Can gold be a sensible addition to a "low-carbon" investment portfolio?

News Arnulf Hinkel, Financial journalist – 05.03.2019

The overall carbon footprint of gold is comparatively small

In 2015, the Paris Climate Agreement was signed by 197 countries committed to doing everything possible to limit global warming to a maximum of 2°C above pre-industrial levels. Even so, it was questionable whether stricter national regulations would be sufficient to make this happen. Today, it is clear that companies around the world need to step up their own efforts and lower their carbon footprints. Investors can be a driving force by steering their investments into a more eco-oriented direction. In pursuit of this idea, the World Gold Council, in collaboration with researchers from the Centre for Environmental Policy of the Imperial College London and others, conducted a study on the eco-friendliness of gold investments.

The overall carbon footprint of gold is comparatively small

Gold has a fairly high greenhouse gas intensity because a lot of energy is needed to mine it. On the other hand, gold is produced in extremely small quantities compared to other mined products; its overall carbon footprint is thus quite small. In addition, due to its high value and scarcity, gold consumption does not typically mean that it is depleted. Also, once they are manufactured, gold bars, jewellery and coins no longer have a negative impact on the climate.

Gold is a decisive factor in the development of clean technologies

Especially in the form of nanoparticles, gold is regarded as an important prerequisite for a low-carbon future. On the one hand, the precious metal is used in filters and devices to reduce greenhouse gases; on the other, it is used to increase the performance of hydrogen fuel cells and solar cells, improving their energy output. Talking about energy: gold mining itself is also becoming more eco-friendly. In Canada, GoldCorp, one of the world's largest mining companies, is currently building a fully electric gold mine. Thus, gold can indeed make a contribution to a low-carbon future and therefore deserves a place in the portfolio of any environmentally conscious investor.

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