The World Gold Council (WGC) has presented a new idea aimed at modernizing the Gold market. According to this idea, there are plans to introduce a form of digital Gold, Commerzbank’s Head of FX and Commodity Research Thu Lan Nguyen notes.
Digital Gold is discussed to be introduced to the market
« So-called Pooled Gold Interests (PGIs) are intended to enable investors to hold even very small shares in a ‘pool’ of physical Gold. In addition, PGIs will also be able to serve as collateral, for example for a loan, and will be easily transferable between parties. This move should be seen as a response to recent developments in the field of digital money (stablecoins, central bank digital currency, CBDC). »
« This could be motivated by fears that stablecoins and/or CBDCs could prove to be alternative forms of investment, particularly to Gold. However, in our view, such concerns are unfounded. Both stablecoins and CBDCs are tied to fiat money – stablecoins because they are backed by US dollars and CBDCs because they are issued directly by central banks and function de facto like cash. »
« Gold, on the other hand, is ‘politically free’, meaning it is not issued by any central bank or another political institution. The amount of Gold is primarily driven by mining supply, which is slow to change. Whether fiat money can be transferred more easily and cheaply is likely to be of little interest to Gold investors who have invested in the precious metal to hedge against political risks. »