Digital Gold Could Unlock 24/7 Bullion Liquidity as Trust Hurdles Block Wider Use
Updated
Updated · Kitco NEWS · Jul 7
Digital Gold Could Unlock 24/7 Bullion Liquidity as Trust Hurdles Block Wider Use
1 articles · Updated · Kitco NEWS · Jul 7
Summary
24/7 tokenized gold trading could turn bullion from a static reserve into a more liquid asset that can be traded continuously, posted as collateral and integrated more deeply into finance, Gold Token SA CEO Kurt Hemecker said.
Basel III already gives physical gold favorable treatment, but it is not a High-Quality Liquid Asset; Hemecker argued tokenization could strengthen the case for gold to qualify for repo and interbank settlement use.
This year's market disruptions and the Iran-war-driven energy crisis pushed some central banks to monetize gold through swaps and other liquidity operations, underscoring bullion's role as a usable monetary asset.
Trust remains the main obstacle: tokenized gold depends on confidence in the backing metal, custodian, legal ownership, storage jurisdiction, sourcing and provenance.
Industry-wide standards and custody agreements are still missing, leaving digital gold nascent even as Hemecker says the recent price correction is a chance to build infrastructure before demand returns.
Is tokenized gold the key for central banks to finally build a global financial system without the US dollar?
Will digitizing the world's safest asset ironically introduce catastrophic new risks to the global financial system?
The Digital Gold Surge: How Tokenization and Regulation Are Shaping a $5,000/oz Market
Overview
The digital gold market is undergoing rapid transformation, driven by innovative infrastructure and a shift in global financial strategies. The World Gold Council’s 'Gold as a Service' model introduces a shared system with physical, digital, and interface layers, aiming to foster competition through better user experience and pricing. This new framework allows digital gold to be used as deployable capital, enabling advanced uses like collateral for borrowing. These developments reflect a broader move towards integrating gold into modern finance, making it more accessible, versatile, and aligned with evolving market needs.