Gold doesn't have to be a ‘dead asset': Tokenization could unlock utility and expand the market – LBMA 2026

Experts at the London Bullion Market Association’s annual Global Precious Metals Conference said tokenizing gold could make the precious metal more useful and attract additional capital. The article provides no quantified estimate of the potential impact.

Analysis

Tokenization is potentially a distribution and settlement innovation, not automatically a new source of gold demand. The key distinction is whether tokens bring incremental buyers who require additional allocated bullion, or simply migrate existing ETF, vault, and over-the-counter holdings onto a blockchain. Only the former is clearly supportive of spot prices; the latter may mainly redistribute fees and liquidity.

Over the next 1–3 months, the investable signal is not conference enthusiasm but verifiable growth in token outstanding, redemption activity, secondary-market depth, and corresponding bullion holdings. If adoption scales, regulated custodians and platforms with credible redemption and compliance may capture infrastructure economics; legacy bullion intermediaries could face fee pressure. That outcome is not yet established, and there is no obvious listed pure-play exposure in the supplied data. Over 6–18 months, broader access could expand gold ownership at the margin, but cyber, custody, legal-title, and redemption risks could instead create discounts to bullion and damage confidence in the category.

Contrarian point: the market may overstate the near-term price effect. Tokenization can improve convenience without changing the aggregate portfolio allocation to gold. No directional gold trade is warranted on this signal alone; falsification of the bullish adoption case would be rising token balances without evidence of incremental bullion backing or persistent liquidity and redemption frictions.

Key Decisions for Investors

• Do not add outright gold exposure solely on this news. Treat tokenization as a market-structure theme until public data show net new bullion demand; existing gold exposure through liquid vehicles such as GLD or IAU need not be changed on this catalyst alone.
• Set an adoption watch for the next 1–3 months: track token AUM, independently verifiable allocated-bullion balances, redemption terms and volumes, and secondary-market spreads. Escalate only if growth is accompanied by reliable backing and functioning redemptions.
• Avoid shorting gold ETFs or miners as a tokenization proxy: substitution from existing gold vehicles is possible, but the scale and net-demand effect are unknown. Reassess if token growth coincides with persistent outflows from established bullion products or measurable changes in physical-market demand.
• Risk trigger: pause any prospective token-related exposure after a material backing discrepancy, redemption suspension, custody incident, or regulatory restriction; these could turn a convenience product into a confidence and liquidity shock.