Royal Mint to bring “blockchain bullion” to gold investors

published 27 January 2017

170127-gold-abrs-b — Royal Mint Gold hopes to drag investing in gold bullion into the 21st century

Draw a Venn diagram of gold bugs and bitcoin fanatics and the odds are that you'd pretty much have a perfect circle. So the Royal Mint's plans to back gold with the technology that lies behind the anarchic cryptocurrency should get both camps salivating.

The 1,000 year-old institution, along with derivatives trading platform CME Group, hopes to bring gold investment bang up to date by using blockchain technology to underpin investment in gold bullion, called "Royal Mint Gold" (RMG), held in the Mint's vaults.

Traditional methods of trading in gold can be cumbersome, time-consuming and costly. By using blockchain, the Mint is hoping to reduce the time it takes to settle trades, remove a whole tier of administration, and cut costs dramatically. Trades can be made 24 hours a day, 365 days a year and can be settled almost immediately, and it will createa permanent, cryptographically secured record of all transactions.It is hoping RMG will compete with other physical gold investment services such as Bullion Vault, and alternatives such as precious metals ETFs.

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Due to launch in the first half of this year, the Mint will initially store $1bn of 400oz bars in its vaults, and convert them into one-gram digital tokens known as "RMG"s, which investors will be able to trade on a peer-to-peer basis. There will be no annual management fee, and no storage fee. The Mint aims to make money by charging a small fee on trades.

Interest in blockchain has been growing for a few years now. And if the buzz at this week's Blockchain Expo in London is anything to go by, it's gathering critical mass. If the Royal Mint's product does take off, it could mark the point at which the distributed ledger finally begins to make it out of the realms of "next big thing" and into the real world, transforming itself from "the technology that underpins bitcoin" to the technology that underpins much of the world's commerce.

Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.

Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin.

As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.