renowned investment funds management company, has demonstrated its commitment to responsible gold sourcing by implementing significant measures in its Trust. In its recently filed SEC (Security and Exchange Commission) report, Franklin Templeton detailed how it intends to hold only “responsibly sourced” gold, primarily in the form of London Good Delivery gold bullion bars, for its Gold Trust’s allocated account. This report highlights the increasing importance placed on responsible gold sourcing by major financial players in the market.
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Defining Responsibly Sourced Gold
The fund defines responsibly sourced gold as London Good Delivery gold bullion bars that have been refined on or after January 1, 2012, and in accordance with the London Bullion Market Association’s (LBMA) Responsible Gold Guidance (the “Gold Guidance”). In transferring gold into and out of the Fund’s allocated account, the Custodian is expected to allocate post-2012 gold on a best-efforts basis and subject to available liquidity. If the Custodian is unable to allocate post-2012 gold due to a lack of liquidity, it will do so as soon as reasonably practicable.
Under normal market conditions, the Franklin Gold Trust Fund expects to hold only post-2012 gold in the Fund’s allocated account. The Fund may temporarily deviate from this policy in unusual market conditions, such as in the event of a temporary supply constraint or lack of availability. In such cases, the Fund will seek to return to conformity with its policy as soon as reasonably practicable.
LBMA’s Gold Guidance and Responsible Sourcing
The LBMA’s Gold Guidance is a set of recommendations aimed at ensuring responsible sourcing of gold. It acts as a framework for conducting due diligence, assessing risks, and making informed decisions regarding gold sourcing. The premise of the Gold Guidance, which is aligned with the international standards set by the Organisation for Economic Co-operation and Development (OECD), enables global market participants to improve transparency and accountability in the gold supply chain.
By emphasizing responsibly sourced gold as a primary standard, Franklin Templeton Holdings is helping to set an important precedent for other market participants. Although gold has been a popular investment for centuries, there has been growing concern surrounding the practices of extraction and production, particularly in developing countries where environmental degradation, child labor, and other negative socio-economic impacts are prevalent.
As the market shifts towards valuing responsible gold sourcing, it’s expected that mines that do not follow ethical guidelines or meet regulatory standards will face potential disinvestment. This trend, in turn, can lead to better overall governance in the gold industry and promote sustainable and responsible gold sourcing practices both now and in the future.
The Gold Trust Fund and Investor Interest
Franklin Templeton Holdings’ Gold Trust Fund showcases the company’s efforts to address global concerns around ensuring ethical and environmentally sound gold sourcing while offering gold bullion as an attractive investment option. It’s important to note that the Gold Trust Fund is not managed like a traditional corporation or an active investment vehicle; instead, it is structured as a Delaware statutory trust and operates as a passive vehicle for investors seeking exposure to gold.
Investor interest in gold remains strong, with gold providing a hedge against inflation and currency fluctuations. By emphasizing responsibly sourced gold in its Trust, Franklin Templeton Holdings is addressing an increasing demand for ethical investments and paving the way for other market participants to follow suit.
In conclusion, the incorporation of responsibly sourced gold in Franklin Templeton Holdings’ Gold Trust Fund serves as an essential and noteworthy step in the industry’s move towards better governance and sustainable practices. As more financial institutions recognize the importance of responsible and ethical gold sourcing, it’s anticipated that the gold supply chain will continue to witness a positive transformation from within, benefiting investors, the environment, and communities worldwide.
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