Royal Mint physical gold ETC endorsed as sharia compliant

Mar 12th, 2023 | By | Category: Commodities

The Royal Mint’s physical gold ETC – the Royal Mint Responsibly Sourced Physical Gold ETC (RMAU) – has been endorsed as sharia-compliant by Amanie Advisors, a Dubai-based firm specializing in Islamic finance solutions.

Royal Mint physical gold ETC endorsed as sharia compliant

The processes by which RMAU buys, sells, and stores its underlying gold holdings has been endorsed as sharia-compliant.

RMAU was brought to market in 2020 in partnership with white-label ETP platform HANetf. Despite a challenging gold market environment in 2022, the ETC has enjoyed steady interest from investors with its assets under management recently reaching a new milestone of $800 million.

According to HANetf, RMAU’s consistent demand reflects its robust ESG credentials and its unique custody arrangement which provides investors with an additional layer of diversification.

By securing an official sharia accreditation, the ETC will now appeal to an even wider audience, further helping to support its growth in the future.

Sharia principles assert that wealth should be generated from legitimate trade and asset-based investment, that investment should also have a social and ethical benefit to wider society beyond purely an investment return, and that risks should be shared.

Amanie Advisors endorsed RMAU as satisfying these principles after scrutinizing the ETC’s processes for buying, selling, and storing its underlying precious metal holdings.

Commenting on the accreditation, Andrew Dickey, Precious Metals Division Director at The Royal Mint, said: “The Islamic investment market in the UK is growing and its position as a destination for sharia-compliant solutions is strengthening. With a rich history spanning over 1,100 years and as the home of precious metals, The Royal Mint is proud to be accessible to a wider variety of investors.”

Hector McNeil, co-CEO and co-Founder of HANetf, added: “We are delighted that The Royal Mint Responsibly Sourced Physical Gold ETC has been confirmed as sharia-compliant. The Islamic investment community is growing and, therefore, it is important to ensure investment products cater to their needs.”

RMAU’s gold is stored in the Royal Mint’s ultra-secure vault in South Wales, located outside of the mainstream financial ecosystem. This is in stark contrast to the vast majority of gold ETCs domiciled in Europe which concentrate their gold holdings in the vaults of either HSBC or JP Morgan in London.

The product is also the first ETC to be 100% backed by responsibly sourced gold in line with the London Bullion Market Association’s 2019 standards. This ensures, on a best endeavours basis, that gold acquired for the ETC is from wholly legitimate and conflict-free sources. Additionally, the ETC is backed in part by gold bars that have been cast from 100% recycled gold sourced from scraps in the manufacturing process.

Another feature that differentiates RMAU is its physical redemption facility. Investors in the ETC are able to redeem their shares for physical gold bars or bullion coins issued by the Royal Mint, a mechanism that is totally unique to RMAU.

McNeil added: “Alongside being sharia-compliant, we hope that investors will find the ETC’s other unique features appealing, including its use of only post-2019 responsibly sourced LBMA Good Delivery Bars, its partial allocation to 100% recycled gold bars, and safety and security provided by the gold that backs the ETC being custodied at The Royal Mint’s vaults.”

RMAU is listed on London Stock Exchange in US dollars and pound sterling, as well as on Xetra, Borsa Italiana, and Euronext Paris in euros.

It comes with a total expense ratio of 0.25%.

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