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World Financial Association plans to promote digital gold, and the gold market may usher in disruptive changes
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: The World Financial Association plans to promote digital gold, and the gold market may usher in disruptive changes." Hope it will be helpful to you! The original content is as follows:
WGC CEO David Tate pointed out that this new type of gold will achieve "digital circulation of gold within the ecological system and can be used as collateral" for the first time. Although gold has become a core safe-haven asset due to physical attributes and no counterparty risks, Tate emphasizes that digitalization is the key to expanding the coverage of the gold market. Its goal is to "promote the digital standardization of gold, adapt to various financial products, and change the positioning of global asset management institutions for gold."
This new model is expected to become a new fulcrum for gold prices. Its characteristics and advantages are as follows:
Digital gold activates financial attributes to reshape gold value
Although the current price of gold hits a record high and doubles its market value in the past three years, it is still classified as a "weak liquidity and no return" asset in the balance sheets of most institutions. Tate believes that digitalization can expand gold applications to margin reimbursement and collateral, creating returns for holders - "For banks, gold in the balance sheet can be used as collateral to obtain generous returns."
This digital unit, called "Collected Gold Equities (PGIs), allows banks and investors to buy and sell part of the ownership of physical gold in separate accounts. The pilot program is scheduled to be launched in London www.xm-forex.commercial institutions in the first quarter of next year. Its operating framework relies on core participants to hold the target gold through a trust structure, which is also WGC's latest move to promote the digitalization of the gold market (in January this year, it launched a blockchain traceability database for refineries and gold bars for its use).
Digital gold, stablecoins have great potential for anchoring
Although gold prices rise, gold still faces www.xm-forex.competitive pressure from cryptocurrencies and traditional asset-linked stablecoins. Previously, most gold stablecoins failed to try, whenThe previous best performers, TEDA Gold (US$1.3 billion) and Parker Gold (US$1 billion), have only managed a very small part of the gold ETF (US$400 billion).
WGC hopes to achieve a breakthrough through digital gold. As the world's largest physical gold trading center, the London market relies on the reserves of HSBC, JPMorgan Chase and the Bank of England, mainly focusing on "OTC" and existing two types of transactions: "specified gold (specific gold bars)" and "non-specified gold (only fixed quantity)"; the WGC proposal will add the third type of PGI, and plans to invite mainstream London banks and traders to serve as joint holders of the target gold.
However, market resistance remains: the gold market is dominated by institutions with deep foundations and conservative risk appetite, and has a weak willingness to change. Adrian Ash, research director of gold trading platform BullionVault, questioned that "gold is already the best-performing asset class, and this move is like finding solutions to non-existent problems."
Policy endorsement strong support, blockchain technology empowers gold traceability
In January this year, WGC and the London Gold and Silver Market Association (LBMA) jointly launched the "Gold Bar Integrity Plan" blockchain database. Although the overall promotion progress is slow, 96% of the refineries on the "qualified delivery list" of LBMA have joined. The core goal is to improve the transparency of gold sources, eradicate non-compliant operations, and ultimately achieve "each gold bar has an exclusive 'pass' and 'birth certificate'."
At the same time, WGC is joining law firms and consulting www.xm-forex.companies to promote "wholesale digital gold", and the core is still PGI - retaining the physical security of designated gold and the flexibility of digital ownership. Investors can hold part of the gold bar share and transfer it safely.
Mike Oswin, head of global market structure and innovation at WGC, said that this move is highly consistent with the British government's goal of "improving the efficiency and resilience of the wholesale market" of "the digitalization strategy of the financial market", and London, as a "global trading center for clearing 20 million ounces of gold per day", has the conditions to lead the innovation of the model.
The initiative is also supported by the legal framework formulated by Nianlida Law Firm to ensure transaction transparency, clear ownership and www.xm-forex.compliance, and further consolidate London's position as the world's leading gold trading center.
Conclusion: Digital gold is expected to become another fulcrum of gold prices in the future
WGC plans to pilot PGI (digital partial equity of physical gold) in London. If successful, it is expected to change the gold trading, settlement and mortgage methods, and give modernization efficiency to this hundreds of years of historical asset.
Digital gold is reshaping the pricing logic of gold through three major ways of activating financial attributes, acting as a stablecoin anchor, and binding policy dividends. Its core value lies in transforming gold from a "passive store of value" to a "active financial instrument" and attracting incremental funds through technological innovation. Although the short-term pilot scale is limited, in the long run, digital gold is expected to form a "dual-wheel drive" with physical gold, becoming a new fulcrum for gold price fluctuations.
PGI represents a shared interest in gold in independent accounts of major London institutions. The trading party can instantly transfer digital units to reduce the settlement resistance of the OTC market, and can also accelerate mortgage operations through the trust structure to promote gold to enter the repurchase and borrowing market. Ultimately activate the financial attributes of gold and create new incremental demand for gold.
The above content is all about "[XM Foreign Exchange Market Analysis]: The World Financial Association plans to promote digital gold, and the gold market may usher in disruptive changes". It is carefully www.xm-forex.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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