More worryingly, the AFR claimed that the Perth Mint bosses knew about the purchases of conflict gold - they were told directly by their staff - but ignored the warnings.
Conflict gold is sourced from miners and dealers that use unethical methods to mine gold. These can include child labour, threatening uncooperative locals with guns, and using toxic mercury to mine the gold. The havoc that conflict gold reaps on villages in PNG has been the subject of reports from campaigners and academics.
Because of the violence that conflict gold causes, the London Bullion Market Authority (LMBA), which runs the world’s biggest precious metals exchange, works to ensure that all gold it accredits is conflict free.
The LBMA's stamp of approval - called LBMA good delivery - is a crucial and often overlooked piece of plumbing in the international $100+ billion gold ETF market. Institutional investors - the kingmakers in the gold ETF market - require ETFs to be backed by LBMA good delivery bars.
For this reason, all gold ETFs worldwide to ETF Stream's knowledge use LBMA accredited gold. And for this reason too, the LBMA is very powerful, if softly spoken, in the ETF industry.
Following the AFR's revelations, the LBMA has announced an investigation.
The Perth Mint, for its part, has emerged as one of the foremost gold ETFs providers the past several years. It is different from other gold ETF providers in that is both an ETF issuer and gold refiner.
The Mint's New York Stock Exchange-listed AAAU is the cheapest gold ETF in the world and has amassed $332 million in assets the past 2 years.
The Perth Mint declined to comment.
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