How Tether Fits into the Global Rush to Gold

The secretive nature of the gold market means that, while it is relatively easy to describe the main factors driving investment, it is often difficult to pinpoint exactly who is behind the purchases. China, for example, officially reported buying only 27 tons of gold last year, but according to many traders, the actual volumes are significantly higher.

Against this backdrop, the scale of Tether’s declared purchases has led some market observers to point to the company as a factor in global price movements. According to analysts at Jefferies Financial Group, these purchases likely contributed to gold’s roughly 65% increase last year. In a client note, they describe Tether as a “significant new buyer” that could help sustain demand for the metal going forward.

Nevertheless, Tether remains just one part of a much broader investor rush into gold. Central banks and exchange-traded fund investors collectively buy over 1,500 tons of gold, putting the crypto company’s activity into a wider context.

Tether’s purchases undoubtedly affect the price, but they are only one element behind the impressive rally, says John Reade, chief strategist at the World Gold Council. According to him, the company is part of the upward movement, but far from the sole reason.

However, Tether’s ambitions extend beyond merely accumulating gold. CEO Paolo Ardoino states that the company plans to actively trade the metal, thereby beginning to compete with leading banks such as JPMorgan, HSBC, and other dominant market participants.

To support its long-term purchases and capitalize on market inefficiencies, Tether needs the “world’s best gold trading platform,” Ardoino notes. He adds that the company is still analyzing the market, and future strategies will be designed to maintain a strong exposure to physical gold.

The goal is stable, long-term access to the metal, and a sign of Tether’s growing ambitions is the hiring of two senior traders from HSBC, who are already helping manage the company’s precious metals operations. Tether is also exploring opportunities for more active trading of its gold, including through arbitrage when futures prices diverge significantly from the physical metal.

Purchasing physical gold at roughly $1 billion per month, however, is a serious logistical challenge. The company buys directly from Swiss refineries and from major financial institutions, and executing large orders can take months. Tether is therefore seeking ways to make the process more efficient, as volumes of one to two tons per week are extremely significant for the market.

The company’s interest is not limited to gold bars. Its bullish stance on the metal also extends to investments in so-called royalty companies, which buy stakes in the future revenues of gold mining companies. Tether has already acquired positions in nearly all mid-sized Canadian companies in this segment, including Elemental Royalty, Metalla Royalty & Streaming, Versamet Royalties, and Gold Royalty.

According to sources familiar with the process, the rapid accumulation of these stakes is coordinated by Juan Sartori—a former Uruguayan senator, businessman, and co-owner of the English football club Sunderland.

In many ways, Tether’s approach to gold resembles that of a central bank. Like monetary authorities, the company values gold for its high liquidity and its role as a reserve asset that represents no one’s debt.

“Gold is logically a safer asset than any national currency,” Ardoino said in an earlier Bloomberg interview. He notes that all central banks in BRICS countries are actively increasing their gold reserves.

Ardoino adds that users of Tether’s dollar stablecoin in emerging markets are “exactly the people who like gold and have long used it to protect themselves from their own governments, which devalue their currencies.” According to him, the world is entering a period of increasing uncertainty and turbulence.

Against this backdrop, gold continues to rise. The metal climbed over 1.5% on Wednesday, marking its eighth consecutive winning session and reaching a new record. The move followed comments by U.S. President Donald Trump that he is comfortable with a weaker dollar, pushing greenbacks to their lowest levels since 2022.

However, gold purchases also carry risks. Deviation from the U.S. dollar could result in losses that might potentially threaten Tether’s ability to maintain its stablecoin USDT at a fixed value of $1.

In November, S&P Global Ratings analysts downgraded USDT’s stability rating to “weak,” citing increased exposure to riskier assets in reserves, including Bitcoin, gold, secured loans, and corporate bonds, as well as limited public information. Tether reports gold as part of the reserves backing USDT in quarterly statements audited by BDO Italia.

So far, however, Tether’s bet on gold has proven highly successful. The company’s purchases coincide with the strongest gold rally since the 1970s, amid rising investor and government concerns over holding dollar assets.

Tether is also seeking to capitalize on this trend through another product—Tether Gold (XAUT), a gold token that can be exchanged for physical gold. The company has already issued XAUT equivalent to around 16 tons of gold, or approximately $2.7 billion, and also offers a smaller nominal version of the token called Scudo.

According to Ardoino, there is a “good chance” XAUT will end the year with a market capitalization between $5 and $10 billion. In such a scenario, Tether would need to purchase over one ton of gold per week for this product alone, excluding purchases for its own reserves.

Although gold tokens remain relatively small compared to the $500+ billion exchange-traded fund market, Ardoino believes their moment is yet to come. He notes that several countries are actively accumulating gold and are likely soon to issue tokenized versions of the metal as a competitive alternative to the U.S. dollar.

Whether token-backed gold will become a real competitor to the dollar remains to be seen. But according to John Reade of the World Gold Council, Tether’s strategy clearly captures the zeitgeist. He says it is significant that one of the leading players in the crypto sector sees gold as the classic asset for protection against dollar depreciation.

-Source: Bloomberg Terminal