A new gold innovation, enabled by Monetary Metals, has the potential to revolutionize the way people invest in and use gold, making it a more practical, accessible, and lucrative asset class that could transform the global monetary system.
Gold as a Productive Asset
Gold can be used productively by offering interest on it, allowing it to be used in real businesses that generate returns, unlike simply holding it as a store of value.
Monetary Metals offers two products: leasing gold to companies with inventory or work in progress, and gold loans to companies that produce or earn gold.
Adding a 4% yield on gold to a diversified portfolio turbocharges risk-reward, making returns higher and risk lower, according to Monetary Metals’ research.
Market Opportunity and Innovation
The universal human need for interest on savings is a trillion-dollar market that’s currently unutilized, with gold having a market cap of $20 trillion and an estimated 200,000 tons above ground.
Monetary Metals aims to create an entrepreneurial, bottom-up, market-based system for free money and credit, setting the first free market interest rate since 1913.
The gold standard is not necessary for gold to be productive and used as a medium of exchange, as it can still be used effectively regardless of monetary policy.
Global Perspective and Network Effect
Gold’s network effect is still present globally, especially outside America, with 115 million gold-denominated accounts in Turkey for a population of 80 million.
Monetary Metals’ global customer base is split between 60% US and 40% rest of world, with Dubai offering the single biggest growth opportunity due to its high volume of gold activity.
Gold’s Unique Properties
Gold’s non-correlation with other assets, including measures of money supply and interest rates, makes it an ideal anchor or hedge in a portfolio.
Gold’s marginal utility does not decline with increasing quantity, as it is always recycled, making it a stable store of value and medium of exchange for billions worldwide.
Risk and Investment Strategies
The barbell strategy in gold investing, where one part is low-risk and the other is high-risk, is not available in other assets, making gold a unique opportunity.
Gold leasing offers 4% yield with 10% excess to ensure metal presence, using daily tracking through ERP systems, cameras, RFID technology, and a second layer of insurance.
Gold bonds offered by Monetary Metals are higher risk than leasing gold, but lower risk than buying equities in gold mining companies, which are on the far end of the risk-return spectrum.