World Gold Council Proposes Digital Gold Amid Market Concerns

According to PANews, Thu Lan Nguyen, Head of Foreign Exchange and Commodity Research at Commerzbank, highlighted a new initiative by the World Gold Council aimed at modernizing the gold market through the introduction of digital gold. This move is possibly driven by concerns that stablecoins and central bank digital currencies (CBDCs) might emerge as alternative investment options to gold. However, Nguyen argues that these concerns are unfounded. Stablecoins and CBDCs are both tied to fiat currencies—stablecoins are backed by the U.S. dollar, while CBDCs are directly issued by central banks, functioning similarly to cash. In contrast, gold is considered 'politically neutral' as it is not issued by any central bank or political institution. The total supply of gold is primarily determined by mining output, which changes at a relatively slow pace. For investors who choose gold to hedge against political risks, the ease and cost-effectiveness of transferring fiat currency may not be a primary concern. Gold's appeal lies in its independence from political influence, making it a unique asset in the investment landscape.