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One of the oldest markets in the world relies on a network of subterranean high-security vaults in Greater London for trading. About 50,000 gold bars, each valued more than $650,000, are traded there every day between the four major banks in charge of handling transactions. The system, which has gold stored there worth roughly $500 billion, has not undergone much alteration in the past 20 years. David Tate, the president of the World Gold Council, a significant lobbying organization for metal prospectors, thinks it is time for a change.
The former investment banker is pushing for changes he hopes will significantly boost demand, including a database that uses blockchain technology to track nearly every gold bar in the world. Once this is up and running, it should be possible to create digital tokens that are backed by physical gold and can be traded more easily. Market participants gathered at the October 16th meeting are skeptical that the proposed overhaul will take off after previous attempts to make minor changes to the market have failed. But a package of synced changes
Gold 247 (24/7) takes on a new urgency. Post-financial crisis banking reforms began to affect gold this year as market participants failed to prove the asset could be easily traded in times of stress. The new rules will actually make it more expensive for banks to hold bullion, squeezing out the meager income banks can make from trading the commodity, raising concerns that the market will shrink.
Over the past decade, gold has faced increasing competition from cryptocurrencies to grab the attention of investors looking for an alternative to stocks, bonds and cash, with some boosters pushing Bitcoin digital gold. digitization will make metals available to a wider range of investors. There are many industries, let alone institutions, that have not considered this product in the past, he says, Tait.
Credit Suisse AG. If we do this right, you stand a chance. Direct access to the gold market is difficult for individual investors. As with many physical goods, different standards apply in different places. London uses 400 oz bars for trading, while the popular Comex futures traded in the US uses 100 oz bars. However, even the smaller version can cost upwards of $160,000, so most retail investors will have to buy smaller bars or coins from dealers instead, often at a hefty premium. Tait believes this problem can be solved by creating tokens that can be easily exchanged for physical precious metals.