Regulation of gold
There is no over-arching global regulation for gold, but many aspects of it – especially on the mining side – are heavily governed by national rules.
There are also important voluntary codes that contribute to the smooth functioning of the global gold market.
The exploration and mining of gold is subject to a myriad of regulations, typically embedded into a national mining law.
National mining laws cover areas such as: licensing process, foreign ownership of land, environment rules, health and safety, tax and royalty payments.
Responsible sourcing regulations
In addition to national mining laws, there are a number of regulations that specifically cover the responsible sourcing of gold. For example, the Dodd-Frank legislation in the United States (Section 1502) and the EU Conflict Free Minerals regulations require due diligence within the supply chain in order to ensure that mining and production of gold does not fund conflict.
One of the most widely recognised is The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas.
The guidance was operationalised by the World Gold Council for the mining sector, the London Bullion Market Association for the refining sector and the Responsible Jewelry Council for this sector. Other similar geographically focused initiatives exist too.
Industry initiatives based on the Guidance
- Conflict-Free Tin Initiative
- Solutions for Hope
- Conflict-Free Sourcing Initiative /Smelter Initiative
- DMCC’s Responsible Sourcing of Precious Metals
- ITRI Supply Chain Initiative
- London Bullion Market Association’s Program
- Responsible Jewellery Council’s Certification
- World Gold Council’s Conflict-Free Gold Standard
- ICGLR Initiative against the Illegal Exploitation of Natural Resources
Regulation of gold’s market infrastructure
Parts of the market infrastructure that exists to buy and sell gold are regulated too.
The bullion banks and exchanges that buy and sell gold or gold products, as well as financial advisors and wealth managers, are typically regulated by their home regulators.
In the UK, the Financial Conduct Authority (FCA) regulates the conduct of several organisations involved in the gold market, including: Exchanges (e.g. The London Precious Metals Exchange (LME), bullion banks, the “clearing” banks, financial advisors, and investment and wealth managers.
The FCA also regulates the LBMA Gold Price, the internationally recognised global price benchmark for gold.
Coins and bar dealers and online platform providers of gold products are not typically regulated.
Voluntary codes also contribute to the smooth functioning of the global gold market. The most important of these is the “Good Delivery” standard, which implements best practices in bar quality throughout the world. This is administered by the London Bullion Market Association and its members.
The LBMA has also launched the “Global Precious Metals Code”. This is a voluntary code designed to include all precious metals participants, which sets out guidelines promoting the integrity of the precious metals market.
Taxation of gold
Gold is subject to a range of taxes at various different stages of the exploration and production cycle, in its import and export and in its purchase and sale.
Royalties and production taxes of gold vary widely from country to county.
Gold is freely imported and exported by many countries, making it a truly global market, but importantly this is not always the case.
Investment gold is often free of Value Added Tax (VAT) or Goods and Services Tax (GST), but this still exists in some countries. VAT and GST can also differ from product to product, e.g. between coins and bars, so it is important to check local tax rules.
Gold is often subject to Capital Gains Tax when it is sold. Again, it is important to check local tax rules.