Gold, a new digital currency?

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by Annika Backe

June 8, 2017 – The world of trade and commerce has always recognized gold because of its intrinsic value and the security that comes with it. Even if gold as a basis of the monetary system – the gold standard – has been abandoned, as a natural resource available only in limited quantities, it still is an important point of reference. Investors looking to combine the security of real gold with the advantages of a digitally tradable financial investment can now purchase a new product from the British Royal Mint: ‘Royal Mint Gold®’.

Since 2004, the current gold price has been set in the ‘Gold Fixing’ twice every day at the London Barclays Bank. Photo: Secretlondon / CC BY-SA 3.0

Buyers of RMG® acquire 1g of physical fine gold held within the vault of The Royal Mint. Due to The Royal Mint’s investment management, the value of RMG®, which has a limited issuance, is closely linked to the spot price. This is the fluctuating price of gold traded over-the-counter. If the trading price of RMG® falls below the spot price for longer than 24 hours the gold will be bought back.

Like the digital currency bitcoin, Royal Mint Gold® is based on the blockchain technology. It saves a buyer’s title to the physical gold holding. The buyer is given the guarantee that at any time he or she can redeem this digital title for gold bars and coins with physical delivery. 

Established in 886, the long-standing Mint thus offers a product that has everything it needs to evolve into a digital currency and compete with top dogs such as bitcoin. Every-day transactions, for instance paying for an acquired eBay article, could then be accomplished through RMG®.

For CoinsWeekly Director of Business Development, Precious Metal Financial Products, Daniel Clegg explains: “The RMG product that we are launching in 2017 is primarily an investment product, providing a better way for institutional investors to own gold (and facilitate the ownership of gold for individual investors) than via Gold ETFs or unallocated accounts. We do however anticipate that additional future uses will evolve, building on RMG as the underlying infrastructure. This could include a myriad of applications including the peer-to-peer example you outline – we’d encourage any organisations interested in working with us to offer such applications to get in touch with us.”

When, and if, this dream of the future will become a means of payment like some kind of gold 2.0, and if it will then achieve a solid position in the market thus remains to be seen.

For further information on RMG® please access The Royal Mint’s website.

Many exciting facts about the sought-after noble metal are gathered on the website of the London Bullion Market Association. 

How the Gold Fixing is done can be read by clicking here.

CoinsWeekly reported on bitcoin here and here.

And from the International Monetary Fund, you can download information on Virtual Currencies and Beyond.