By John Drachman
Some 2500 years ago the first gold coins were minted, instantly giving markets a chance to evolve from the barter system to the currency loved by consumers and pirates alike. Now, increasing numbers of investors are discovering the advantages of owning gold the digital way, through the same worldwide blockchain ledger used by the world’s largest institutional investors. With a few taps on your mobile device, you too can trade physical gold on the Internet as easily as buying a copy of Man’s Fate on Amazon.
Digital gold defined
Around the globe, financial technology advances are adding luster to digital gold. Backed by the physical gold secured in a safe, insured vault for precious metals storage, digital gold is purchased at current rates in the form of a blockchain ledger receipt that is transparent, easily tracked and secure. This way of owning gold serves as an invitation to the average investor to participate in the gold exchange ecosystem where everyone accesses the same information, rates and exchanges simultaneously.
Buying gold the digital way can reduce time-consuming recordkeeping by maintaining an investor’s ledger receipts as online evidence of ownership. Digital gold even lets investors buy gold in quantities as low as an ounce at a time. In fact, The New York Times cited this affordability aspect of digital gold as “the biggest advantage” for the investors hoping to accumulate physical gold in small quantities.
From cryptocurrencies to crowdfunding, fintech advances have evolved blockchain asset ecosystems to encompass other precious metals like silver as well. Digitization of other assets may be the logical next step for investors looking to further explore new alternative selections in the global commodity markets.
Digital Gold and the Prudent Investor
Digital gold isn’t right for everyone. Just like any other investment subject to the whims of the marketplace, digital gold too has a range of market risks. While trustees and insurance for the asset offer protections, there is currently no regulatory oversight for this alternative marketplace. So, if you’re thinking about digital gold carefully review any documentation before investing.
Offsetting those risk factors are some distinctive advantages. Beyond gold’s proven track record as a hedging and diversification strategy, the digital version offers benefits unique to the blockchain eco-system.
- Ease and Cost-Efficiency You can build digital gold into your portfolio an ounce at time from your smartphone knowing that your blockchain ledger receipt represents your safely stored gold.
- 100% Ownership Unlike gold funds, digital gold invests 100% of your money into your metal.
- Greater Liquidity Digital gold can be bought and sold more easily than the hard asset too, eliminating the need for time-consuming administration.
Financial planners and advisors are trained to counsel investors to focus first on factors they can control – like investment diversification – rather than the market’s daily fluctuations. If you’re thinking about going for the digital gold, consider asking a professional for a portfolio review and risk profile before taking your seat in digital gold’s blockchain ecosystem.
John Drachman is a contributing writer to www.myperfectfinancialadvisor.com, the premier matchmaker between investors and advisors. John is an IABC award-winning writer, who applies his 30 years of financial marketing experience toward advancing the dialog between investors and investment professionals.