Straight Talkin' Financial Hustle
Tether Invests in Gold, Bolstering Digital Currency and Precious Metal Combination Approach
The Scoop: Tether, that massive player in the crypto game, has gone full gold rush capturing a chunk of stock in a Canadian gold mining company. This sudden gold fever comes as Tether pushes for both gold and Bitcoin as essential additions to any smart investor's portfolio.
Tether rocked the world on Thursday, dishing out $121.5 million Canadian dollars (over $89 million USD) to grab 31.9% of Elemental Altus Royalties Corp., a gold-mining royalty firm listed on the Toronto Stock Exchange. Elemental's stock is currently priced at $1.14 USD per share, according to OTC Markets, dancing around a 1% increase on the day.
Paolo Ardoino, Tether's big boss, shared his thoughts on the deal, praising it as part of a "forward-looking strategy to build a more resilient and transparent financial system." He continued by dubbing gold "a time-tested store of value" with Bitcoin serving as the ultimate "decentralized hedge against monetary inflation."
The Tether team has coined this approach a "dual pillar strategy" – a commitment to building their empire on a foundation of not just digital gold but also the real stuff.
Tether is famous for issuing USDT, the third-largest cryptocurrency by market cap, typically the most-traded digital asset. Their big crypto product is a stablecoin, a digital token pegged to the US dollar. Tether keeps the value of its digital tokens balanced with dollar reserves – a critical function for its role as a stablecoin.
Ardoino hinted at additional gold love back in April, suggesting it's a smart move for any investor. "Just as Bitcoin provides the ultimate decentralized hedge against monetary inflation," he said, "gold continues to be a time-tested store of value."
Tether owns over 100,000 Bitcoins, worth approximately $10.7 billion, and almost 80 tons of physical gold. The company also has a gold-backed stablecoin – XAUT – valued at over $833 million, according to CoinGecko. Last month, Ardoino said Tether had over 7.7 tons of gold backing XAUT.
Edited by Andrew Hayward**
In-Depth Insights:
Tether's dual pillar strategy is all about building a strong, resilient financial system by combining the unique properties of gold and Bitcoin. The rationales behind this approach include:
- Hedging Against Inflation: Both gold and Bitcoin offer a hedge against inflation. Historically, gold has protected investors' purchasing power from losses due to monetary devaluation, while Bitcoin serves as a decentralized hedge against economic uncertainties.
- Risk Diversification: Incorporating stable assets like gold and Bitcoin enhances the stability of Tether's ecosystem. This diversification reduces risks associated with traditional financial systems.
- Barbell Strategy: Tether's approach resembles the "barbell strategy," combining ultra-safe assets like US Treasuries with high-growth investments like gold and Bitcoin. This way, Tether is poised to profit regardless of monetary policy fluctuations.
These strategic investments link real-world assets to Tether's blockchain products, establishing a backup for their ecosystem. Additionally, backing digital assets with tangible value, such as gold and Bitcoin, builds a strong foundation for durable digital value. By mitigating macroeconomic risks through diversification, Tether is prepared for potential fluctuations in interest rates, inflation, and currency devaluation.
All in all, Tether's investments in gold and Bitcoin form part of a holistic strategy to navigate economic realities, create a more robust financial system, and bring stability to the crypto world.
- Tether's acquisition of Elemental Altus Royalties Corp., a gold-mining royalty firm, is a step towards their "dual pillar strategy," aiming to build a resilient and transparent financial system using the properties of both gold and Bitcoin.
- The strategic hedging against inflation is a significant aspect of this approach, leveraging gold's historic role as a time-tested store of value and Bitcoin's function as a decentralized hedge against monetary inflation.
- The diversification of Tether's ecosystem with stable assets like gold and Bitcoin reduces risks associated with traditional financial systems, providing stability to their digital assets.
- Tether's investments resemble the "barbell strategy," a combination of ultra-safe assets like US Treasuries and high-growth investments like gold and Bitcoin, ensuring profitability regardless of monetary policy fluctuations.
- By linking real-world assets like gold and Bitcoin to their blockchain products, Tether creates a backup for their ecosystem and builds a strong foundation for durable digital value.
- This strategic approach will help Tether navigate economic realities, increase robustness in their financial system, and bring stability to the crypto world, providing potential benefits for investors in both finance and technology sectors.
