The World Gold Council has unveiled a new initiative aimed at modernizing gold trading through digital currency. This move comes amid concerns that stablecoins and central bank digital currencies (CBDCs) may emerge as rival investment options, according to Panews. Commerzbank’s Thu Lan Nguyen argues that these worries are unfounded. She highlights that the rise of digital gold could address market uncertainty stemming from potentially volatile financial assets such as stablecoins and CBDCs.
Stablecoins are backed by fiat currencies like the US dollar, while CBDCs are directly issued by central banks, functioning similarly to cash. In contrast, gold is considered ‘politically neutral’ due to its lack of issuer affiliation or political influence. Its supply primarily relies on mining output which changes at a relatively slow pace.
Furthermore, for investors seeking protection against political turmoil, the ease and low cost associated with transferring fiat currency may not be a primary factor. The allure of gold lies in its independence from political sway, solidifying its place as a unique asset within the investment market.