Precious Metals Tokenization Prospects (Gold, Silver, Palladium)
The price of gold is on the verge of breaking record highs and is helping to increase investment in precious metals. Since gold’s all-time high of $1,920.30 in 2011, blockchain development has become more and more sustainable and brings improvements to many industries. One of the most interesting implementations of blockchain technology is the backing of physical gold.
Digital security assets
Because security tokens can be traded continuously and globally, they are much more liquid than many other forms of precious metal ownership. Tokens are also easier to store securely and do not carry the risk of theft associated with physical storage of the metal.
As the industry matures, the demand for significant transparency in the ownership of precious metal-backed tokens will increase. After all, it was the lack of transparency that led to the theft, fraud and manipulation associated with traditional markets. The provision of secure and transparent storage, coupled with regular third-party audits, will boost investor confidence in precious metal-backed security tokens.
Using gold to back blockchain-based security tokens makes sense given the current state of fiat currency and allegations of fraud in the precious metals markets. Gold-backed blockchain products take advantage of a dynamic market and set the standard for providing digital asset-backed products. The nature of decentralized markets encourages best practices such as transparent auditing and custody of assets backing tokens.
The benefits blockchain brings to the process of buying, holding and trading gold can be applied to other metals and should be a catalyst for new and innovative investment products.
Reflecting the recent rise in gold prices, silver is on a similar uptrend and is attracting investors to the market. The value proposition for silver tokenization is very similar to the value of gold. Both gold and silver have been used as a store of value for thousands of years. Both of them have industrial, medical applications, and their production volumes are relatively limited.
The silver market has been heavily manipulated and some companies are currently under investigation for allegedly manipulating the silver market. Unfortunately, fines and legal fees seem to count as part of the cost of doing business for some of the biggest traders. The ability to transparently back tokens with silver will provide a market segment for investors who want direct access to their silver holdings without having to store the bulky metal themselves. Several market experts have expressed their belief that silver is grossly undervalued, and if so, a rise in the price of silver will cause strong gains for silver-backed tokens.
Platinum group metals
In addition to gold and silver, there are other metals that will benefit greatly from the tokenization process. Tokens provide custodial options that improve the process of buying and trading precious metals, and can also provide increased accountability in supply chains. Goods can now be registered on the blockchain from the source of production using photos and scales. Since tokenization provides accountability in the trading and storage of precious metals, it can also lead to manufacturing accountability to reduce exploitation and fraud.
Many products will benefit from tokenization, but there are benefits to tokenizing products with strong value propositions. Already, we are witnessing the active development of the sphere of tokenization of such metals as palladium, platinum and rhodium. Processes similar to those used in gold tokenization can be applied to these precious metals to ensure transparency and ease of investment. Tokenization will provide investors with the opportunity to diversify their portfolios and exit their position quickly if necessary.
Portfolio of tokens
Portfolio tokens can be actively managed to rebalance in response to predicted market changes. Currently, not only is the market of tokenized precious metals actively developing, but we can also count on the appearance of innovative products on the market in the near future. From an investor’s point of view, it has never been easier to buy and hold such assets. In this global economic environment, precious metals are the best hedge against inflation and the effects of the current global panic.