Gold: Central Banks go on a Buying Spree and HSBC Tokenizes it for Retail Investors
Gold shows that all that is old is new again!
ING Research on Gold:
Link to article on HSBC Gold Tokenization: HERE
Today, I have a few thoughts about gold, but unlike most gold reports, I will not try to sell you gold or a story of societal collapse that requires a survival bunker.
I am not a big fan of gold, but it’s been in the news lately for rising prices. The price increases are mainly driven by central bank buying to hedge against inflation and instability and, of course, diversify away from the US dollar.
It’s no surprise that China is the global purchase leader. However, Singapore and the Czech Republic, considered more friendly to the US, took second and third place, respectively.
So, what does this have to do with fintech?
Gold was also in the news because of the recent gold tokenization by HSBC Bank in Hong Kong for retail investors.
HSBC isn’t the first to tokenize gold by putting it on the blockchain, the crypto world already has $1 billion in tokenized assets. But what is essential is that it is one of the first big international banks to do this.
If HSBC bank tokenization can work for retail, it’s just a matter of time before it is adopted on a larger scale.
👉TAKEAWAYS
🔹 Gold proves that “all that is old is new again.”
🔹 Gold’s renewed status in central bank reserves does not indicate social collapse or the need to buy a bunker but shows its importance during volatile times.
🔹 Central Bank buying of gold directly results from geopolitical tensions, inflation, and de-dollarization.
🔹 China is the world’s largest buyer of gold, buying more than the number two and three purchasers, Singapore and Czech Rep. combined.
🔹 China’s motivation for purchases is de-dollarization. However, retail buyers burned in the stock market rout are also large buyers.
🔹 China has between $3 and $6 trillion in US dollar reserves (it depends on counting), so de-dollarization through gold purchases will not be easy or fast.
🔹 Tokenization of gold by HSBC for retail demand in Hong Kong may not be the first, but it is the most interesting.
🔹 Tokenization by a major bank like HSBC or equivalent could be a game changer.
🔹 Think about BRICS+ nations; what would a tokenization by Banco do Brazil or Saudi National Bank do?
👊STRAIGHT TALK👊
So, the purpose of today’s article isn’t to get you to buy gold or to predict its future price.
Instead, it is intended to put gold on your radar, and show how it is still a part of the financial and fintech world as it transitions from physical metal to a tokenized asset.
Tokenization raises the bigger question of which banks will tokenize it and what role it will play in BRICS+ trade.
Some of these answers come from Russia, where Sberbank tokenized gold in 2022 and promoted it as a means of de-dollarization.
While the trade volume and use of this tokenized gold are unknown, it must work. Just yesterday, Russian digital asset firms trading the tokens received new US sanctions!
Gold shows that all that is old is new again and has a role in tokenized form in a world in conflict.
Gold is on my radar, and I think it should be on yours too.
Thoughts?