Blockchain – An Emerging Force in the New Gold Bull Market

If there’s one thing gold doesn’t suffer from, it’s a lack of fair-weather friends. Recently, the yellow metal has seen more of its share. Investment gurus love to flood the airwaves and Internet with praise for gold when it looks as though it’s about to take off, especially if the stock market is looking shaky or lackluster. But once it drops, these same gurus forget that gold’s principal driver has traditionally been its negative correlation to the U.S. dollar.
 
We’re seeing this now as gold appears to dawdle in the 1,220′s range. Professional investors and followers of the gold market realize that the shiny metal is at a market price chart-readers understand to be “support” – $1,224 per ounce.
 
Traditional forces which drive gold – a decline in the greenback, uncertainty in geopolitical affairs, and a pullback in stocks – can still come into play as gold gathers momentum for another push to the upside. But gold is about to encounter another force – one which will drive it to higher prices.
 
The digital currency bitcoin has taken the financial community by storm. Many have called it the contemporary “digital gold.” It’s clear that bitcoin is now an important source of value. Like gold, it’s portable, scarce, and divisible into units.
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It’s hardly an exaggeration to say that bitcoin is on a tear. Its price has catapulted over 81% since the beginning of the year. Early this morning (5/12/17) in London, bitcoin was trading close to $1,824. Only two days before, on Tuesday, its price exceeded $1,700 for the first time. This past Monday, market capitalization for bitcoin rose to almost $30 billion.
 
Bitcoin is traded in blocks, which are time-stamped from block to block and are notably resistant to tampering. In our era of banking scams and delays, the safety and efficiency of blockchain technology has helped make bitcoin immensely successful as a currency.
 
Now, one of the world’s biggest providers of gold futures contracts, the CME group, has partnered with the U.K.’s Royal Mint to bring blockchain technology to the gold market. The partnership is introducing to the gold-trading marketplace a new gold-backed asset known as RMG or (Royal Mint Gold).
 
According to Sandra Ro, CME Group’s head of digitization, “RMG will allow instant transfers of gold to anyone anywhere in the world.” The Royal Mint will launch trading this summer, and plans to back up tradeable gold tokens with $1 billion.
 
A Singapore-based company, Digix, will be launching a similar project – one with gold-based assets that can be traded by private clients, as opposed to the Royal Mint project assets which will be traded exclusively by licensed dealers.
 
We are about to see exciting times in the gold market. Blockchain technology will provide efficiency and speed to the gold market – efficiency and speed that will be a match for any technology now seen in trading activity for stocks and bonds.
 
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