LBMA Wants To Put Gold On The Blockchain And That Could Be A Blessing Or A Curse

“The LBMA, which oversees the world’s biggest spot gold market, will seek proposals including the use of blockchain for tracing the origins of metal…”

We have had many examples of analysts discussing the ways in which gold and the blockchain could merge.

For example, in this interview, Rob Kirby has been calling it the “cryptoization” of gold.

Fast forward to this week, and now we see that what analysts have been stating for some time now is starting to come into solid plans.

For example, the LBMA is mulling the use of blockchain integrating with the $200 Billion supply of metal.

Here’s more from Bloomberg:

Gold is going digital.

Blockchain technology may help keep track of the roughly $200 billion of the precious metal dug from remote mines, traded by middlemen and melted down by recyclers that’s sold each year to buyers scattered around the world.

The London Bullion Market Association, which oversees the world’s biggest spot gold market, will seek proposals including the use of blockchain for tracing the origins of metal, partly to help prevent money laundering, terrorism funding and conflict minerals, according to Sakhila Mirza, an executive board director.

“Blockchain cannot be ignored,” Mirza, also general counsel of the LBMA, said in an interview Monday. “Let’s understand how it can help us today, and address the risks that impact the precious metals market.”

Theoretically, this sounds like a good idea, for the tracking of metal, but we must understand that people inputting the data of the “sourced” metal in the first place can simply enter whatever they want, and then voila – illegally mined gold from Columbia can be shown to have been produced in Peru or Argentina.

And that’s just what can be deduced assuming Orwellian insights to what the LBMA is shooting for:

The LBMA has pushed ahead with efforts to modernize a trade that until recent years relied on phone auctions to set a key benchmark price for the market.

“For us, it’s a question of where the gold comes from,” Mirza said.


Let’s not sugar coat this development:

The blockchain can provide perfect linkage. That is, after all, why it’s a “chain”, but the blockchain in and of itself does not establish the validity or integrity if the cartel is inputting whatever data they want for any particular bar’s “origin”.

Notice this chart showing the origin of the gold:

Looking at the countries on the list, and that huge category of “others.

Granted, this is a Bloomberg chart and not how the LBMA classifies country of origin, but the point is the same:

it is not hard to see that there is much opportunity to obfuscate the true origin of the metal, especially if it is the LBMA in control of the blockchain working for their own interests as a card-carrying member of the cartel, and not working for the interests of actual transparency or “modernization” as Bloomberg puts it.

For the sake of argument, we’ll assume this is a step for the better.

If it really is as step for the better, then it is a welcomed change.

Granted, this is not the sovereign issue gold-backed or silver-backed cryptocurrency we’re all waiting for that would usher in a new bi-metallic gold and silver standard, so it’s safe to say that nations aren’t chomping at the bit to bring in real change that would benefit everybody.

But for fusing the precious metals with blockchain – it’s baby steps.

Just like a budding stacker buying that first coin, the first bar from some assuming legitimate gold mine that the LBMA places on the blockchain could perhaps become a baby step on the way to something better.

Assuming there is good in the world.

That would be a blessing.

Although the LBMA could just as easily use it for their own nefarious purposes.

And then it would be a curse.

Stack accordingly…

– Half Dollar


About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at Paul’s Twitter is @Paul_Eberhart.