The CACHE Gold Standard

Not all gold is created equal when it comes to liquidity, taxation and compliance.

In bullion terms, there are three broad types of gold:

  • Branded Refinery Gold – Includes extensive controls on the gold’s origin
  • Junk gold – Gold jewelry and pellets for industrial use of various purities
  • Unmarked Gold – Illiquid, trades at discount and may have AML/CFT issues

Gold spot prices refer to the branded refinery variety. Because CACHE can tokenize gold for third-parties which can later be redeemed, it is important to maintain a minimum quality standards, which for CACHE, requires highly liquid, branded refinery gold.

The CACHE Gold standard prevents deposit of unmarked gold with the intention of withdrawing branded gold. CACHE also advises users against depositing minted gold coins because CACHE values the pure gold mass irrespective of premiums. This means the premium typically paid for coins over bars would be lost and other CACHE Gold token holders would have the opportunity to earn a riskless profit by redeeming their tokens for coins instead of bars.

CACHE Gold will be primarily backed by 1 KG branded gold bars since 1kg bars are a good compromise between low premiums and a practical minimum redemption value. 400 troy ounce good delivery bars and 100 grams are also expected to back CACHE Gold, however, redemptions will likely target bullion with the highest premiums resulting in 100 grams bars being redeemed first and leaving 1 KG and 400 troy ounce good delivery bars as the majority of CACHE Gold’s backing.

It is important to note that not all branded gold bars are uniform. The LBMA good delivery rules state that LBMA good delivery bars can vary between 350 to 430 troy ounces in weight and must have a minimum purity of 99.5%. Described below are the rules CACHE Gold implemented to ensure bars of different purities and weights are valued fairly and consistently.

Gram Determination

Since CACHE Gold operates on a pure gram basis rather than a troy ounce basis, it must consistently convert troy ounces to pure gold grams. This conversion uses the LBMA Conversion ratio between grams and troy ounces of 31.1034768 (7-digit precision).

GramChain® uses 2 digit precision to provide 1/100th of gram precision. Bars will therefore be rounded to 100.00 or 100.01 grams. This precision is exceeds the +/- 0.05g variation allowed by the Shanghai Gold Exchange and is equivalent to the LBMA 0.00032 troy oz variation standard as well.

A troy ounce gold bar is converted to grams:

  • 10 troy oz = 10 x 31.1034768 = 311.0348 grams - rounded to two digits (311.03)
  • 1 troy oz = 1 x 31.1034768 = 31.10348 grams - rounded to two digits (31.10)

Pure (Fine) Gram Determination

Purity variations are addressed by multiplying the gross bar weight times the stated purity. Therefore, a 400 troy ounce 99.5% pure bar would be 398 pure troy ounces whereas a 400 troy ounce 99.99% bar would be 399.96 pure troy ounces.

Secondary alloyed metals are ignored as only gold is measured. This is another reason not to deposit 92.5% gold purity American Eagle gold coins as their silver content balance will not be recognized.

GramChain® follows the LBMA purity rounding practice which truncates (rounds down) by default, unless the decimals to be truncated are 9 or more, in which case they are rounded up.

For example, a gold bar’s gross weight at:

  • 1,000 grams with 9999 purity would be 999.90 pure grams.
  • 10 grams with 999 purity would be 9.99 pure grams (10 x 0.999 = 9.99)
  • 10 grams with 9995 purity would also be 9.99 pure grams (10x 0.9995 = 9.995 rounded down)
  • 10 grams with 9999 purity would be 10 grams (10x 0.9999 = 9.999 rounded up)

Brand List

Any gold refineries on the LBMA list are accepted by CACHE Gold as are several reputable non-LBMA refineries and national mints. Sunshine Mint, for example, is a major provider of gold blanks to the US mint, is not an LBMA member but is accepted by CACHE Gold.

Branding filters are enforced via the GramChain® scanner directly at the vault at the time of scanning and later verified making it impossible to deposit gold bars that are not on CACHE Gold’s list of accepted refineries. It is possible for a brand to be added to the list upon request. Contact us at [email protected] to request an addition.

Refineries sometimes make custom bars as a white label service using other names. Such bars are acceptable as long as the refinery hallmark is present, clearly visible and the refinery is on CACHE Gold’s list of accepted refineries.

Currently the following brands are accepted:

  1. ABC Bullion (ABC) - ABC Refinery (Australia) Pty Ltd
  2. AGR Matthey (AGR) - AGR Matthey
  3. Logam Mulia (ANTAM) - PT Aneka Tambang (Persero) Tbk (Logam Mulia)
  4. Argor-Heraeus (ARGOR) - Argor-Heraeus SA
  5. Asahi (ASAHI) - Asahi Refining / Asahi Pretec
  6. Austrian Mint (Austrian) - Muenze Oesterreich AG
  7. Banco de Mexico (BMexico) - Banco de Mexico
  8. Bangko Sentral (BSP) - Bangko Sentral ng Pilipinas
  9. Degussa (DEGUSSA) - Degussa-H_ls AG
  10. Engelhard (ENGEL) - Engelhard Industries Pty Ltd
  11. Heraeus (HERAEUS) - Heraeus Deutschland GmbH & Co. KG
  12. IGR (IGR) - Istanbul Gold Refinery
  13. Jiangxi (JIANGXI) - Jiangxi Copper Company Ltd
  14. Johnson Matthey (JM) - Johnson Matthey
  15. LS Nikko Copper (LSNIKKO) - LS Nikko Copper Inc
  16. MATSUDA SANGYO (MATSUDA) - MATSUDA SANGYO
  17. Metalor (METALOR) - Metalor Technologies Singapore Pte Ltd
  18. MMTC PAMP (MMTCPAMP) - MMTC-PAMP India Pvt. Ltd
  19. Nadir (NADIR) - Nadir Metal Rafineri San. ve Tic. Ltd.
  20. Ohio Precious Metals (OHIO) - Ohio Precious Metals, LLC
  21. Pamp (PAMP) - PAMP SA
  22. Peñoles (PEÑOLES) - METALÚRGICA MET-MEX PEÑOLES, S.A. DE C.V
  23. Perth Mint (PERTH) - Perth Mint
  24. People Republic of China (PRC) - Chinese State Mint
  25. Rand (RAND) - Rand Refinery (Pty) Ltd
  26. Royal Canadian Mint (RCM) - Royal Canadian Mint
  27. Republic (RMC) - Republic Metals Corporation
  28. The Royal Mint (RoyalM) - The Royal Mint Limited
  29. SKS (SKS) - Shuikoushan Nonferrous Metals Group Co Ltd (SKS)
  30. Solar (SOLAR) - Solar Applied Materials Technology Corp.
  31. Sunshine Mint (Sun) - Sunshine Minting, Inc.
  32. Tanaka (TANAKA) - Tanaka Kikinzoku Kogyo K.K.
  33. TXY (TXY) - Sichuan Tianze Precious Metals Co., Ltd
  34. Umicore (UMICORE) - Umicore SA Business Unit Precious Metals Refining
  35. United States Mint (USMint) - United States Mint
  36. Valcambi (VALCAMBI) - Valcambi S.A.