Digital logging of trade flows: Gold industry wants to use blockchain technology against black market

• Global gold trade is heavily affected by illegal activities
• Blockchain technology to reveal gold supply chains
• Effective area of ​​application of blockchain: supply chain management

The sometimes drowsy, centuries-old gold industry seems open to new technologies. As “Bloomberg” recently reported, two of the world’s largest institutions in the gold industry are planning an interesting pilot project: The London Bullion Market Association (LBMA) and the World Gold Council (WGC) want to log gold trade flows in a blockchain in the future.

Pilot project: Blockchain as a transaction register for gold trading

The LBMA and WGC project is another example of how multifunctional blockchain technology can be used. In this specific case, the gold authorities want to use the blockchain technology of aXedras and Peer Ledger. As CoinTelegraph reports, the blockchain ledger will be used to register and track bullion at every stage of the production and distribution cycle, including mining, storage, transportation and purchase by jewelry makers. The name of the program is “Gold Bar Integrity Program” and it is endorsed by numerous publicly traded gold miners such as CME Group, Barrick Gold or Newcrest Mining. As the LBMA and WGC emphasize, this is initially a pilot project which – if successful in practice – is to be quickly expanded to include the entire gold trade.

Goal: Blockchain should prevent gold smuggling from conflict regions

The aim of the digital transaction register is to better trace the origin of the gold in order to identify and then sanction precious metals sold on the black market. Illegal mining, counterfeit gold bars, corrupt gold mining in war zones and human rights violations have long been a thorn in the side of the gold industry, particularly as serious crimes in the gold mining and trading process have repeatedly drawn public criticism.

The digitization of supply chain information is now intended to remedy these problems: The advantage of blockchain technology is that this tamper-proof digital register is not dependent on a central register-keeping actor, but rather is transparent for all authorized participants (i.e. not for the general public). . Important here: Accounting and reading rights can be distributed in stages depending on the actor and thus adapted to the different user groups and their needs. World Gold Council CEO David Tait told his Twitter followers on March 28, 2022: “This transformative project is the first step towards a more aligned gold industry where we work together to create a more accessible and transparent marketplace guarantee.”

Our CEO David Tait and LBMA CEO Ruth Crowell today announce the launch of a new Gold Bar Integrity Program. Together with @lbmaexecutivewe will develop and implement an international system of gold bar integrity, chain of custody and provenance: https://t.co/jcZ6V1wYLB pic.twitter.com/x7klqZ8WTL

– World Gold Council (@GOLDCOUNCIL) March 28, 2022

Blockchain helpful for supply chain management

The gold institutions initiative is just one of many examples of the use of blockchain in supply chain management. According to Cointelegraph, over half of the companies included in Forbes’ 2021 Blockchain 50 list use distributed ledger technology to solve their supply chain and logistics problems. For example, the US defense company Lockheed Martin announced in April 2021 that it was using blockchain technology for supply chain management in Switzerland. The blockchain is therefore not only relevant for digital assets such as Bitcoin or NFTs, but can also offer fundamental services in the real economy – such as in the global and extremely capital-intensive gold trade.

Record high reached – golden prospects for the gold industry?

What about the price of gold, the barometer of the health of the gold industry? After the past year was disappointing for the gold industry overall and the dollar-gold price fell by around four percent, 2022 started very successfully. As a result of the high geopolitical risks associated with the Ukraine war and the escalating inflation rates, the price of gold has so far increased by 6.85 percent (as of April 11, 2022). Gold benefits from the fact that many market participants see the precious metal as a protection against inflation and increase the price of gold through their interest in buying it. On March 8, 2022, gold even made a new all-time high of $2,078.80, but subsequently bounced back and is currently trading at $1,971.88.

Editorial office finanzen.net

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