In a first for precious-metals industry, Tradewind uses blockchain to trade $7.4M in gold

Financial technology firm Tradewind Markets Inc. announced Tuesday the first-ever trade of high-grade precious metals using its Tradewind Origins distributed ledger blockchain provenance management service.

The trade between Agnico Eagle Mines and Bank of Montreal, confirmed by the Royal Canadian Mint, consisted of 5,000 ounces of London Bullion Market Association quality-verified gold, valued at about $7.4 million.

The transaction took place through the delivery of the gold from Agnico Eagle’s flagship LaRonde mine, located in Quebec, Canada, to BMO. The Royal Canadian Mint will refine the gold from Aginco and tag the shipment with Aginco’s self-reported provenance information, including the origin of the metal.

All of this data and supply chain info, as well as the transfer of ownership credits, will then be recorded on Tradewind’s blockchain, completing the formal assumption of ownership by BMO.

Tradewind Markets launched Tradewind Origins, its blockchain provenance service, in November with the intent of using blockchain technology to provide trustworthy digital transaction protection for precious metal supply chains in consultation with the Royal Canadian Mint.

Blockchain technology works by widely distributing a ledger of transactions between multiple parties and transactions are only added after rigorous cryptographic proof-of-work and consensus between parties. With multiple copies of the ledger shared and cryptographic security, data stored on a blockchain is extremely difficult to tamper with, and each block uses the cryptographic hash of the previous one in the chain to prove its authenticity.

“This is a long-awaited development for precious metals markets,” said Michael Albanese, chief executive of Tradewind Markets. “By delivering meaningful data on how, when and where these assets were sourced, we are providing the ecosystem with greater visibility into the precious metals global supply chain. By differentiating their metals, companies are unlocking the latent value of their production. Tradewind is proud to bring this new level of transparency to financial markets.”

Suppliers of precious metals, including miners and recyclers, record a lot of information about the provenance and supply chain of raw materials using Tradewinds Origins before delivery to a refiner. This information is then stored in Tradewind’s blockchain as a transaction. Upon arrival, the acceptance of the delivery is recorded and confirmed on the blockchain as well. This continues through the refinement process, storage and eventually sale to other companies.

By recording each step in the supply chain, the product can be traced, via the blockchain, back to its origin. That helps assure not just the quality of the product, but also the veracity of its origins.

For suppliers, this reduces supply errors that could be caused by mismanaged paperwork. It also boosts trust in the supply chain for users. And for regulators, it provides deep transparency into the entire lifecycle of metals from the mine to the factory floor.

The regulation of precious metals requires ethical sourcing, which means showing that they were mined or imported according to the law. Numerous companies have begun experimenting with blockchain supply chains to provide solid documentation for regulatory compliance. They include Ford Motor Co. and IBM Corp. tracking cobalt sourced from the Congo and Volkswagen Group and Minespider GmBH proving ethical sourcing for battery materials.

“Through their adoption of the Tradewind platform, BMO has improved precious metals producers’ ability to differentiate our product for the first time,” said Ben Lam, treasurer at Agnico Eagle Mines. “Meanwhile, precious metals investors and downstream purchasers, such as luxury goods companies and jewelers, will be able to purchase from selective jurisdictions and sources, such as those adhering to the highest ESG standards.”

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