Do you know how to buy digital gold? When we think of gold, typically we think of buying bars or physical gold. But you can set up an eWallet like Google Pay or Paytm that allows you to have digital gold. In the past, we used a gold-backed currency before moving to the dollar. The money went a lot farther then. Now, however, we’ve moved away from gold. Could we see it make a comeback? And if so, should we have it in our eWallets already? With all this talk of a stock market bubble, it’s no surprise that this type of investing has become a hot topic.
What is Digital Gold?
Wait, did you read that right? Digital gold? Isn’t that an oxymoron? Not anymore! You can buy digital gold! In fact, digital gold has become a popular way for investors to get exposure to the precious metal; without having to actually keep gold bars locked up in their homes.
But what does this mean in terms of what an investor is actually buying? How is it held by institutions or banks? The answer is surprisingly simple. In fact, it’s quite similar to other forms of popular digital assets.
The standard measurement of digital gold is measured in something called DGC or Digital Gold Currency. It’s a form of electronic money that’s held by private institutions and is actually fully backed by legitimate gold reserves. Now, the name may be a bit misleading since DGC isn’t actually used as a currency to purchase goods. Instead, just like physical gold, it’s used as a store of value and a long-term hedge against inflation, market volatility, and devaluation of fiat currencies.
Historically How Has Gold Been Invested In?
Gold has been a lucrative material and currency since the Paleolithic period; around 40,000 B.C. It’s the oldest naturally occurring metal in history. But how it appeared then and how it appears now is drastically different.
Gold coins, bullion, jewelry, statues, and decorations were all commonplace and symbolic of great wealth. Now, you’d be hard-pressed to find people who’d be willing to put out gold bars as decorations or household items.
More recently, investors have been able to buy all kinds of financial instruments that give them exposure to precious metals, including ETFs, stocks, and contracts.
Gold ETFs: There are a lot of ETFs these days, but some of the biggest hold the physical metal. Others allow you to buy shares of gold miners or producers. While others still allow you to short the global price of gold if you’re bearish on the metal. ETFs are a great, low-risk way of getting exposure to different parts of the gold industry. Don’t confuse this and buy digital gold; even though you may buy shares of the gold ETF online.
Gold Stocks: Perhaps the most common way to invest in gold is by buying shares of gold companies. These can be gold miners, refiners, or distributors. The nice thing about these commodity-type stocks is the healthy dividend they often pay. However, the stock price usually moves alongside the global price of an ounce of gold.
Gold Contracts: Yet another way to invest in gold is to buy a futures contract on the commodities market. These are similar to buying options because you’re buying the contract for the opportunity to buy gold at a future price and time. It’s one of the cheapest ways to invest in gold but definitely takes some patience and research before jumping into contracts and options.
Digital Gold Sounds Familiar
If you’ve paid any attention to the financial world over the past few years, you’ll recognize that digital gold is the new nickname for everyone’s favorite cryptocurrency; Bitcoin.
Truthfully, as often as the two forms of investments are pitted against one another by investors, Bitcoin and DGC have a lot in common.
If you read through Fintwit, Reddit, or any other social media investing group, you’ll quickly find that most people are either for gold or for Bitcoin; with very little overlap between the two sides.
Call it old school versus new school. Both assets were at the forefront this past year as many investors were seeking a stable hedge in their portfolios from the volatility of the stock market. And that’s why people buy digital gold. Hedge your bets and your portfolio does much better during a downturn. That’s why a basket trade works.
When one sector is down, you’re not losing your shirt. That is, if you’re hedging stocks. When a sector is down, another one is going. Or you buy digital gold and have your safe haven in a bear market.
The Similarities Between Digital Gold and Bitcoin
So how are Bitcoin and DGC similar? Well, for starters, most people probably don’t know that DGC is actually built on a distributed ledger technology. This is really similar to the Blockchain that cryptocurrencies are built on. The ledger that DGC exists on is called hashgraph.
It claims to be faster and more secure than the digital Blockchain that cryptocurrencies reside with. The hashgraph makes a claim of being able to accurately process up to 500,000 transactions per second. While the current Blockchain can only process about ten for Bitcoin or Ethereum.
Secondly, although this can definitely be argued, both assets have a finite supply. Therefore, using basic economics will always cause a higher demand. And therefore a higher price. There have been arguments about whether or not Bitcoin truly is finite if it’s digital.
And the same can be said for DGC. Since DGC is a form of electronic currency that’s measured against specific mass units of gold, it can also be argued that there’s a finite amount of that as well. Others will argue that gold isn’t rare. Instead, its appearance and historical performance as a measure of wealth maintain its value.
Finally, the mechanism of investing in these two assets itself is similar. A store of value that protects the investor against volatile fluctuations in the stock market. Physical gold and Bitcoin both hit all-time highs in 2020. So it’s no coincidence that this occured during perhaps the most tumultuous market performance of the S&P 500 benchmark index in decades.
