Opinion · Hometown Post
Digital gold and tokenised investments are gaining traction as investors look for easier ways to invest in gold, with the global digital gold market projected to grow to $160 billion-$170 billion by 2031 from its current estimated size of $45 billion-$55 billion, according to estimates cited by the World Gold Council. Gold prices have corrected around 20% from their reported peak of $5,600 an ounce and are currently hovering near $4,100 an ounce. While the decline has attracted some buying, digital gold is emerging as an alternative to physical gold and exchange-traded funds (ETFs), particularly during the festive season.
The growing interest in digital gold and tokenised products reflects a broader shift towards financialised gold investments. More than 70 digital and tokenised gold products have been launched globally, with Asia emerging as a key market. India, China and Indonesia are among the countries seeing increased adoption.
The global gold market is valued at around $28 trillion-$29 trillion, based on the total stock of above-ground gold. Jewellery accounts for about 45% of this, while bars, coins and ETFs make up 23%. Central banks hold around 18% of the gold stock, while over-the-counter transactions and other holdings account for 14%.
Digital gold currently represents only about 1% of the market, leaving room for further growth. One of the key factors driving demand is the low entry barrier. Investors can buy digital gold for as little as ₹100, without having to purchase a full gramme of the metal.
Unlike jewellery, digital gold does not involve making charges when investors accumulate their holdings. New buyers account for around 65% of latent demand in the segment, indicating that digital platforms are helping attract people who may not have invested in gold earlier. Investors can also redeem their holdings for physical gold, although conversion may involve making charges, GST and other applicable fees.
Digital gold and tokenised gold, however, operate differently. Digital gold is generally held through a centralised system managed by a service provider, with transactions taking place through the issuer's platform. Tokenised gold uses blockchain technology, allowing tokens representing gold ownership to be transferred through compatible private wallets and traded on supported cryptocurrency exchanges.
Tokenised gold can also have additional uses in decentralised finance, where certain tokens may be used as collateral to earn interest. These features depend on the product and platform, and investors need to consider the associated risks. In India, companies offering digital gold include MMTC-PAMP, Augmont and SafeGold.
Internationally, Pax Gold and Tether Gold are among the prominent tokenised gold products. Watch video for more Digital gold market may touch $170 billion by 2031 as tokenised investments gain traction Tags
Source: CNBC TV18
