Gold Has a New Digital Shine


Gold Has a New Digital Shine

The article is written by Jason Peckham. He grew up on a farm in Kwa-Zulu Natal, South Africa. He qualified as a civil engineer before moving towards FinTech, and is currently an Analyst at Invictus Capital. He believes that an efficient global financial system is important for human progress.

Spurred by a tailwind of macroeconomic forces, gold is poised to overcome all-time highs. As anticipated, the seemingly infinite money supply provided by central banks is proving favorable for assets with a finite supply. The total stimulus from global governments in half a year is triple the entire 2008 financial crisis. Not only has this brought a wave of optimism for gold prices, but stocks and digital currencies are also jostling for portfolio allocations. The uncertainty of future economic outcomes makes allocating capital to an uncorrelated asset class a favorable bet.

The precious metal is under no obligation to perform, however. While stocks enjoyed a bull run over the past decade, gold recorded lesser gains, tarnishing its appeal. This time, the broader market context along with recent price action could start a rush. And now, gold-backed digital assets give the unmistakable metal a technological glint.

Through tokenization, the options available to investors expand beyond physical gold bars or ETFs. Having played a significant role in human society for millennia, gold’s digital transition combines it’s physical scarcity with digital availability.

The Gold Shield

The COVID-19 pandemic is causing a change in habits as society reconsiders previously accepted social norms. One of these is money, used globally as a medium of exchange. But fiat currencies are not the only form of money. The U.S. dollar was once backed by gold, permitting physical gold redemptions, but this system was disbanded in 1971 as the United States effectively ran out of gold to satisfy the demand for redemptions. This has since proven favorable for gold, which has gained value relative to fiat currencies. The graph below compares the value of national currencies to gold over the past century, showing a drastic drop since 1971.

doubling in value and increasing buying power throughout. If history is to be our guide, then a similar breakout in the coming years is probable, especially considering that the current crisis dwarfs anything before it.

Value Goes Digital

As the old saying goes, necessity is the mother of invention. Paradigm-shifting inventions tend to be born out of resource-constrained markets in times of difficulty, not comfort. The adversity exposes inefficiencies, making change necessary for progress.

The creation of Bitcoin and the underlying blockchain technology was no different, envisioned to improve the flawed monetary system exposed by the 2008 recession. Satoshi Nakamoto, the pseudonymous Bitcoin creator, signed the genesis Bitcoin block with the message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This definitive moment is etched deep within the immutable Bitcoin blockchain. Consequently, the bailouts could only slightly delay the inevitable unraveling of an international crisis.

Just a decade later and again, markets are precariously poised. Although cyclical in nature, technological innovation since the last crisis has introduced new players.

A Safe Haven in Digital Hands

Today, there exists an unexpected overlap between the previously separate worlds of gold and blockchain. Tokenized gold enables digital ownership of physical gold. This solution mobilizes the cumbersome asset, making it easy to own, store, and move. Gold-backed tokens are digital contracts for gold bars secured in vaults.

This innovation solves more than cost and convenience alone. The frictionless transfer of gold tokens enables opportunities to trade and lend them to earn a yield on top of gold. The Invictus Gold Plus Fund is a unique opportunity to earn a return above gold price movements, accepting fiat currencies via a simple online platform.

Perhaps now, wrought from the economic turmoil of our time, gold can emerge with a digital shine.

This is a submitted sponsored story. urges readers to conduct their own research with due diligence into the company, product or service mentioned in the content above.

Last modified: July 6, 2020 1:57 PM UTC

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