How Can I Buy Gold Digitally?
While there are seemingly more cryptocurrency exchanges popping up every month, there are only a few sites that truly allow you to buy and store DGC as a stable value investment. Let’s take a look at one of the bigger sites that are quickly gaining popularity with gold and digital asset investors around the country. Coro.Global is a company to look at if you want to buy digital gold.
This Miami, Florida-based fintech company actually trades on the OTC market with the ticker symbol (OTCMKTS: CGLO). The stock hasn’t really done much. Although it peaked at around $8.00 per share, in March of 2020. However, it’s steadily declined since then and currently trades around $3.50.
Coro has a market cap of about $88 million, but I wouldn’t expect much from this stock anytime soon. The beauty of Coro is that it uses the hashgraph digital ledger to store shares of digital gold that users can actively purchase.
Coro offers digital gold to be purchased in XAU; or the equivalent of one troy ounce of actual gold. Just like with Bitcoin where you can purchase Satoshis, you can also purchase fractional ounces of gold with U.S. dollars. This XAU is then held in your XAU wallet (sound familiar to Bitcoin?). There you can store them securely until you need to convert them back to USD.
Coro CEO David Dorr recently published the following quote in a blog post on Coro’s site:
“Since 1971, when President Nixon removed the United States from the gold standard, we’ve seen the purchasing power of the U.S. dollar drop 97%. This has had devastating consequences on our society such as loss of our middle class, reduction in real wages, loss of savings and income, higher debt levels, and overconsumption of natural resources.”
All of this because as it is now, the U.S. dollar and most other fiat currencies are unstable and are devalued due to constant inflation and interest rate changes. By storing your money in gold, Coro argues that you are protecting it within the value of the gold you own and therefore are unaffected by any monetary policies that may be implemented by the Federal Reserve.
Does Coro Store Your Gold?
Coro quite literally stores physical gold with the International Depository Services Group; which allows users to have direct ownership of their gold at all times. While Bitcoin doesn’t have physical coins anywhere, you can see the parallels beginning to form between investing in cryptocurrency and investing in digital gold.
Perhaps the wildest part about Coro is that while maintaining itself as a digital brokerage for gold, it has plans for a service that’d actually allow its users to have the physical gold they own with Coro, shipped to their homes. Try getting Bitcoins sent to your doorstep!
One major difference between gold and cryptocurrencies is that the crypto market is open 24/7. Coro only allows you to buy digital gold between the hours of 6:00 pm EST on Sunday to 5:00 pm EST on Fridays. And not during federal holidays or if the market is closed.
Coro is currently only available on mobile phones and is ready for download from either the Apple App Store or Google Play store. Accessibility is also limited to 27 states around the country, with plans to add more in the near future. Because the physical gold is stored in the United States, it does seem unlikely that Coro will ever have a presence outside of America. However, international investors can invest in gold through other vehicles outside the U.S.
Finally, with all of the storage fees and auditing that need to take place with a physical asset, it’s understandable that Coro charges transaction fees for converting USD to XAU. There’s a standard 0.5% transaction fee every time you exchange USD to XAU or XAU back to USD. There’s also an annual gold storage fee that users pay; which amounts to 0.5% of the total value of your gold, billed per month.
The Future of Digital Assets
Digital Gold is interesting because, unlike cryptocurrencies, you can’t actually say that it’s a fully digital asset. Sure, the XAU wallet and buying fractional ounces of gold is very similar to a Bitcoin wallet. At the end of the day, the physical gold you own actually lives somewhere and you can even have it shipped to your door one day. It’s kind of the best of both worlds for investors. You get digital account management while also having the option of storing the actual metal as well.
Where do digital assets go from here? As more institutional investors and corporations buy into cryptocurrencies, particularly Bitcoin, digital investments continue to gain legitimacy as mainstream investment vehicles. Just this year alone, Tesla, Square, PayPal, Microstrategy, Bank of New York Mellon, the Motley Fool, Riot Blockchain, and Marathon Digital Holdings have all purchased Bitcoin as a business investment. And some have even allowed it to be used as currency for their goods. Later this month, the largest American crypto exchange, Coinbase, will debut on Wall Street via a direct listing, and early indications are that it will be valued at somewhere in the range of $100 billion.
But it’s not just currencies either. NBA Top Shots are NFTs or non-fungible tokens that are built into the blockchain to ensure uniquity and have been the hottest collectible on the internet. Anything that can be “Blockchained” has seen a spike in demand. And digital collectible assets are rapidly gaining popularity. It should come as no surprise then to anyone, that the oldest symbol of money and wealth, has joined the digital investment trend through brokers like Coro. So you can buy digital gold.