You can hold lots of things that aren't highly-fungible assets with a trillion-dollar, highly-liquid international market.
Discussion
Two things are being conflated here that both go by the name âgoldâ. One is the gold that you can hold (physical metal). The other is gold thatâs highly-liquid and fungible (IOUs). These are not the same.
Thinking about storage, you can self-custody a few million dollars of physical gold (ballpark) before the mass begins to be a hassle and risk. Todayâs gold price in USD is ~$2k. 500 pounds of gold = ~7290 Troy oz = $14.5M. Fortunately, since gold is fairly dense, you should be able to fit this in a medium-size safe.
Thinking about transport, at 500lbs, you can probably get it all into and out of your house in 5-10 trips to the car depending on body strength. At that weight, your car probably wonât ride noticeably low unless itâs a compact. You may have difficulty crossing international borders on land. Air travel is out of the question.
Next, fungibility. Your buyer is going to want to know itâs actually gold youâre selling. Theyâll have to test the metal in some way. This takes time, no matter which method is used.
Liquidity: your buyer is likely constrained in terms of how much they are willing to take at any given time. This could be for security reasons, or jurisdictional. In some jurisdictions, sales above certain thresholds trigger reporting requirements ($10k/day is usual)
For these reasons, that âtrillion dollar international marketâ doesnât apply to physical, self-custody gold. That market is for gold IOUs. The industry refers to them as âgood deliveryâ bars. These are bars that have been assayed and continuously vaulted by certified custodians. âOwnersâ of good delivery bars do not self-custody. They vault.
Now, $14M may sound like a lot of money. And it is for many. For institutions, itâs tiny.
But in any case compare this to #Bitcoin. With Bitcoin, you can store 483 BTC in a wallet with a 12-word seed. Memorize the seed and you can travel anywhere in the world undetected. Sign a transaction and you can send it to anyone, anywhere, for a few dollars in fees, and it settles in about an hour.
Itâs hard to predict how long institutions will tolerate the overhead, risk and manipulation of the gold IOU market. But technologically, thereâs no competing with Bitcoin.