Tag Archives: fairtrade gold

Five Gold Rings

Posted on February 24, 2012 | Leave a comment

Five Gold Rings; how Christmas came early for Olympic Contractors and how Bankers don’t care when Christmas is as a Bot can keep buying and selling, by Chris Edwards

In August 2012 several pounds of gold securely locked in storage in London will be released to public view in a constant flow of publicity over a six-week period.

Most gold is bought on a global market in which source is not known and not important so long as the gold is pure and the price is right. That is not the case with medal gold. The medals for the Olympic games are made under contract to agencies that buy the gold from specific sources on account of the particular requirement to introduce a specific amount of gold into the world markets on a non commodity basis at a particular time. This is gold that will not be traded. It will go from ground to furnace to die and casting,and every ounce of that will be planned and accounted for in advance of the process.

Although it is only a few thousand ounces in a global mountain of hundreds of millions, the fact it is from an identifiable source is of real significance as most gold is not. Once it has left the refinery as an ingot and been issued with a verifying certificate by the Bullion Vaults, it is stored away in a vault as collateral for an investing agency, or securitised to provide gold bonds that trade on the market like stocks and shares. However should an investor purchasing a certificate for gold have the audacity to ask to see his ingot..well, my friend , start looking.  At this stage It is impossible to trace the thread back from ownership of the certificate for gold, thence to the actual gold certificated as owned, thence to the source of that gold. Unless you win a medal. In which case for this year 2012 if you want to find its source then go east and keep going to…Mongolia, where you will find a massive western company extracting the ore using cheap labour in a remote location with minimal supervision or control. That means big profits for someone but not the workers who work in one of the o=most dangerous mining conditions of any in the world.

China is one of the largest gold buyers in the world with the specific aim of becoming the country which owns the largest reserves in the world. The Chinese people have also caught the vision and are investing in gold in an unprecedented way. There is a difference however between the state and its people in this matter. If the state buys gold someone picks up a phone or sends an e-mail asking to buy; someone in a broker or bank puts them n touch with a country wanting to sell; and at the press of a button an order goes out to John Doe in the lower 10th floor vault in Manhattan. He jumps on to the fork lift and moves one or 2 pallets from one pile to another and lo! China and the US have done a trade. Does anyone know or care where this gold is or what happens to it? Not really. The Chinese people or other individual investors however take a different view. They want a certified gold bar in their name and proof of its actual existence. There is a market for this investor and it is called the allocated gold market. In this market he can in theory go to the repository and demand to see his gold bar. So you can sit a home and become one of the savvy investors who are keen to own the metal and do not trust the bond or share trading system.

Alternatively you can become a banker and employ an automated system to source your buying and selling. Bankers employ a variety of “e-bay” programme called bots which scour the markets for gold deals and buy and sell on a 24 hour basis. So a further layer covers the process.  Now a person buying gold through a banker has an automated application working to source a gold price for ingots that are not specifically identifiable, being within the global vault , whose source is unknown and which once bought he has no idea where it is, and nor does anyone else. And the banker really does not care at all so long as he gets a profit off the deal. And in fact most gold deals result in basement John Does moving existing gold from one place to another ; they are not fueled by new to market produce.

It has been said that the walls of bank offices are lined with worthless gold-bearing certificates and that is probably more true today than ever before. The lure of the incorruptible metal remains irresistible. The 100 million people who work in the gold industry globally are simply irrelevant to these dealings. What if there were a way to influence the market so that new gold although a small percentage relatively were part of a tribal system where the supplier had a relationship with the gold owner and that relationship possessed an intrinsic value? That would mean that bots could not be used so easily to manage the market as they cannot be programmed with ethical value. That would mean that the market makers would have to become involved and become aware of the true identity of the gold they were buying and selling. Is that so hard to imagine? We have Fairtrade in everything and even in gold although it is restricted to the jewellery trade at present. If we had a Fairtrade market in gold bars then it would help these workers to recover their dignity earn a fair wage and perhaps even bring a reality check into Boardrooms when dealings in the metal are concerned. Oh yes; and you Olympic athletes could truly wear your medals with pride.

