Fair Trade Gold: An Update

For my May JCK story on fair trade gold, I spoke to a lot of people who deeply believed in the fair trade cause. Yet they all had complaints about how the product was marketed: The 10 percent premium was too high for consumers, they said. It didn’t make sense to have two labels (Fairmined and Fairtrade). And because of the split between FLO (Fairtrade International) and Fair Trade USA, it was almost impossible to buy the gold in America, which everyone saw as the best market for this product. 

As the issue went to press, FLO and the Association for Responsible Mining—the group behind the Fairmined label—announced they would no longer work together, and that seemed like just one more issue to muddy the waters. 

Now, it’s a few months later, and a very different picture is emerging. FLO and ARM going their separate ways may have been the best thing to jump-start the category.

For one, ARM’s Fairmined gold is now available in the United States. And soon, Fairtrade gold will be sold here, too, according to Greg Valerio, the veteran jewelry activist who is now FLO’s gold and previous metal program coordinator.

(What is the difference between the two labels, you ask? At present, there doesn’t seem to be one; they both source from the same mines. Down the road, though, the two groups may develop their own standards, but they aren’t likely to be noticeably different. “We don’t see ARM as a competitor,” says Valerio. “We are both part of a broader movement for change in small scale mining.”)

One of the things Fairtrade has changed is the product’s premium, as many complained that 10 percent on an already expensive piece of gold jewelry was too high. So the new premium is $2,000 per kilo, regardless of the price of gold.

“That puts about $30 on the price of a wedding ring,” Valerio says. “That is very affordable for consumers.”

He says he has already seen greater interest in the re-priced product, including from some “very significant companies” who are subject to the SEC’s Dodd-Frank conflict mineral rule and want a “clean source” of gold. 

“Everything we do is fully traceable,” he says. “From a Dodd-Frank SEC perspective, we tick that box off big time.” Interestingly, though, those companies don’t want to use the Fairtrade label. “They don’t want to co-brand,” he says. “It’s the golden rule of luxury companies that you don’t co-brand.” But he stresses that even if these big players enter the picture, they won’t dominate the market. “We are very used to servicing large corporate accounts like Starbucks as well as the small connoisseur coffee house.” 

Valerio admits there is a lot of work to do, including developing new sources—there are currently seven pilot projects running—and figuring out ways to get the word out. (One enticing idea involves bringing celebrities to the mines.) There is also the opportunity to market Fairtrade silver and platinum—and, he hints, maybe even diamonds.

“Stores in our industry don’t want to talk about the source of their products,” he says. “They either don’t know or are embarrassed by it. For us, it’s critical to put the source and the soul back into the jewelry product.”  

 A couple of thoughts:

—Fairtrade and Fairmined gold items present an good opportunity for jewelers to offer an appealing, differentiated product that not many other stores are carrying. If you are located in a college town, or simply deal with a lot of younger consumers who ask questions about things like blood diamonds, it’s worth looking into.

—I have heard jewelers say they don’t want to offer fair trade products, because they think that it will make the rest of their inventory look bad. I have two thoughts on that. First, if people are worried their inventory is from dubious sources, that’s a problem in itself.

Second, look at Starbucks. For that matter, look at your local supermarket. All those places sell fair trade coffee, bananas, you name it. Not only does that not make the rest of their inventory look bad, it gives the store something of a “halo effect.” There are a lot of people who think that Starbucks sells only fair trade coffee. It doesn’t—but it is helped by its association with that name.

—For that reason, I’m not sure it makes sense for luxury companies who buy the product to not use the Fairtrade label. They will be paying the premium; they might as well as enjoy the benefits.

We all know there are companies in our industry who have done a lot of advanced work on responsible sourcing. But consumers don’t know this. Carrying a fair trade-labeled product is one way to tell them. 

—Chances are if you are reading this you already understand why fair trade gold is a worthwhile product. But if you want to know how it helps the affected communities, the video below gives a quick summary. Small-scale mining is really pretty bad, but it’s an undeniable part of our industry. This is a way to turn it into a positive.

Anyone interested in learning more can contact Valerio at gold@fairtrade.net.

JCK News Director