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Why did we digitize gold?

Image 18 min
  • Gold is a popular investment but investors often suffer from additional layers of unnecessary middlemen, costs and associated risk.
  • DGLD is an accessible and convenient solution which will revolutionize the way the world owns one of its most enduring commodities.

Gold is one of the most valuable commodities for individuals and investors around the world. The most precious of all metals, gold has been treated as a safety net in times of financial uncertainty, often immune from wild currency fluctuations or economic downturns. It has an unparalleled reputation as a secure investment. From Ancient Egypt to serving as part of a modern-day investment strategy, gold has been sought after and evolving in both form and utility for centuries:

3600 BC –Through metallurgy, the Egyptians mine gold out of ores using blowpipes.

2600 BC – Artisans throughout Mesopotamia experiment with gold to craft jewelry and other items.

564 BC – The first gold coins are minted by King Croesus of Lydia, using a standardized purity for general circulation.

300 – The Romans use nano-particles of gold to decorate ornaments, in addition to establishing the first stream-based gold mining operations.

1300 – In London’s Goldsmith’s Hall, the first hallmarking systems to verify the quality of precious metals - including gold - was established.

1717 – The United Kingdom introduces the Gold Standard, linking the currency of gold to a fixed price.

1792 – The United States Congress establishes a bimetallic standard for gold and silver, with gold valued at $19.30/ounce.

1848 – The discovery of gold traces in California leads to the Gold Rush, bringing people from across the world to the region.

1933 – President Roosevelt suspends convertibility of the U.S. dollar to gold - although this is subsequently reversed - and forbids the holding of gold by private individuals.

1944 – The Bretton Woods system is introduced, creating a gold exchange standard linked to the U.S. dollar. After the Second World War, the U.S. was the world’s strongest economy and did not have to repair infrastructure, unlike European partners.

1971 – The Nixon Shock takes place. The Vietnam War and America’s budget struggles meant that pressure was intensifying on the U.S. to leave the Bretton Woods system. President Nixon ordered the termination of the system in August 1971.

Since that date, gold prices have increased from the fixed $35/ounce level in the early 1970s to approaching a peak of almost $2,000/oz in 2012. In that time, gold has emerged as a ‘safe haven’ investment for consumers and investors alike.

The Conundrum of How Many ‘Invest’ With Gold Today

Owning gold can be complex.

In many cases, you may not actually own the physical commodity itself. Many individuals consider investing in an exchange-traded fund (ETF) which tracks the relative value of gold at any given time. Other products may give the impression that you own your stocks of gold, but suffer from additional, inconvenient layers of middlemen which create distance between investors and their asset. With additional layers come additional uncertainties around security, accessibility and geographic/regulatory concerns.

If you are investing in gold as a hedge or safe haven – but rely on middlemen whose bottom line is tied to the market you are specifically hedging against – then you may be defeating the object of investing in gold in the first place, because in the midst of a crisis, those very middlemen may be frozen, inaccessible or otherwise predisposed. These traditional solutions are neither convenient nor practical for individuals or professionals, particularly in a black swan economic scenario when easy access to a physical store of gold may be of paramount importance.

Digitizing gold is a natural solution to these problems. At its core, DGLD is simply an easily-accessible, convenient representation of the physical gold you own. Your gold is held in the same Swiss vaults by trusted, well-respected organizations who have a proven track record in this industry. With DGLD in your digital wallet, there is no doubt that the allocated gold in the Swiss vault is yours. No questions of ownership, no unnecessary middlemen to navigate.

Your ownership of the allocated gold is cryptographically and independently verifiable, and cannot be altered by us or anyone else.

With your ownership proven by leveraging open blockchain technology – we believe DGLD will revolutionize how the world will own one of its most precious commodities. Accessible from anywhere with Internet access, economies will emerge from this straightforward and simplified approach to gold ownership. For individuals and investors alike, DGLD represents significant breakthroughs in convenience, safety and security for one of the world’s most valuable commodities.

We won’t say more than this for now - but suffice to say, we are actively working in the background to make sure that the utility of DGLD held in your digital wallet continues to expand.