Copyright Chris Edwards 2012

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Posted in Fairtrade Gold, Gold, Gold Bullion

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Fairtrade Gold – 1 year old

Posted on January 30, 2012 | 4 Comments

12 months on from the launch of Certified Fairtrade Gold, I thought I would contact 3 of the UK’s leading ethical jewellery companies and find out what impact if any the launch of Fairtrade has meant for their business. So I went to the horses’ mouth and asked Alan Frampton from CRED Jewellery, the designer Jon Dibben and Vivien Johnston from Fifi Bijoux to give me their honest appraisal.

CRED Jewellery

The Original Fair Trade Jeweller

If people knew just how much harm was happening to artisanal miners all over the world they would never buy normal gold. Health and safety, child labour, poor environmental practice and poverty are perpetuated by a corrupt system of control by bullion buyers. Where Fairtrade has been the answer to bringing justice to the fresh produce industry, so it is doing the same in the mining industry. It will be difficult for Fairtrade as the values are totally different, but I firmly believe that in the future all precious metals and precious stones will have authenticate paperwork to prove they have been produced in a responsible way.

This year CRED has paid over £30,000 in premiums directly to benefit the artisanal mining communities. This is good news for everyone.

In February we saw the launch of Fairtrade gold. The supply got off to a slow start but by the autumn is was freely available. This all happened as gold was hitting $1900 per troy oz. Seven years ago it was $400 per troy oz. That’s nearly a five times increase over seven years. Given the Fairtrade premium of 10%, we were nearly priced out of the market. Fair Trade activists would support us but the general public were reluctant to pay over £100 more for the some product because it was Fairtrade.

Therefore we have responded by developing a new website with a more friendly retail environment with an improved information service that people have come to expect from us. We have developed the retail side of the business offering a wider range of ethically produced jewellery. These two areas are doing well with YOY growth of over 30%. Additionally we have created a wholesale wedding ring range that will enable other jewellers to partner with us in making Fairtrade Gold available to a wider customer base at competitive prices. We have strengthened the team by bringing in new staff. We are collaborating with other industry leaders to find ways of promoting Fairtrade products across the UK. Our 1st quarter strategy 2012 will be to find a price framework that really works for the consumer in these difficult economic times. High gold values mean we can no longer expect the margins of the past, so we are looking at creating demand by being realistic and aggressive on the price of jewellery whilst maintaining a clear focus on design, quality and value.

www.credjewellery.com/

Jon Dibben

The first year of Fairtrade gold has been very much one of creating a market and educating people. We have had a number of good articles in local magazines and newspapers, although it still amazed me that some didn’t appreciate the magnitude of the story. On the whole customers have been interested to find out more; many have been sceptical until they hear that the Fairtrade Foundation backs the initiative. Throwing in the bit about coffee and bananas really helped to get across the confidence that people should have in the certification process.

After a frustrating but understandably slow start to the supply chain, we only really got stuck in to making a number of one off pieces and a small collection in autumn, having finished our debut piece in the summer. We haven’t actually sold any yet, but they are higher priced pieces, so we are not taking this as an indicator of demand. However we have recently finished one quite special commission in Fairtrade gold and just had another one confirmed. As often happens with life, I had my preconceptions challenged, when a young, liberal, educated couple who had sold a high tech gaming company, were not interested in Fairtrade gold, even though what they were commissioning was a copy of a design we had made in Fairtrade, but a retired, conservative engineer and his wife, were adamant after our discussion, that their ring had to be Fairtrade.

Undoubtedly Fairtrade has been a good thing to be involved with; it was certainly something we all felt strongly about doing, but the gain to our company so far has been the wonder of having a positive story to tell in such challenging times. It is the correct ethical choice if you are interested in helping make other peoples difficult lives a little easier.

