New York – Gold prices have surged to record highs, breaching $5,000 per ounce amid geopolitical instability and persistent inflation concerns, renewing the metal’s appeal as a safe-haven asset. Adding an unexpected dynamic to this rally, cryptocurrency firm Tether – the issuer of the widely used USDT stablecoin – has emerged as a significant gold accumulator, now holding an estimated $24 billion in physical gold reserves. The company’s aggressive purchasing and ambitions to directly trade in the gold market are prompting scrutiny from ratings agencies and raising questions about the future of digital currency backing and potential challenges to the dollar’s dominance.
The price of gold recently hit a record high, surpassing the psychological barrier of $5,000 per ounce, driven by central bank purchases and broader market uncertainty. Contributing to this surge, cryptocurrency giant Tether has been aggressively accumulating physical gold, potentially playing a significant role in the precious metal’s recent rally – according to a report from Bloomberg.
Tether currently holds 140 metric tons of gold, valued at approximately $24 billion (9 trillion Hungarian forints). This makes the company one of the largest known gold holders in the world, trailing only central banks and the largest exchange-traded funds. For comparison, the United States holds the largest gold reserves with over 8,100 tons, representing nearly 78% of the country’s total foreign exchange reserves, followed by Germany with more than 3,300 tons. The National Bank of Hungary, according to recent data, possesses 110 tons of gold.
The company is adding to its reserves at a rate of 1-2 tons per week and doesn’t anticipate slowing down its purchases. The gold is stored in a heavily guarded Swiss bunker, originally built during the Cold War, protected by multiple layers of thick steel doors.
“It’s a James Bond-esque location. It’s insane!”
said Paolo Ardoino, CEO of Tether, describing the vault. Ardoino likened the company’s strategy to that of a central bank, noting that the world is moving towards uncertainty and that, due to a lack of trust in government debt or the long-term stability of the dollar, physical gold is seen as the most secure form of collateral. Tether’s ambitions extend beyond simply accumulating gold; the company aims to be an active participant in the market.
To that end, Tether has recruited experts from major banks, including HSBC, to build a world-class trading division capable of directly competing with traditional banks in the gold market. While details of the company’s gold strategy remain limited, analysts who spoke with Bloomberg suggest Tether’s substantial purchases contributed to the 65% increase in gold prices last year. However, experts emphasize that Tether is not the sole driver of the price increase, as central banks and investors globally purchased over 1,500 tons of gold collectively.
The move comes as some, including S&P Global Ratings, have expressed concerns about Tether’s reliance on assets like gold and Bitcoin to back its dollar-pegged stablecoin (USDT), rather than solely holding cash reserves. Despite these concerns, the company is profiting from the strategy and anticipates that other countries may launch digital, gold-backed currencies as rivals to the dollar in the future.
This activity occurs as the gold market experiences a period of strong performance, as detailed in a recent article, marking a two-decade high for the precious metal.
