Core Viewpoint - The World Gold Council is set to launch "digital gold" to revolutionize the $900 billion physical gold market in London, enabling gold to circulate digitally and be used as collateral [1][3]. Group 1: Digital Gold Initiative - The initiative aims to standardize gold in a digital format to expand market coverage and allow various financial products to be applied in the gold market [3]. - The CEO of the World Gold Council, David Tait, emphasizes the need for digitalization to enhance the utility of gold, which is currently seen as a low-liquidity, non-yielding asset on balance sheets [2][3]. Group 2: New Financial Products - A new digital product called "Pool Gold Interests" (PGIs) will allow banks and investors to buy and sell partial ownership of physical gold stored in independent accounts [4]. - The pilot for this product is set to launch in the first quarter of next year in London, in collaboration with commercial institutions [4]. Group 3: Market Context - Gold prices have reached an all-time high, doubling in value over the past three years, yet it remains a non-productive asset for most banks and investors [2][3]. - The World Gold Council's digital gold framework relies on a trust structure among core participants to hold the underlying gold assets, marking a significant step in the digitalization of the gold market [4].

Core Viewpoint - The World Gold Council is seeking to launch digital gold, which could revolutionize the $900 billion physical gold market in London [1][3]. Group 1: Digital Gold Initiative - The new digital unit called "Pool Gold Interests" (PGIs) will pilot in London with commercial participants in the first quarter of next year [3]. - Digital gold aims to expand market coverage despite many investors valuing gold for its physical characteristics and lack of counterparty risk [3][4]. - The digitalization of gold could allow it to be used as collateral and meet margin requirements, transforming it from a static asset on balance sheets [3][5]. Group 2: Market Structure and Participants - The London wholesale gold market is the largest physical trading center globally, supported by major banks like HSBC and JPMorgan [6]. - Currently, there are two types of trading in the London market: "allocated" gold trading involving specific bars and "unallocated" gold trading without specific bars [7]. - The proposal for PGIs will create a third trading type in the London over-the-counter gold market [7]. Group 3: Challenges and Competition - Despite rising gold prices, the asset faces competition from cryptocurrencies and stablecoins, which could surpass traditional gold investments [9]. - Efforts to create gold-backed stablecoins have largely failed, with the most successful ones managing around $1.3 billion in assets compared to $400 billion held in gold-backed ETFs [9]. - The adoption of blockchain initiatives in the gold market has been slow, but there is a positive reception among refiners, with 96% of good delivery list refiners participating [9].

Core Viewpoint - The World Gold Council (WGC) plans to introduce a digital form of gold, potentially revolutionizing the $900 billion London physical gold market by enabling new methods of trading, settlement, and collateralization [1][2]. Group 1: Digital Gold Initiative - The new digital gold initiative aims to allow gold to circulate digitally within the ecosystem and be used as collateral [1]. - The concept of "pooled gold interests" (PGIs) will enable banks and investors to buy and sell partial ownership of physical gold stored in independent accounts [2]. - The pilot program for this model is set to involve commercial institutions in London in the first quarter of next year [2]. Group 2: Market Context and Competition - Despite the recent surge in gold prices, which have doubled in value over the past three years, gold remains a low-yield, illiquid asset on many banks' balance sheets [1]. - The introduction of digital gold is seen as a way to enhance liquidity and generate returns by allowing gold to meet margin requirements and serve as collateral [1][2]. - The digital gold initiative faces competition from cryptocurrencies and stablecoins that are pegged to traditional assets [2][3]. Group 3: Existing Market Structure - The London gold market is the largest physical gold trading center globally, supported by major banks like HSBC and JPMorgan, and operates on an over-the-counter (OTC) basis [3]. - The current trading structure includes "allocated gold" (specific bars) and "unallocated gold" (quantity without specific bars), with the WGC's proposal introducing a third type of trading [3]. Group 4: Challenges and Industry Response - Some market participants express skepticism about the adoption of the new digital model, citing the existing institutions' dominance and risk-averse nature [4]. - The London Bullion Market Association (LBMA) and WGC have previously launched a blockchain database to enhance transparency and verify gold sources, although its adoption has been slow [5]. - The WGC remains optimistic about the long-term impact of the blockchain database on gold procurement practices [5].