And for the future, publicity definitely has to continue, to keep the story alive in the minds of people and to increase consumer awareness of Fairtrade gold.

http://jondibben.co.uk/

Fifi Bijoux

Fifi Bijoux has been a campaigner and advocate of certification for Fairtrade gold since we launched in 2006. 2011 was particularly exciting to at last see the realisation of this and I was eager to see consumer response.

The only available source of certified Eco gold is Oro Verde (the project which actually launched Fifi Bijoux and inspired me to create the brand).

The eco mark is critical to Fifi Bijoux brand values; as I believe that the best models of sustainability are those which will allow complimentary industries to continue, or become more prominent when gold supplies deplete. Should the gold price become too low and mining no longer offers a viable income, industries which could offer alternative livelihoods may be harmed by the chemicals used in mining (cyanide and mercury) include fishing, agriculture and tourism. The Fairtrade standard does account for mercury management; but this remains a consideration for long-term development and so for the moment we only offer the ‘triple label’ that meets our ‘triple bottom line’ (people, planet, profit). Due to the limited availability of Oro Verde gold, it is comparatively expensive.

However, we’ve had a surge in uptake recently for bespoke pieces. Many of these customers have opted for a coloured gemstone rather than a diamond in their design. The feedback from our customers has been that they would rather have a truly unique ring, made in certified Fairtrade Eco gold than stick with tradition. I think this speak volumes of the new generation of conscientious luxury consumers. It’s also a dream come true as a designer. Together with our customers we’re forging not only a new ‘luxury value’ but also pushing creativity and creating exquisite new styles.

www.fifibijoux.com/

Final thoughts.

As I reflect on what has been a major marketing shift in the jewellery story, I am both optimistic as well as sobered by the challenges that lay ahead for the Fairtrade pioneers. The economic climate does not look bright for anyone, but it is pleasing to see three companies that have made progress economically with the Fairtrade story and product. Also a review of the websites shows a genuine diversity of design and product that is available to the consumer. Clearly value and design remain a high premium, as well as the more obvious value for money imperative.

Challenges I see for Fairtrade gold and its governance will be the issue of the Fairtrade premium and the potentially marginalising impact this will have on the broader commercial adoption if the price of gold remains high in 2012.  Also how quickly and effectively the UK Fairtrade Foundation will drive the consumer awareness campaign around Fairtrade Gold and the benefits that the purchase has on people and planet. Gold is not an agricultural consumable product and jewellery is not an average consumer experience. This will require specific marketing strategies to foster broad adoption of Fairtrade gold jewellery so it is demanded on every UK high street.

However I have confidence that despite the huge challenges that Fairtrade gold faces in 2012, we will see a steady growth in the number of companies selling Fairtrade gold, more certified miners benefiting from the scheme and more UK consumers asking for Fairtrade gold in their jewellery purchases.

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Posted in Fair Trade Jewellery, Fairtrade Fairmined Gold, Fairtrade Gold

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Early steps in Fairtrade Gold – Africa

Posted on December 14, 2011 | 4 Comments

Julius contacted me via this blog back in January of this year. A Kenyan born activist, Julius had grown tired of the endless fundraising form filling you need to undertake when you work with an NGO. As a local Migori County man he had grown up surrounded by artisanal small-scale miners and was familiar with the lifestyles, environmental impact and social conditions that the many thousands of miners endured in order to to pay there daily way in the world. So I was delighted when Julius showed a considerable amount of interest in how Fairtrade Fairmined Gold could work in his locality. We talked throughout the year and planned. One of the biggest reasons why Julius approached the Fairtrade process, was because the local miners wanted ‘to be free of the economic slavery forced on them by the Asian traders in the region’.

Migori County (MICA) Artisanal Mining COOP was established to allow the local miners and traders to come together and to formalise their relationships in such a way as they could move forward to achieve Fairtrade status and begin exporting their production directly to the international market. Additionally by removing themselves from the economic controls of the bigger traders they would be able to increase their prices and begin lifting themselves out of the poverty that this form of gold trading creates.

