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As gold miners begin reporting earnings this week, it’s time to ponder the long-term future of bullion demand. One of the most intriguing developments in that regard is an audacious $1-billion (U.S.) project to create a freely traded gold-backed digital currency.
To be sure, it’s easy to mock the new venture as a way-too-trendy attempt to marry the traditional appeal of precious metals with today’s enthusiasm for the blockchain technology behind bitcoin.
But the project has two big-name backers behind it and their reputation suggests investors might want to pay close attention. CME Group Inc. is a U.S.-based company that operates the world’s largest options and futures market. The Royal Mint is a thousand-year-old institution owned by the British government.
The partners announced RMG – short for Royal Mint Gold – late last year and plan to begin offering the product this summer with an initial $1-billion worth of gold. For now, they’re billing it simply as a new way for people to trade bullion. Viewed more broadly, though, RMG is the first in what could prove to be a wave of commodity-backed cryptocurrencies.
What’s the appeal of such a creation? Many gold enthusiasts insist that any government-issued fiat money – the U.S. dollar, the Japanese yen, the British pound or whatever – is doomed to fail.
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