Gold bar draws fintech crowds
The World Gold Council made a bold statement at the Money20/20 fintech convention in Las Vegas this week. Instead of typical promotional items, the industry association displayed a 400-ounce gold bar valued at nearly $2 million. A security officer removed the bar from its lucite showcase for attendees to hold.
The bar’s 25-pound weight caught many off guard. Businesspeople stopped in their tracks, dropped their bags, and waited in line for a chance to hold it. The display was not just a stunt. It was part of a focused campaign to increase demand for gold and establish its place in the digital world.
According to Stephanie Cadman, WGC’s head of communications in EMEA, gold has always been associated with something physical. “For thousands of years gold has been associated with something physical that you can own and see and touch,” she said. The challenge is to maintain that trust with digital gold.
Trust is a major barrier for digital gold, Cadman noted. The industry needs standards to build consumer confidence, a March report from the WGC and Boston Consulting Group stated. Without consistent rules for backing, custody, audit, and redemption, consumers cannot assume digital gold products are interchangeable.
Digital Gold’s Small Market Share
Digital gold remains a tiny fraction of the global gold market. The investment market for physical gold is valued at $13 trillion, while digital and tokenized gold make up less than 1% of the market, according to an Oct. 19 WGC report. The current digital gold market is estimated at between $45 and $55 billion.
The report forecasts that the digital gold market could grow to $170 billion by 2031 and eventually reach $700 billion. Gold’s appeal is rooted in its scarcity and durability. Annual mining supply adds only about 1.8% to the existing above-ground stock.
Gold’s role has evolved over centuries. It started as physical coins or bars around 3000 BC. In the 1990s, gold certificates emerged. By 2003, exchange-traded funds backed by physical gold gained popularity. Fast forward to 2005, and pool-allocated digital gold accounts allowed people to own a fraction of gold. By 2019, tokenized gold investments linked to vaulted gold became available.
Competing in the Digital Space
In the crowded digital and crypto market, gold must find its place. Stablecoins are becoming more mainstream, and both traditional banks and startups are launching new digital currencies.
Gold’s “limited and persistent supply, combined with diverse sources of demand,” reinforces its role as a long-term store of value.
