Provenance Premium for Precious Metals

USI Università della Svizzera italiana has performed structured expert interviews and an online survey to study the relevance of provenance data, the size of the provenance premium and the data structure that industry experts expect from a valid provenance documentation of precious metals.



USI found that there is a demand for provenance data for gold and that market participants

are willing to pay for it. Concretely, the USI found that industry experts unanimously acknowledge the large importance of provenance data. Based on expert interviews, the USI estimates the provenance premium to be larger than 0% and smaller than 2%. This is slightly lower than existing gold certi fications, which imply a premium of between 1.7% and 10%.


Part of the diff erence can be explained by the wider ESG-scope of existing certi fications.

For the optimal structure of provenance documentation, the USI identified an "inverted ESG"

order of importance, with conflict-free ("G") being the most important data point, followed

by fair labour ("S") and environmentally friendly or sourcing from recycling ("E"). Also of

interest are the country of origin and the exact mine. Vanity data points such as the year

of mining are perceived to be of less interest.


The USI found that the industry currently relies on traditional relationships, with supplier

trust, followed by internal databases being the most important current technologies for

ensuring provenance. Survey participants however regard blockchain technology as the most important future technology, closely followed by chemical analysis. They also believe that the importance of trust is going to slightly increase in the future, while the importance of

internal database will slightly decrease, possibly as a result of moving to (public) blockchains.


Interestingly, the USI identified a large experience gap for the technologies that are perceived to be of importance. About half the respondents fi nd blockchain important, but do not have any experience with it. A similar, slightly smaller gap is identi fied for chemical analysis.


Identified topics for further research are the interaction of digital technology with the real world, i.e. the interaction of local inspections with the blockchain, the de finition of a standard structure for provenance data and the answer to the question whether the provenance premium is included in official gold price fixings (with undocumented gold trading at a discount) or whether this premium is added to the official gold price.


Read the full study here:

https://people.lu.usi.ch/gruberp/files/gruber_2021_paying_for_esg_gold.pdf