Forget Bars And Coins; Digital Gold Will Revolutionize Marketplace - Sprott CEO
(Kitco News)- Although gold is one of the top traded assets in the worldwhen compared to other markets like U.S. bonds or foreign exchange, it ishugely inefficient, but one fund manager thinks this is going to change.
 |
| Peter Grosskopf, CEO of Sprott |
More than a decade ago exchange-traded productsrevolutionized the gold market, and the yellow metal is on the cusp of a newdigital revolution, said Peter Grosskopf, CEO of Sprott, in an interview withKitco News on the sidelines of Mines and Money Toronto.
Grosskopf said that he thinks a digital bullion marketplacewill open up the gold market to a new category of investors and bringmuch-needed efficiencies for the market.
“Goingto a bank or a broker to buy gold is not agreat option. Because of the fees, it’s a losing trade,” he said. “Yes, buyingETFs are better, but the storage costs are still prohibitive for long-terminvestors.”
Grosskopf said that what the gold market needs to berelevant to today’s modern investors is a digital market, which is why thecompany has taken a stake in Vaultchain Gold, a physically-backed digitalmarketplace, developed by Tradewind Markets.
Through Vaultchain, which launched in March, investors canbuy fractional amounts of gold or silver on digital exchange with the physicalgold stored in a vault at the Royal Canadian Mint. The transactions andownership of the gold are recorded through blockchain technology.
He added that adigital marketplace is the next evolution of the gold market, which hasn’t seenany significant changes since the first gold-backed ETFs were launched.
“Without exaggeration, I think a digital exchange isimportant for the gold market,” he said. “The gold market is ready for a wholenew investor. We just have to bring the physical market into a digital world.”
Although gold has struggled to find momentum even as itholds on to most of its recent gains, Grosskopf said that he is expecting goldto regain its luster through the rest of the year as investors start to seecracks growing in the U.S. economy.
He added that he expects increased economic risk and highervolatility will prompt some investors to move out of equities and invest inmore defensive assets.
“It just takes a small percentage of investors to take theirmoney off the table and put it into gold to spark a major rally,” he said. “Ithink people are starting to recognize that gold is a resilient asset.”
Grosskopf noted that gold prices, while falling to a 1.5year low in August, have held critical long-term support levels despite facingsignificant pressures from strong momentum in the U.S. dollar and higher bondyields.
One of the reasons why gold has remained resilient isbecause of growing inflation fears. Although inflation has been tame this year,he said that there are already signs that pressure is starting to build.
“Economic growth has comforted many investors,but we don’t think it can last,” he said. “Government tax cuts have juiced thiseconomy and when the impact of those tax cuts runs out, the growth numbersaren’t going to be great. When do people stop buying the growth story and startworrying about the deficit? We think that happens sooner rather than later.”
By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |