Sprott joins with Canadian Mint to launch gold ETF
Canadian commodities ETF specialist Sprott has teamed up with the Royal Canadian Mint to launch what it is marketing as “ethical gold”.
The Sprott ESG Gold ETF (SESG) has been listed on NYSE Arca. It holds allocated bullion, like every gold ETF, held in segregated trusts.
What makes SESG different from other gold ETFs is that it only holds bullion that the Royal Canadian Mint says complies with its standards.
The fund charges 0.38%.
Bernie’s commentary – marketing ruse?
Gold ETFs already have ESG standards built into them. These ESG standards are called “LBMA Good Delivery”. To have a gold bar accepted for trading in London by the LBMA – the world’s gold exchange – gold bars must meet certain standards. These include not having come from artisanal mines – like those in Papua New Guinea. And not having created too much (everything’s relative, right?) environmental destruction in digging up the gold ore.
Miners and refiners that don’t meet the LBMA’s standards are rejected from the LBMA’s gold exchange. And therefore have to be sold at a major discount in some dark alley somewhere.
So what does this new ETF really offer? And is this meant as some criticism of the LBMA’s good delivery standards?
It’s hard to say. The press release says: “Selected gold miners will also undergo additional due diligence conducted at individual mine sites to ensure they are meeting local ESG best practices.”
So Sprott and the Canadian Mint are going down the mine shafts in deepest darkest Nunavut, and Yukon, are they? I’m a bit sceptical. Until we have some more clarity on what the value-add is here (how is the ESG above and beyond good delivery) my instinct is that this ETF's ESG screen is mostly a marketing creation.