Illustratively, the local gold business works through networks of local traders, linking with the artisan miners and then selling their production back to central processing  hubs were the production is weighed, tested for purity and then smelted into simple ‘doray’ bars (unrefined gold bars)  before it is moved to Nairobi and then sold to refiners in Dubai. This system is funded at the front end by money from the traders, who due to their financing, control and monopolise  the entire region.  They buy the gold at discounted rates as much as -28% as I discovered and then adjust for purity. Many miners complain of dodgy scales and purity testing. For example, I had one local processor boast about his cheap PC computer that could scan gold and give a 100% accurate reading on the purity. The genius of this system is it keeps everyone in debt. The local trader may make an average commission as little as KSH 80-100 per gram that he buys on behalf of the Asian buyers with their money. Everyone owes money to these monopoly traders and therefore you have an effective and very efficient form of economic slavery. Any deviation from the proscribed process meets with a swift response as we were to find out.

Over the course of the year, I and others had worked with MICA to see them formalise into a COOP, secure a direct export license and then create a traceable supply chain that would link transparently the miner to the end purchaser of their gold. This in an of itself is progressive as we had to work our way through the myriad of prejudice that exists towards small-scale miners from the refiners, shipping companies and potential financiers and business men, all whose lives are linked to risk mitigation and protecting their investments. Although understandable to a degree, it becomes untenable when in the name of ethics and justice people expect the poor to underwrite their risk with personal guarantees etc.

Anyway with MICA at one end and CRED Jewellery stepping up to the plate to act as the buyer, we booked the trip with a view to enabling the first direct export of gold from a small-scale mining coop from Kenya in the history of the country. The simple aim to enable the COOP to export it first shipment and thereby open up a supply route that would give the COOP access to the international market as well as lay the foundations for a vital part of their becoming a Fairtrade certified mining operation.

However, and this is where it came unstuck, the financial, social, cultural and indentured relationships that have governed this area for so long were not happy with the idea of the local miners being free to export directly, as this would be an erosion of the power they have in the region. Traders have all the power in these artisanal relationships and the COOP discovered that the wrong trader in the mix can kill a process by simply using the economic leverage they have to dictate price, pre-finance behaviour and loyalty. As we came to the day of the trade, it became increasingly obvious that the big traders had a plant in the COOP who simply killed the opportunity, withheld a part of the services needed and prevented the COOP from delivering. That same evening certain members of the COOP were visited by local bully boys and everyone got the message that this movement towards economic independence was not going to be tolerated by the invisible status-quo.

It is a strange thing knowing that you are so near, yet so far. I literally watched the gold disappear in front of my eyes. It was all there, yet the COOP could not bring it all together and deliver and of course this all happened on the same day as the money for the shipment arrived in the COOP account. Also I was now being advised to get out of the area for awhile as things were heating up and the COOP were not happy about the deteriorating security situation. So with driver and passport to hand I jumped into a car and drove to Mwanza to visit some friends there, while the COOP waited for the situation to calm down.

I learned a very valuable lesson on this trip. Traders have the potential to create problems in a way that anyone in the fair trade movement must never underestimate. The Gold mafia are a very real obstacle to change and we must have a strategy for dealing with them. And also that a quality relationship is often forged in adversity, as opposed to success. In many ways the COOP needed to fail on the first trade so that they could fully understand the scale of the mountain they want to climb and how much work they will have to put into their dream.

The COOP I am pleased to say as we parted company with them having transferred the money back to the UK, were very clear of their continued commitment to becoming a Fairtrade COOP. Are now much clearer as to what the obstacles are and also the relationships that prevented their first shipment. In truth we stress tested the system and in doing so all have a greater understanding of what not to do in the future.

Is there a future? Yes there is, and I hope to be able to update everyone on our progress early in the New Year as CRED and MICA seek to facilitate Kenya’s first export from a local COOP.

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Posted in Fairtrade, Fairtrade Fairmined Gold, Fairtrade Gold, Responsible Mining, Small-Scale Mining

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