Is gold booming ?
Well can you think of a time when it was not?
The value of gold increases almost every year and this makes it an interesting investment.
If you look at its price charts there are very few times when its price dips.
After all Gold is a rare metal and difficult to find in nature. You take out 1 gram of gold from earth and there is not way to make another gram.
It is in limited supply much like Bitcoins
Gold is an invaluable asset. Its supply is limited and as an asset class few can rival its stability and growth.
The value if Gold grows even faster every time the there is war, wide spread disasters or pandemic.
Even when the national currency of a country goes weak its citizens turn to gold as an investment and store of value.
Store of Value?
The word Store of Value invariably makes one think of Bitcoin and crypto as an asset class.
However the only draw back is that it is extremely volatile.
Checking the value of USD and Gold over time
If we compare the value of USD from 1900 up to 2019 it is decreased a good 98% in value.
If we see the value of gold in the same period its value has gone up almost 59 times
So it makes a lot of sense investing in gold or an investment linked to gold.
This means one can invest in gold and rest assured of good returns over time.
Investment in Gold is not always easy
There are a number of restrictions and drawbacks when it comes to investment in physical gold
- Depending upon your location and quantity a purchase may need paper work.
- There may be restriction on the amount of gold you can buy.
- You may have to disclose identity and proof of income thus there may be legal and compliance issues.
- There is risk of getting account block due to restrictions in different countries.
- Physical gold kept at home can be robbed or stolen putting your and the lives of your loved ones at risk.
Investing in crypto vs Gold
In a recent trend it has been found that the younger investors prefer to invest in crypto and the older investors prefer gold as an investment.
Investment in crypto can give good returns but is very volatile.
Perhaps people prefer it for the good returns and bright prospects in the future.
It need not be taken care of like physical gold.
Investing in gold like we invest in crypto
Would one be interested in buying in gold if it could be bought like crypto minus the hassle of managing physical gold?
First let us see how this is possible
This is possible by way of digital gold. Where 1 digital gold is backed by 1 gram of physical gold.
This creates a direct correlation between the digital Gold token and physical token.
Digital Gold is an ERC-20 token
This means it is and behaves like a crypto. However since it is backed by physical gold it acts as a gold backed stable coin.
Such a coin gives a couple of advantages
Advantages for gold investors
- Buy gold maintaining confidentiality
- The gold token is a standard ERC-20 token which can be obtained and held by anyone who has an ERC-20 address. So no need to disclose identity.
- All tokens are stored in a bullion style vault in Singapore so all the underlying gold is safe and so is the value of the token.
- Owners can check at anytime the audit report to check if tokens in circulation are backed by physical gold.
An insurance cover protects the physical gold so the core investment asset that is gold remains intact.
The digital gold platform allows users to make free and unlimited transactions if they wish to do so.
Users can also sell and purchase tokens without any restrictions.
No need to send physical gold
Simply send the ERC-20 address of the recipient to buy and send gold in the digital format. This way of buying selling and sending makes it a feel of ownership very similar to that of physical gold.
It is a better option giving you more control over your gold ownership as compared to a gold ETF where paperwork and identity disclosure is required.
- Fast transaction
- No restriction of geolocation. Even international transactions need only an ERC-20 address.
- Good option to gift to friends and family without the hassle of buying, selling and holding physical gold.
Digital gold as stable coin for crypto investors & traders
Crypto investors typically invest in a crypto which they believe would go up.
However all cryptos are volatile and their price action moves both ways going up as well as down.
The savvy investors and traders use this as an opportunity.
When they feel the price is at a top and would correct they sell their crypto against a stable coin like USDT.
As these are backed by a US Dollar so it is very similar to selling it for dollars and when they feel an uptrend is resuming they buy back the crypto using the stable coins they had obtained.
This is the most common way to make money.
However it may be noted that the USDT is backed by the US dollar which has lost 98% of its value since the 1900's
So you are basically selling your digital crypto gold like bitcoin against a currency that has lost and continues to lose value over time.
How about hedging with gold
Now think you have some ETH which you feel would correct and so you sell ETH and hold the proceeds in Digital Gold ERC-20 token.
Gold being a more stronger asset class than US$ would be a more secure anchor for your investments.
In addition even if you hold the Digital Gold ERC-20 token its may go up in value if the gold prices go up.
Adding Digital Gold to crypto Portolio
Having ERC-20 Digital gold can help you play the gold market without the hassles of physical gold.
Things to note
- The Digital gold price is pegged to physical gold and so if the price goes down it can go down
- Digital Gold is an ERC-20 token and you do not need a fee for sending it across. However a gas fee would be required by the underlying ETH network.
- As each Digital Gold token is backed by physical gold which is securely stored in a locker so an annual fee of 0.99 % would be charged as storage fee.
This annual storage fee of 0.99% (0.0027% per day). Yearly storage fee is automatically charged from token holder's wallet by GOLD secure and audited smart-contract, based on Ethereum network, on daily basis.
For more info please refer
My Bitcointalk Profile : Thetimetravelerz
Disclaimer: This post is not financial advice please do your own research and due diligence before making an investment.
Post originally Posted on my hive blog: https://hive.blog/hive-175254/@thetimetravelerz/is-digital-gold-a-good-way-to-ride-both-the-crypto-and-the-gold-boom