Ethical gold and silver enter the jewellery market
Precious metals with ethical provenance are wooing lovers worldwide, writes Rob Stock.
New Zealand's ethical gold and silver company is expanding into the jewellery market.
For lovers thinking of tying the knot this leap year, ethical precious metals allow buyers to do the right thing when buying rings and other bling for loved ones.
The Waihihi Bullion Company, founded by motorcycle tour operator Baz Howie, sources all its gold and silver from the Martha mine in Waihi, owned by the OceaniaGold Corporation.
It gets made into bars by the Perth Mint in Australia and shipped back for sale here.
Now, the portion not snapped up by tourists keen to take a chunk of certified Kiwi gold or silver home with them, is finding its way into jewellery.
Auckland craft jeweller Asher Freeman believes ethical gold and silver have a big future.
In Britain a fair trade gold and silver project, which sources its precious metals from small-scale artesanal miners, is now gaining ground. But Asher prefers to source his gold and silver closer to home, and has begun using ethical gold and silver from the Waihihi Bullion Company.
"I love the fact that it all comes from New Zealand. When Baz started talking to me about it, I was like, 'This is totally awesome'."
"I was looking at getting Fair Trade gold from England," Freeman said, "but it was pretty pricey."
Freeman said some jewellery buyers were very keen to know the items they were buying were not tainted by human rights abuses. "So far the feedback has been fantastic," he said.
Howie cut his finance teeth in London, but set up the Waihihi Bullion Company in 2011.
Waihi and the gold mine are synonymous. The mine employed around 10 per cent of the workforce, Howie said, but a great many more jobs indirectly relied on the mine.
Initially, Howie's idea was to sell "green gold", but the key attribute of the Waihi precious metals was not its green credentials, but that buyers could be certain no human rights abuses, or environmental destruction went into its making. It was all dug out of the ground under New Zealand's strict mining and labour laws.
Howie did not believe any of the big global mints could guarantee the gold and silver in their bullion bars were free of taint, though he was an admirer of American Max Kaiser, who mints ethical silver bullion coins. "No child labour has been involved and that is something we can prove," Howie said. "We have full traceability."
The Waihihi Bullion Company buys gold and silver direct from OceaniaGold, contracting the Perth Mint to cast it into bars. That removes the precious metals from the stream of Waihi gold and silver flowing overseas to be melted down and combined with gold and silver extracted from places like Africa and South America to feed world demand.
Howie said his venture was welcomed by the gold miner and Perth Mint, both of which see a future in which gold and silver traceability would be increasingly important, just as it was in the diamond trade, which had the Kimberley system to exclude conflict, or blood diamonds from the global supply.
Howie said there were three markets for his ethical gold. The first was wealthy tourists visiting Waihi for a gold experience. That market is growing well, with many sales to visitors to the Waihi Discovery Gold Centre.
The second, and the one holding the promise of real scale, is the jewellery market, with Freeman looking to become the supplier fo Waihi Bullion's ethical gold to other jewellers. Howie drew a parallel to consumers' "paddock to plate" demands for clean, ethical food.
The third market is the investor market, though this one is trickier.
Ethical gold and silver may cost a little more, and investors have their eyes on the bottom line. At 5.03pm on Thursday, the Waihihi Bullion Company website had an "indicative" price of $2150.25 for one troy ounce of its ethical gold, compared to $2113.17 for a one troy ounce Cansdian Maple bullion coin, and $$2131.71 for a one troy ounce Gold Kiwi from the New Zealand Mint.
For jewellers, the cost of gold and silver is one cost input, but not the only one, so paying a little more still makes economic sense. But bullion coins like the Canadian silver maple and the Australian gold bullion Kangaroo are very liquid, immediately recognised and accepted the world over.
HOW TO BUY GOLD
Investors in gold and silver see them as a store of value in tough economic times.
It's traded globally in US dollars, which means the value of New Zealand gold-owners' hoards rises and falls not only with global demand, but also as a result of movements in the cross-rate of the New Zealand dollar and the US dollar.
Gold and silver are expensive to work with, so bullion coins cost more by weight than bars. Bullion dealers charge margins when they sell and buy coins and bars. Like banks with foreign currency, they sell at one price, and buy back at a lower one.
For example, at 3.28pm on Wednesday, the New Zealand Mint was selling gold at $1961.58 a troy ounce, but buying it at $1787.14. It was selling silver at $28.17 and buying it at $22.32.
The prices charged by different bullion dealers varies, so shopping around is worthwhile. And don't look only inside New Zealand's borders. The Perth Mint ships to New Zealand. There are also precious metals funds investors can opt for.
Unless an investor hides their gold and silver at home, or buries it in the garden, there are likely to be storage and insurance costs. There are also hidden costs. As gold and silver pays no interest like bank deposits, there is an opportunity cost to holding them, though this is currently low compared to keeping money in the bank as interest rates are so low.