The gold price is being supported this year primarily by strong purchases from central banks and sustained investment demand. At the same time, however, another, previously rather marginal area of the gold market is moving into the foreground: tokenized gold. In particular, the stablecoin provider Tether is developing into a significant factor. A recent report by the investment bank Jefferies traces how Tether is increasingly gaining influence on the gold market through physical gold purchases and investments along the value chain – with possible consequences for the gold price and the mining industry.
Tether Accumulates Physical Gold in Central Bank Dimensions
Tether, known primarily for its US dollar stablecoin, is systematically expanding its position in the physical gold market. According to Jefferies analysts, the company now holds around 116 tons of gold with a value of approximately 14 billion US dollars. It is noteworthy that only a small portion of these holdings – about 12 tons – directly underpins the gold-backed token Tether Gold.
Gold currently accounts for about seven percent of the reserves with which Tether secures the stablecoin. Arithmetically, this corresponds to a gold position that is in the order of magnitude of the holdings of smaller central banks such as South Korea, Hungary or Greece. Against this background, Jefferies concludes that Tether is likely to be the largest gold holder outside the central bank sector. The published reserves should also be understood as minimum values; it is unclear whether gold is also held on its own balance sheet beyond that.
According to Jefferies, the fact that Tether wants to further expand its role in the precious metals sector is also demonstrated by the company’s presence at industry-specific events. For example, investors report that Tether representatives at the Mining Forum Americas Conference in Denver indicated that they intend to purchase around 100 tons of physical gold in 2025. At the same time, the company is examining investments in gold royalty and streaming companies as well as in parts of the physical supply chain.
Additional Demand: How Tether Could Influence the Gold Market
Jefferies assesses Tether’s orientation as a potentially structural demand boost for gold. The analysts assume that the company could continue to act as a significant buyer in view of its high profitability. For 2025, Jefferies estimates Tether’s annual profit at around 15 billion US dollars. Should the company – purely hypothetically – invest half of this profit in gold, it could buy around 15 tons of gold on the market per quarter, according to the bank’s calculations, i.e. around 58 tons per year at the current gold price level.
Although this order of magnitude would be manageable in relation to global mine production, it would represent an additional, previously non-existent demand component. In addition, Tether generates additional interest income with the further growth of the stablecoin, which in turn could be partially reallocated to gold. Jefferies emphasizes that its own estimate is deliberately formulated conservatively in order to convey an idea of the possible order of magnitude without assuming concrete purchase decisions.
In addition to physical gold purchases, Tether is increasingly involved in the area of gold royalties and streaming models. According to Jefferies, the company has already invested around 300 million US dollars in companies such as Elemental Altus Royalties, Gold Royalty Corp, Metalla Royalty & Streaming and Versamet Royalties. This shifts part of the demand from the pure bullion market to financing instruments that are directly linked to the cash flows of gold mines. For gold producers, this can open up additional sources of financing, but at the same time also help to direct capital flows towards specific projects.
Tokenized Gold: A New Access to Precious Metals
At the center of Tether’s strategy is tokenized gold, specifically the Token Tether Gold (XAU₮). This is a digital representation of physical gold that is mapped on the blockchain and is intended to grant the owner direct claim to deposited bars. For many market observers, tokenized gold has been the “next stage of development” in the precious metals sector for years – now, for the first time, reach and volume seem to be reaching an order of magnitude that could also become relevant for the physical market.
In its analysis, Jefferies highlights the differences to established investment forms such as ETFs, futures or classic bullion and coin purchases. Tokenized gold such as XAU₮ enables the acquisition of the smallest fractions of physical gold bars and offers 24/7 tradable, digital property rights. Settlements take place in real time, without classic custody and management fees, as are incurred with many exchange-traded products or bank safe deposit boxes. At the same time, the end user does not have to organize storage and insurance, as these functions are taken over in the background by the issuer.
Due to the strong fragmentability, investors can invest very small amounts and quickly adjust their positions. Jefferies argues that this form of digital, physically backed gold could increase liquidity in the market and make portfolio management more flexible for private and institutional investors. Especially in combination with stablecoins and decentralized financial applications, a field of application opens up in which gold is seamlessly integrated into digital ecosystems.
Significance for the Gold Market and Mining Industry
Tether’s growing role in the gold market comes at a time when many central banks are increasing their gold reserves and investors are increasingly viewing gold as a hedge against inflation and currency risks. Tokenized gold, as Tether maps it via XAU₮, adds an additional source of demand to the market, which is fed from the crypto and stablecoin ecosystem.
This development could have an indirect impact on the gold mining industry. If Tether invests not only in physical gold but also in royalties, streams and other forms of project financing, an interface is created between digital demand and the physical supply chain. What long-term effects this will have on project developments, financing structures and the volatility of gold prices remains to be seen. However, it is clear that Tether as a new major player and the increasing spread of tokenized gold could change the architecture of the gold market and further fuel the discussion about the role of gold in digital financial systems.
