Commerzbank: Digital Currencies Are Unlikely to Replace Gold, Which Possesses "Non-Political" Characteristics

According to a report by Golden Finance, Thu Lan Nguyen, Head of FX and Commodity Research at Commerzbank, pointed out that the World Gold Council has proposed a new concept aimed at modernizing the gold market, with plans to introduce a form of digital gold. The motivation behind this may stem from concerns that stablecoins and/or central bank digital currencies (CBDCs) could become alternative investment assets to gold. However, in our view, such concerns are unfounded. Stablecoins and CBDCs are both tied to fiat currencies—stablecoins are backed by the U.S. dollar, while CBDCs are directly issued by central banks, essentially functioning similarly to cash. On the other hand, gold is "non-political," meaning it is not issued by any central bank or other political institution. The total supply of gold is primarily determined by mining output, which changes relatively slowly. For investors who purchase gold to hedge against political risks, whether fiat currencies can facilitate more convenient and low-cost transfers may not be their primary concern.