London’s physical gold market stands on the brink of a significant transformation, as the World Gold Council aims to introduce a digital version of the precious metal.
The initiative would revolutionise the capital’s $900bn (£672bn) marketplace, enabling traders to buy, sell, settle, and use bullion as collateral digitally throughout the gold ecosystem for the first time, as reported by City AM.
Whilst numerous investors prize gold for its tangible characteristics, viewing it as a safe haven investment, David Tait, chief executive of the World Gold Council, contends that bullion requires digitalisation to expand its market appeal.
Tait informed the Financial Times: “We are trying to standardise that digital layer of gold, such that the various financial products used in other markets can be used in the gold market going forward.
“My goal is that many asset managers around the world will suddenly look at it differently.”
The conclusion of a dormant investment?
Gold reached a record peak this week, fluctuating around $3,530 per ounce during early morning trading, and has increased twofold in worth over the past three years, amidst continuing economic uncertainty and geopolitical tensions.
Despite these advances, most banks and fellow investors regard the precious metal as a dormant, non-income generating investment.
Tait maintains that digitalised gold, conversely, could be deployed for profitable purposes.
He stated, “For the banks, from a collateral perspective, they will make a lot of money, as they get an opportunity to use the gold on their balance sheet as collateral.”
The new digital unit, termed ‘pooled gold interests’ (PGIs) would enable banks and investors to purchase and sell fractional ownership in physical gold stored in segregated accounts.
Commercial participants in London will test the system during the first financial quarter of 2026.
The system’s framework will be constructed around a limited number of participants, including leading banks and trading houses, jointly owning the underlying gold within a trust structure.
Battle to beat crypto
This represents the most recent development in a multi-year initiative by the World Gold Council to digitalise the gold market, following January’s launch of a blockchain database for refineries and gold bars.
Despite its climbing price, industry experts believe the asset risks being overshadowed by emerging competitors, including cryptocurrencies and stablecoins.
Nevertheless, some market participants suggest the initiatives may encounter opposition, questioning whether London’s market would embrace it, given the capital remains dominated by a cautious customer base.
Adrian Ash, director of research at gold trading platform BullionVault said, “Gold is already the best performing asset class.
“This feels like a solution in search of a problem.”
