According to the World Gold Council (WGC), gold is facing a profound change. In the paper “A New Golden Age,” the industry organization outlines how new technologies – from blockchain to DeFi to the tokenization of real assets – could change the markets in which gold is traded and held. The WGC emphasizes that digital development opens up opportunities to position gold as both a physical and a digital asset – with potentially higher transparency, fungibility and liquidity. At the same time, the report identifies hurdles, such as questions of regulation, custody and the fact that, unlike bonds or real estate, gold does not provide ongoing returns.
Gold: Large Market, High Liquidity – but Structural Questions Remain
Gold is one of the largest and most liquid asset classes in the world. The World Gold Council puts the physical holdings of investors and central banks at around US$5.1 trillion. Average daily trading volumes reached a record high of approximately US$329 billion in the first half of the year – orders of magnitude comparable to ten-year US government bonds and exceeding the turnover of many stock markets. Historically, the price of gold in US dollars has increased by an average of around 8% per year over the past 50 years.
In phases of economic uncertainty, gold has underscored its role as a “safe haven”: almost half of the financial advisors surveyed rate the diversification effect of the precious metal as a strength. Gold is also gaining weight at the level of currency reserves. According to the European Central Bank, in June the precious metal overtook the euro as the second-largest global reserve asset behind the US dollar. Beyond the capital market, gold is also an industrial raw material – for example for medical technology, electronics or aerospace – and, due to high recycling rates, is considered one of the most circular assets.
Challenges for Gold: Regulation, Custody and Lack of Ongoing Returns
Despite its size, the gold industry faces structural challenges. In many jurisdictions, gold is neither classified as a High-Quality Liquid Asset (HQLA) nor as a financial instrument. As a result,
Another point is the lack of cash flow. Unlike bonds (coupons) or real estate (rent), gold does not generate regular income. According to surveys, 54% of financial advisors see this as an obstacle to allocation – especially in environments in which interest rates make alternatives appear more attractive. It is also emphasized within the industry that simply digitizing existing processes is not enough. Simone Ferriani, a professor at the Bayes Business School, points out that only an expanded understanding of innovation is likely to enable the actual opening of new use cases for gold.
Digitization of Gold: from Vault Transactions to Tokenization
The WGC outlines how digitization could transfer the traditional strengths of gold – store of value, hedging against crises, global tradability – into modern market infrastructures. Ecosystems are conceivable in which investors buy gold directly “from the vault,” immediately deposit it as collateral or transfer it in real time via atomic settlement mechanisms. Likewise, standardized “location swaps” could efficiently move physical gold between storage facilities and make it interoperable with other digital assets.
At the same time, the report sees potential in rethinking gold as a digital asset: Tokenized claims to clearly defined, verifiable holdings, embedded in rules for ownership and settlement, could increase fungibility and market access – for institutional addresses as well as for private investors. However, the prerequisite is the establishment of common, globally accepted technology protocols as well as viable legal and regulatory frameworks for the possession, transfer and settlement of gold in physical and digital form.
Industry Perspective: Circularity and New Use Cases
From the industry’s point of view, the circularity of gold remains a strong argument. “Almost every ounce of gold ever mined is still in circulation,” Wheaton-Precious-Metals-CEO Randy Smallwood is quoted as saying – a reference to the precious metal’s exceptionally high recycling rate. Digitization could combine this “inventory advantage” with modern market infrastructure: transparent proof of origin (e.g. via blockchain-based track-&-trace solutions), automated compliance checks and standardized product definitions (fineness, storage location, audit frequency) would simplify trading and collateralization.
For the way forward, the World Gold Council sees the industry as having a duty to jointly lay the foundations – from interoperable data standards to legally secure proof of ownership. Only on this basis could the outlined use cases be scaled and gold anchored as a modern, highly liquid digital asset in the financial market. The guiding principle of the report: Digitization should not only digitally map existing processes, but also create new benefits – for central banks, institutional investors and the retail market alike.
Conclusion: Gold remains globally anchored as a precious metal and asset class, but is facing a phase of reorganization. The World Gold Council describes how digitization could increase trust, transparency and tradability – provided that technology standards and regulation keep pace. This brings gold as a physical and digital asset into focus at the same time, with potential effects on liquidity, market participation and the role of the precious metal in future financial architectures.
