Tether Ramps Up Physical Gold Purchases as Tokenized Assets Hit New Highs

TLDR

• Tether plans to increase gold holdings to 10-15% of its investment portfolio, up from around 7%, representing several billion dollars in purchases
• The company currently holds 130-140 metric tons of physical gold valued at $23-24 billion, already placing it at 12-13% of broader holdings
• Tether is buying one to two tons of gold per week and will continue for at least the next few months
• At an annualized pace of 50-100 tons, Tether’s demand represents 1-2% of global yearly supply, enough to matter at the margin but not dominate
• Tokenized gold assets like Tether Gold (XAUT) and Pax Gold (PAXG) hit record highs above $5,500 as spot gold prices surged

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Tether is buying up to two tons of physical gold each week as part of a plan to expand its gold holdings. CEO Paolo Ardoino told Reuters the company aims to hold 10-15% of its investment portfolio in gold, up from earlier levels near 7%.

With USDT circulation at around $186 billion, this shift could mean several billion dollars in new gold purchases. The buying will continue for at least the next few months, according to Ardoino.

The stablecoin issuer already holds between 130 and 140 metric tons of physical gold. At current prices above $5,000 per ounce, this stockpile is worth about $23-24 billion.

Gold Market Impact

This puts Tether’s gold allocation at roughly 12-13% of its broader holdings. The company is sourcing metal through over-the-counter markets and Swiss refiners rather than futures exchanges.

At an annualized pace of 50-100 tons, Tether’s purchases represent 1-2% of global yearly supply. Global mine production runs at roughly 3,500-3,600 tons per year, with recycled gold adding another 1,200-1,500 tons.

The buying draws from existing above-ground stocks since gold supply cannot scale quickly to meet demand spikes. This creates tighter physical liquidity in the short term.

Weekly purchases of one to two tons amount to a small fraction of daily global trading volumes. But the buying is predictable and balance-sheet-driven, which helps support price floors.

Analysts say flows of this scale could contribute 1-3% upside over short periods. The effect is strongest when the dollar weakens, real yields fall, or geopolitical risks rise.

Ardoino has framed gold as a central bank-style reserve asset. This language resonates as official institutions add more than 1,000 tons annually in recent years.

Tokenized Gold Surges

Tokenized gold assets tracked the rally in physical gold prices this week. Tether Gold (XAUT) climbed 5.8% to above $5,543 after hitting a record high of $5,554.

Tether Gold (XAUT) Price

Pax Gold (PAXG) rose 5.9% to $5,561, according to CoinGecko data. Both tokens represent ownership of physical gold held in vaults.

Pax Gold recorded inflows of $248 million in January, according to DefiLlama data. Spot gold broke above $5,500 per ounce for the first time on Wednesday.

Tether Gold accounts for more than half of the gold-backed stablecoin market by capitalization. The tokens allow investors to gain exposure to gold prices without holding physical metal.

The Federal Reserve’s decision not to cut interest rates preceded the gold price surge. The SPDR Gold Shares ETF (GLD) rose 3.88% during regular trading and added another 2.62% in after-hours trade.

Gold was trading at $5,549 as of this writing, up almost 30% year-to-date. Tether’s purchases add a structural demand floor but remain too small to dominate the overall market.

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