World Gold Council's 2026 Pilot Program for 'Digital Gold'

World Gold Council’s pilot for ‘digital gold’ set in 2026

Summary: The World Gold Council plans to pilot a new 'digital gold' initiative by 2026, aiming to transform London’s $900 billion gold market. This digital representation of gold, known as "pooled gold interest" or PGI, will allow for greater flexibility in trading and using gold as collateral.

Key Takeaways:

The World Gold Council aims to launch a 'digital gold' pilot by 2026, transforming the existing physical gold market.
Known as "pooled gold interest" (PGI), this initiative will facilitate digital trading and collateral use of gold.
The council's goal is to modernize perceptions of gold in investment portfolios, aligning it more closely with digital assets.
Past attempts at creating gold-backed digital assets have seen varying levels of success, with few projects currently thriving.
The new model will incorporate major banks and trading houses as co-owners of the gold.

Introduction to the Digital Gold Revolution

London's bullion market is preparing to introduce a revolutionary form of 'digital gold' that could transform how people trade, settle, and leverage gold for collateral purposes. David Tait, the Chief Executive of the World Gold Council, stated that the miners' organization aims to revolutionize the existing $900 billion market for precious metals by allowing traders to "pass gold digitally around the gold ecosystem, as collateral, for the first time."

Aiming to Modernize Gold Trading

According to Tait, the objective of this digital gold initiative is to shift how asset managers perceive gold, which is often seen as a static asset. While gold is prized for its physical properties and position as a “safe haven asset,” Tait acknowledges the competition from more modern digital assets like cryptocurrencies.

In recent years, gold has significantly increased in value, reaching a record high this week. However, many investors still regard it as an unchanging asset on financial statements. Tait believes that by transitioning gold to a digital format, it can be utilized for margins and collateral, creating potential profits for investors.

“For the banks, from a collateral perspective, they will make a lot of money, as they get an opportunity to use the gold on their balance sheet as collateral,” Tait explained.

Introducing Pooled Gold Interest (PGI)

The new asset will be named “pooled gold interest” (PGI). This innovative unit will enable banks and investors to trade fractional ownership in physical gold through separate accounts. The World Gold Council aims to kick off a pilot program for this digital gold involving commercial participants in the first quarter of 2026.

Learning from Past Digital Gold Attempts

The concept of digitalizing traditional physical assets is not entirely new. Numerous cryptocurrency firms have attempted to create digital assets linked to gold value. However, only a handful have succeeded commercially.

Research from Blockdata shows that, out of 66 active stablecoin projects, 24 have been discontinued, with around two-thirds of those backed by gold reserves. In contrast, two notable exceptions are Tether Gold (XAUT) and Pax Gold (PAXG), both achieving market caps exceeding $1 billion since their launches.

Bitcoin as Digital Gold

Interestingly, Bitcoin (BTC) is often referred to as 'digital gold' due to its similarities with gold and its movements mirroring those of other safe-haven assets. Typically, when gold performs well, a rally in Bitcoin closely follows, often supported by safe-haven status amid macroeconomic uncertainty.

As illustrated in statistical analyses, gold's uptrend is largely fueled by its reputation as a safe-haven asset, backed by central bank purchases. While Bitcoin also benefits from shifts away from fiat currency, its dynamics lead to a historical trend of outperforming gold following a rally.

A Unique Approach by the World Gold Council

What distinguishes the World Gold Council’s initiative from previous gold-backed tokens is its structural approach. According to the proposal outlined in their white paper, the Council's offering will involve ownership of gold being represented through over-the-counter (OTC) transactions in London, with collaboration from major banks and trading firms as co-owners of the underlying gold assets.