Industrial recycled gold is essentially a fabricated concept regarding the source and origin of gold, designed to obscure the fact that recycled gold is largely obtained from a wide range of pawn shops and cash-for-gold businesses. It is more practical and safer for brands to claim that their gold comes from a jewelry manufacturer rather than admitting it originates from pawn shops. Some jewelry companies are paying significant premiums to avoid disclosing that pawn shops and cash-for-gold schemes are part of their supply chain. I challenge these brands to consider: where do they think the gold in the manufacturing process comes from? It’s clear that the jewelry or watch manufacturer did not create the gold from nothing.

According to gold refineries, pre-consumer gold refers to gold used in the manufacturing process of jewelry or high-grade gold-containing items like watches and jewelry. For example, a jewelry manufacturer producing 18k gold rings or bracelets employs the lost wax casting method to create its pieces. After this process, the jewelry is removed from the casting tree, leaving behind an 18k gold remnant, which typically amounts to about 20% of the total gold input for that production. The average value of this remnant can range from $7,000 to $15,000, depending on the size of the casting tree. Medium to large-scale jewelry manufacturers can produce more than twenty casting trees per day.

Gold refineries that reprocess this type of gold have crafted a narrative centered around the term “recycled.” By technically classifying this industrial byproduct as waste, they can label the gold as recycled. This manipulation of technical definitions presents several issues:

  1. By designating this high-value industrial byproduct as waste, refineries can exploit the positive connotations of the word “recycled,” effectively eliminating concerns about traceability. This so-called recycled gold could have been mined just 15 days earlier and bought by the jewelry manufacturer as newly mined gold, only to be artificially rebranded as recycled gold. In my view, this practice is fraudulent.
  2. Its entire carbon footprint is instantly nullified once the manufacturer successfully labels this industrial byproduct as waste, despite its significant economic value. This practice constitutes carbon offsetting fraud.
  3. This gold lacks a clear origin, making it extremely difficult to trace. Whether it’s sourced from pawn shops, cash-for-gold businesses, illegal mining operations, legitimate mines, or investment gold, the artificial creation of this gold renders it almost impossible to track. The narrative and existing standards are designed to conveniently stop at the jewelry manufacturer, leaving the most risky parts of the long and complex supply chain unaddressed and unidentified.
  4. This process is essentially used to bypass restrictions on what can be classified as recycled gold. For instance, according to the RJC COC, eligible gold should come only from used jewelry and industrial sources. However, companies that manufacture jewelry that artificially create recycled gold can source their gold from any origin, including investment gold, newly mined gold, or illicitly obtained gold. Despite this, the resulting product can still be labeled as industrial recycled gold.
  5. This gold has never been in the hands of a final consumer, yet gold refineries are determined to classify it as pre-consumer recycled gold at any cost.
  6. The complete absence of traceability for this artificially created recycled gold makes it riskier than directly sourcing gold from pawn shops and cash-for-gold schemes.

I recently reviewed the latest ESG reports released by luxury companies, and there’s a prevalent focus on the use of industrial recycled gold. Personally, I believe these luxury jewelry and watch manufacturers are falling prey to a well-established narrative crafted by gold refineries. This narrative creates an illusion of traceability and responsibility through carefully chosen words, while in reality, it often obscures the truth. Gold refineries do not fully disclose the inherent risks associated with sourcing recycled gold, nor do they adequately communicate that tracing gold obtained from jewelry manufacturers is virtually impossible. A simple supply chain flowchart would reveal the limitations and challenges in tracing industrial recycled gold.

Another very delicate issue is that most LBMA gold refineries are purchasing carbon-neutral industrial recycled gold not by buying carbon credits and measuring the corresponding carbon footprint of the gold contained in these industrial by-products. The honest and transparent way to neutralize the carbon footprint of this so-called recycled gold would be to actually pay for carbon credits. Instead, they are neutralizing this gold’s footprint by artificially labeling it as waste as soon as the refiner purchases it. This method fraudulently neutralizes its entire footprint, even if the gold was mined just 15 days earlier. Frankly, this practice is very disturbing. There is no intention to pay for any carbon credits. The only carbon emissions accounted for in this process are those from refining the gold, which are irrelevant at about 30 kg per kilogram of refined gold. Some gold refineries shamelessly promote their artificially neutralized recycled gold without paying a single cent in carbon credits, misleadingly comparing it against the carbon emissions of large-scale mining while omitting other sources of mined gold with considerably smaller carbon footprints such as ASMG. Even if this so-called industrial recycled gold was recently mined, as the saying goes: if it looks and smells like fraud, it probably is fraud.

This narrative is a weak attempt to conceal the stark reality of minimal traceability associated with recycled gold. Claims originating from this source are virtually impossible to substantiate, elevating them beyond mere greenwashing to outright fraud. Exposing these falsehoods is straightforward: whenever you encounter the term “industrial recycled gold,” remember it’s a manufactured concept designed to mask the numerous inherent risks within the so-called recycled gold supply chain. It’s remarkable to observe the lengths these refineries go to distance themselves from pawn shops and cash-for-gold schemes.