Industry experts discuss gold tokenization, which may activate the trillion-dollar precious metals market

Huitong Network, October 7th — At the London Bullion Market Association conference, industry experts discussed the tokenization of precious metals to revitalize large quantities of idle book gold. Tokenization could simplify gold collateral procedures, help institutions use gold as trading collateral, reduce entry barriers for individual investors, and unlock the huge potential of the retail market. Experts emphasized that tokenized gold must be anchored to physical gold, rely on trusted custody and clear ownership, and serve as a supplemental solution for the existing gold market to release the value of gold assets.

Gold has long been regarded as a core monetary asset, but a large amount of gold remains idle as a book asset, making it difficult to unlock more financial value. At the London Bullion Market Association’s annual global precious metals conference, industry experts suggested that tokenization of precious metals could increase the operational efficiency of gold assets and attract more capital into the precious metals sector.

Vincent Domien, Head of Precious Metals Trading at Standard Bank, stated in a panel discussion that, although current institutional demand for tokenized gold remains relatively low, the market landscape could change dramatically once gold asset utilization is significantly enhanced. He said: “With gold prices on an upward trend, the most striking issue, in my opinion, is that this batch of gold on balance sheets is completely dormant, unable to create any value for its holders.”

Revitalizing Gold Stock: Tokenization Simplifies Collateralization Process

Vincent Domien explained that while physical gold can already be used as collateral, the process as a whole is cumbersome and subject to restrictions such as the location of gold storage and high collateral haircut rates. Through tokenization, gold could be transferred more conveniently, and institutional investors could use their gold holdings as collateral in swap transactions or to meet margin requirements. He stated: “If gold can achieve tokenization, all participants would be able to use this asset instantly, and the utility value of gold would be immediately and dramatically increased. What we need to think about is how to make the gold lying on various balance sheets, which generates no output, become productive.”

Mike Oswin, Head of Global Market Structure and Innovation at the World Gold Council, noted that activating these dormant gold assets could release new collateral worth tens of billions of dollars into the financial markets. Increased gold asset efficiency will eventually translate into growing market demand.

James Willis, Global Head of Precious Metals Sales at HSBC, believes that mature digital gold products will boost gold holdings and encourage investors and institutions to trade and utilize precious metals more frequently. Well-structured token products underpinned by physical gold bars will further stimulate storage demand for physical gold as market acceptance increases. He stated: “If our product development efforts succeed and we create a practical market product that expands gold’s use cases, that will benefit our business. Gold holdings will increase, and the frequency of trading and using gold by market participants will also rise.”

Unlocking Growth Potential in the Retail Market

Tokenization can also make gold more attractive to retail investors. James Willis cited HSBC’s launch of digital gold tokens in Hong Kong as an example; the product has attracted many new clients, even though they could already buy physical gold bars, gold ETFs, or paper gold products. The ease of buying and transferring tokens appeals to ordinary consumers who were not interested in traditional gold investment categories.

Mike Oswin stated that the World Gold Council estimates the size of retail investment assets to be in the range of $6 trillion to $7 trillion, while the combined market for retail stored gold and tokens is only about $50 billion to $60 billion, indicating significant room for growth. He added that gold has unique advantages in the asset tokenization wave: many financial assets are already in electronic form, but gold is a physical asset stored in vaults. The industry’s core challenge is how to leverage digital infrastructure to revitalize this physical wealth. He said: “Gold is a physical asset kept in vaults, requiring continuous management. Now, through technological innovation, we are unlocking the value of these physical assets. This is highly significant.”

Unwavering Bottom Line: Trust Is the Core Foundation of Gold

Experts at the conference also stressed that advancing gold tokenization must never undermine gold’s most essential attribute — trust. Any digital credentials for gold must correspond to physical gold, with reliable custodians, clear legal ownership, and unified industry standards. James Chapman, Director at Hilltop Consulting, stated that holders must be certain that the digital asset corresponds to real gold and that they possess legally enforceable ownership of the gold.

The World Gold Council is advancing a wholesale digital gold project that integrates the advantages of both allocated and unallocated gold products. The goal is to retain the legal certainty and asset ownership of allocated gold, while adding asset splitting, rapid transfer, and settlement capabilities. According to James Chapman, the project is not intended to replace the existing gold market, but to create an alternative supplementary solution, providing a third path for holding, transferring, and settling gold bars.

Vincent Domien mentioned that investors can go long on gold through ETFs or tokens, but the operational possibilities after holding these two types of assets differ significantly. He said: “Both methods can achieve a long gold position, but the use cases after acquiring the asset are not the same.”

Conclusion

In summary, tokenizing gold is not simply digitizing it, but unlocking the financial value of dormant gold through technology, while meeting the needs of both institutional and retail investors. However, this innovation must not deviate from the fundamental support of physical gold, and the baseline of asset trustworthiness must be maintained for tokenized gold to open up new market opportunities.