Gold has to be delivered if it backs a pricing process. If there is no delivery uncertainty, I have no reason to dump my gold certificates, just holding on to them guarantees the even money bet. So, I am not going to spend them, instead my spending currency remains the tax dollar and other S&L backed currencies.
A freely traded digital currency backed by gold may be just around the corner. This week, at the MIT Technology Review’s Business of Blockchain conference, I heard Sandra Ro of CME Group (which operates the world’s largest futures and options exchange) discuss a partnership with the U.K.’s Royal Mint to offer a digital currency called RMG (Royal Mint Gold). According to Ro, “When you purchase RMGs you will effectively have real gold that is allocated from a direct ownership standpoint that is completely reserved — there is no re-hypothecation, there is no lending on that gold, there will be enough physical gold to represent all the RMGs that are issued.” This article provides more detail.
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