The World Gold Council is trialling a new form of gold ownership which could unlock novel advantages and use cases for investors and institutions
by Dan McEvoy
Everyone wants a piece of the gold pie – but what if you want a fraction of a gold bar? Gold’s epic rise was the investing story of 2025. Gains of over 64% marked the yellow metal’s best calendar year since 1979. Investors the world over are now piling into the stuff: the World Gold Council’s latest gold demand trends report showed that global gold demand for investment purposes increased to 2,175 tonnes in 2025, up from 1,185 tonnes the previous year. Of this uplift, the vast majority – around 804 tonnes – was accounted for by ‘ETFs and similar products’.
This makes sense, on the face of it. Retail investors, on the whole, don’t want to buy an entire bar of gold in one go. It’s inconvenient to store, and fundamentally fairly illiquid.
But there is a catch. A big part of the investment rationale for gold is its ability to act as a hedge against instability in the TradFi system. As such, many gold bugs insist that you need to buy the real thing. Owning it through ETFs exposes you to counterparty risk: you don’t actually own any gold, but rather a contract that is backed by gold (for that reason, this is known as ‘unallocated gold’). You could easily be left out of pocket if the issuer goes bust (and historically, gold really comes into its own in the kind of environment where financial institutions start going bust).
Owning a gold bar (or a gold coin, or other smaller chunks of gold) is known as ‘allocated’ ownership. You can keep that bar at home if you want, or entrust it to a custodian, but either way, there is a piece of physical gold out there that belongs to you. But as well as the cost and logistics involved in either storing your own gold securely or entrusting it to a custodian, owning allocated gold also means you must buy gold in multiples of one bar. A standard 400oz gold bar currently costs over £1 million. Some brokers sell smaller bars, but even the smallest will still cost over £100. Physical gold is not a particularly liquid asset (unless you have access to a thousand degrees C of heat, in which case, you can think about melting your gold down and dividing it into more manageable chunks). So how do you get the security of allocated gold while retaining the convenience of unallocated gold?
What’s happening with digital gold?
Digitising ownership of physical gold could solve this conundrum. In December, the World Gold Council (WGC) to develop an innovative new digital form of gold, Pooled Gold Interests (PGI). The idea is to give holders ownership of a fractional share of a physical gold bar, in increments as small as a thousandth of a troy ounce. The WGC is designing this system to be technology-neutral but with a modern technology stack in mind; as such, it will be compatible with distributed ledger technology (DLT) and blockchain. “Technology has the power to transform the global gold industry, making it more accessible, transparent, and trusted than ever before,” said David Tait, CEO of the World Gold Council[1] .
Where can you buy tokenised gold?
While the World Gold Council is venturing into digital gold for the first time, there are some forms of tokenised gold already available for anyone who wants access to the precious metal’s price action without relying on either an ETF or physical ownership. HSBC became the world’s first global bank to offer tokenised physical gold back in 2023 through its HSBC Gold Token. Initially, it was aimed purely at institutional investors, though it soon opened up access to retail investors based in Hong Kong.
But the biggest players in tokenised gold are the gold-backed digital tokens Tether Gold (XAUt) and Pax Gold (PAXG). According to ARK Invest’s latest DeFi quarterly[2] report, tokenised commodities grew 64% quarter-over-quarter in Q4 2025, largely driven by these two tokens. Tether is estimated to hold $24 billion worth of gold[3] , making it the largest gold holder that isn’t a government, a central bank or an ETF issuer.
Why digitise physical gold?
Digitising physical gold ownership offers a few key advantages to investors:
Improved liquidity
Digitised gold offers improved liquidity in gold trading.
Digital gold, such as PGI, can be stored and traded on DLT, potentially facilitating faster trade execution: in theory, digital gold would be accessible and tradeable 24/7 from anywhere in the world and could settle instantaneously.
Smart contracts could also be used to automate parts of the buying and selling process for digital gold.
Fractional trading
Digitised gold can divide ownership of physical gold into units as small as one thousandth of a troy ounce.
That will enable investors to buy and sell gold in far smaller quantities. Based on £3.50[4].
Mitigating counterparty risk
Investing in digitised gold also reduces counterparty risk compared with buying gold ETCs.
If you buy a gold ETC and the issuer goes bust, you stand to lose your investment. But buying a digital gold token means that your investment is permanently logged in the distributed ledger.
Fairer pricing
Buying physical gold on DLT also eliminates the need to transport or store it, meaning investors can access itup to 30% to the price of gold purchased through traditional channels at closer to spot prices. CoinDesk estimates that these premiums can add up to 30% to the price of gold purchased through traditional channelsthat the gold used be physically segregated from other gold holdings, meaning it must.
Collateralisation and other new use cases
There are further advantages of tokenised gold, especially for financial institutions: particularly its potential to unlock the use of gold as collateral in financial transactions. Being the quintessential store of value, gold ought to be an excellent candidate for collateral. However, under European Market Infrastructure Regulation (EMIR) rules, financial institutions in the UK and the EU can’t use unallocated gold as collateral.
Theoretically, allocated gold can be used, but underwriting financial contracts with physical gold bars has some major drawbacks. Most clearing houses and exchanges require that the gold used be physically segregated from other gold holdings, meaning it mustthe use of be physically exchanged and stored by the clearing house. The upshot is that gold effectively can’t be used as collateral, meaning that it sits on institutional balance sheets as a dormant, yieldless asset.
The WGC has designed its PGI ecosystem to facilitate the use offrom gold as collateral. The underlying gold bars are already segregated, so there is no need for a physical transfer. Tait told Financial Times. “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,” he said.
The WGC is trialling PGI with commercial participants early in 2026. de-dollarisation of these trials.
[1]https://www.gold.org/news-and-events/press-releases/world-gold-council-launches-report-exploring-future-uses-digitalised
[2]https://www.ark-invest.com/crypto-reports/defi-quarterly-q4-2025
[3]https://fortune.com/2026/01/30/the-crypto-industry-used-to-store-bitcoin-in-swiss-vaults-now-one-firm-is-using-vaults-to-hold-gold-instead/
[4]Or $5 if we are pitching this at a US audience
