Annual Report 2022
Gold Bar Integrity
The Gold Bar Integrity programme (GBI) aims to digitally monitor gold moving through the global supply chain by confirming provenance and providing transparency over the chain of custody.
GBI Project And Scope
The Gold Bar Integrity project has two parts: the Security Feature and GBI Database, which will work together to ensure a robust digital ecosystem.
The Security Feature is a physical feature that will establish the identity and verify the authenticity of a gold bar, akin to a bar passport, which will link to the GBI Database. The market standards for the Security Feature were launched in 2020 by LBMA, and the associated application process opened in 2021. LBMA has been supported by the working group, a panel of technical experts, who review the Security Feature applications and determine if they meet the standards.
The Gold Bar Integrity Database – a transparent ledger of gold bars – will give consumers, investors, and traders greater confidence in gold as an asset class and advance standards for the common good of the global industry.
The GBI Pilot
The GBI Pilot, jointly launched by LBMA and World Gold Council (WGC) in March 2022 and concluded in July 2022, provided international market participants with the opportunity to help define the scope of the database, identify priorities, and gain a better understand how interoperability may work. They worked with two service providers, Axedras and Peer Ledger.
Over 30 participants took part in the pilot across 13 locations including UK, Europe, USA, Canada, Australia, and South Africa – and saw 16 test cases complete. Now that the pilot has ended, we can share some initial findings and information on next steps.
Key Observations
Throughout the course of three different simulation flights run by the two service providers, the participating companies (mines, refiners, carriers, vaults/banks) across the globe interacted with each other and jointly simulated upstream- and downstream-related processes on the blockchain-based solutions.
These simulations showcased how both platforms digitalised the gold value chain, including registering and exchanging data among parties in an efficient and secure manner. It illustrated the integration of provenance data from the source of origin and traceability of chain of custody per refined product. The handling of edge cases was also tested, such as duplicate detection or exit / re-entry of refined products – and bulk uploading of material and bars for all actors.
Next Steps
The pilot has been extremely useful in helping to understand the technology and its uses for the precious metals supply chain. It highlighted how the industry can collaborate on a shared solution to address a shared problem – confirming provenance and providing chain of custody transparency.
Despite the conclusion of the first pilot phase, some participants are still keenly running scenarios between themselves to test ‘real world’ scenarios while the vendors have the networks still available.
It’s become even clearer that a further governance and industry consultation is required for developing an industry standard taxonomy, dispute resolution process, and developing best practice for the reintroduction of material from outside the country of origin.
The pilot has also revealed longer term opportunities, which include the market expansion of the platform to include other gold products including secondary markets, other precious metals, ESG reporting, KYC requirements, and the due diligence surrounding the onboarding of customers.