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  • Writer's pictureBIZWORLD MAGAZINE

$11 Trillion Global Gold Market Slated for Reform with a Digital Drive

Updated: Aug 2, 2023

Trading on one of the world’s oldest markets depends on the high-security vaults that can be found underneath Greater London. Out here, approximately 50,000 gold bars are found changing hands daily amongst the four big banks responsible for processing transactions. Each gold bar is worth around $650,000.

The system includes around $500 billion worth of gold stored in locations. It is found that these have been trundling with a little change for the majority party in the last twenty years. The head of the World Gold Council, David Tait, the main member of the group among metal miners, believes that it is time that it requires an overhaul.

The former investment banker hopes to push through the changes, remarkably enhancing the demand. These changes also include a database using blockchain technology to track almost each gold bar across the globe. Once this technology starts functioning in this arena, it would be possible to create a digital token backed by physical gold that can be traded much more easily.

The market players will be meeting for a conference on October 16th. They are apprehensive about these attempts that might be off the ground, and this is because any change attempted earlier has all failed and consequently fallen flat. The changes are being called Gold 247 for 24/7 and are being addressed with a lot of urgencies. The period of post-financial crunch banking reforms started affecting gold in the present year following market participation, which could not prove that the assets could be traded easily during stressful times.

The newly introduced rules are making it difficult for the banks to hold on to bullion, thereby compressing the returns, which are already meager from trading commodities, which raises concerns that the market will be shrinking. And in the last decade, cryptocurrencies have posed a threat to gold. Investors have been drawing to digital tokens and alternatives to bonds, stocks, and cash along with some boosters, and Bitcoin is also referred to as “digital gold.”

The project starts with a program ensuring the integrity of the gold bars, with the London Bullion Market Association making use of blockchain technology for monitoring the supplies. Pilots that involved around 30 participants include the miners, the refiners, and the banking institutions.

In the past year, a working group was established by the government in the UK comprising banks and investors who had recommended policies for making trading more transparent on the London gold market.

Bloomberg News reports that the idea of a tradeable asset representing ownership of metal held in the vaults is not new and unheard of. In 2004, the Council helped launch an exchange-traded fund backed by gold, known as SPDR Gold Shares, which presently holds assets of about $50 billion.


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