💹 Innovations such as blockchains and ‘smart contracts’ are disrupting the traditional investment space by tokenizing different assets, from real estate to gold and silver.
Tokenization is transforming assets or other valuables into digital tokens that can then be transacted through blockchain technology.
Tokenized gold is a digital form of gold under ‘stable coins’ representing ownership of gold and directly pegged to real gold. Its prices are supposed to follow the underlying, i.e. gold.
The tokenized gold can be owned fractionally and bought by anyone over the Internet; it is stored and traded digitally using highly secure blockchains.
The yellow metal is a proven hedge against inflation, and in current global scenarios with declining fiat currencies, gold has been one of the most favoured assets.
While tokenized gold is backed by real gold, it comes with its own set of risks.
Changes in supply and demand on crypto exchanges can make tokenized gold more volatile than actual gold. If the token is not backed adequately with physical gold. In that case, it may lose its value rapidly, and most importantly, the values are also highly dependent upon the stability of firms and exchanges offering them.
Overall tokenized gold may seem an exciting new option, but it needs to earn its place as a viable alternative to physical gold, gold ETFs, Sovereign Gold Bonds etc.
One should enter this asset if one chooses to do so, only after proper due diligence and under the guidance of an expert.
Vikas Sharma, CFP®, is a first-generation purpose-driven entrepreneur with over 19 years of experience in financial services, personal finance, and the advisory space. He is a Certified Financial Planner, an IIM Calcutta Executive Alumni, and holds an MBA in Finance and a Postgraduate qualification in Financial Planning.
Currently, Vikas is the Co-Founder & CEO of The Logical Advisor (TLA Academy Pvt. Ltd.) and Goalchi Capital Solutions LLP, where he integrates life, purpose, values, and money to create meaningful financial journeys.
He has worked with a leading Asset Management Company, mentored 1,500+ IFAs and Relationship Managers across India, and educated 10,000+ investors through Financial Wellness programs. His work has consistently focused on reshaping advisor and investor behaviour to enable sustainable success.
Vikas also coaches and mentors financial advisors nationwide, helping them build purposeful and successful careers.
