The World Gold Council Looking to Launch a Digital Form of Gold

The WGC (World Gold Council)* is, according to experts within this arena, planning to launch gold in a digital form, which may well create major changes as to the collateralisation, trading and settlement of gold, whilst at the same time transforming the USD 900 Billion gold market centred in London. David Tait, the current CEO of the WGC, when interviewed, said this new form “will allow for the digital circulation of gold within the gold ecosystem, using it as a collateral for the first time”.

*The World Gold Council – The WGC is an international trade association for the gold industry, it is headquartered in London and whose members are gold mining companies. The WGC is a market development organisation for the gold industry and works to champion the use of gold as a strategic asset.

The WGC has said that the digitisation of gold will broaden its market reach and they are trying, according to their CEO, David Tait, to standardise that digital layer of gold such that the various financial products used in other markets can be used going forward in the gold market. Gold has recently proved that it is still extremely popular especially as a safe haven as only last week it reached a record price of USD 3,550 per ounce having also doubled in price over the last two years.

Each digital unit of gold will be known as PGI’s (“Pooled Gold Interests”) and this will allow investors to buy a form of fractional interest in gold bullion. Over many years the OTC* (over-the-counter) gold has been settled through two key structures i). allocated gold and ii). unallocated gold

i). Allocated Gold is a form of gold ownership where physical gold is purchased (bars) and are stored in a secure vault and is legally owned by the purchaser and ownership is insulated from credit risks of the custodian bank. However, in order to attain this status, there is a limitation on holding only whole-bar multiples and increased operational complexity.

ii). Unallocated Gold is where specific gold bars are not set aside for the holder, rather the holder has a contractual right against the institution where their unallocated gold is held in respect of their entitlement. Unallocated gold has traditionally provided holders with greater liquidity through deeper markets and quick and simple settlement mechanics. However, the status for unallocated gold is that it requires holders to take the credit risk against the institution where their unallocated gold is held.

*OTC or over-the-counter gold refers to gold being directly traded between two parties (the buyer and the seller) rather than through a formalised or centralised exchange. This allows for flexible, customised transactions with such terms as quantity, quality and delivery being negotiated privately. Major clients within this market include central banks, refiners and investors with the London market being a central hub for these 24-hour transactions.

This proposal from the WGC would create a third type of transaction for the OTC gold in London and the pilot scheme due to be launched at the beginning of Q1 in 2026, will include major banks and trading houses as joint or co-owners of the underlying gold. This third pillar in the OTC market is known as the Wholesale Digital Gold Ecosystem (the “ECOSYSTEM) and will underpin as mentioned above, the new form of digital gold bars the pooled gold interests or PGI. This third transaction, or as the WGC refer to it, as the “Third Foundational Pillar” has been designed to sit alongside existing settlement through allocated and unallocated gold, with the belief that gold when paired with the new structure could unlock significant opportunities across financial markets with regard to trading, investment and collateralisation.