Investment bank Jefferies on Thursday said Tether is a major new buyer and is responsible for the recent surge in gold prices. The financial institution also argued that traditional drivers are no longer the major drivers of gold prices.
The bank revealed in a report that attestation data and on-chain activity show Tether has accumulated substantial gold ingots in recent months. Jeffereis believes that the initiative has tightened gold’s supply and helped fuel the precious metal’s sharp rally.
Tether plans to purchase 100 tons of gold this year
Gold has soared nearly 60% this year and is currently trading around $4,049 per ounce. The precious metal has also declined by more than 7.2% in the past 30 days, but has gained approximately 26% in the past 6 months.
Investors disclosed to Jefferies that Tether plans to purchase around 100 tons this year. Tether’s CEO, Paolo Ardoino, also made public comments about adding gold to reserves and a $1,000-per-ounce price spike.
According to analysts led by Andrew Moss, Tether holds approximately 116 tons of gold at the end of Q3. They also revealed that the company has 12 tons of gold backing its XAUt token (worth about $1.57 billion) and around 104 tons backing its stablecoin USDT (worth about $13.67 billion).
The firm’s gold holdings make it the world’s largest non-sovereign holder, placing it on par with smaller central banks. On-chain data revealed that XAUt currently has a market capitalization of approximately $1.5 billion, supported by more than 250,000 tokens.
The stablecoin issuer previously said Tether Gold has emerged as a reliable, compliant, and modern alternative to traditional gold ownership. The firm argued that XAUt plays a stabilizing role in today’s environment, marked by BRICS-led gold accumulation, declining confidence in fiat regimes, and debates around commodity-backed digital currencies.
The analysts also noted that Tether has doubled down in its gold accumulation strategy, adding roughly 26 tons in the third quarter alone. The amount equates to about 2% of gold’s global demand. The analysts argued that the purchase likely tightened near-term supply and boosted bullish sentiment, although it was not enough to overwhelm central-bank flows.
Jefferies’ report revealed that Tether is expected to continue accumulating the precious metal as USDT grows, with gold accounting for approximately 7% of reserves. The bank’s analysts also calculated that even deploying half of Ardoino’s projected $15 billion in 2025 profit into bullion could add nearly 60 tons annually.
The report also revealed that Tether’s planned GENIUS Act-compliant stablecoin, USAT, won’t require gold reserves. The analysts believe that it would leave the long-term impact on USDT and gold demand uncertain.
Tether invests in royalty companies
The investment bank first flagged Tether’s interest in gold after the firm met with miners and royalty companies in Denver last fall. The bank’s analysts also highlighted the USDT issuer’s growing investments across the gold ecosystem. They cited more than $300 million deployed by Tether into royalty and streaming companies this year. The analysts argued that the initiative provides further evidence of a broader metals strategy.
The USDT issuer also committed to a $105 million investment in Elemental Altus Royalties Corp., representing a 31.9% stake in the gold mining company. The investment in the Canadian company, which specializes in mining royalties, follows a previous stake in the firm. The initiative also suggests a more robust strategy to convert crypto profits into commodity assets.
Earlier this month, Tether onboarded high-level metals traders from HSBC, including Vincent Domien, the bank’s global head of metals trading, and Mathew O’Neill, who oversees precious metals origination across Europe, the Middle East, and Africa. Cryptopolitan previously reported that the bank’s officials are finishing their notice periods and will join Tether in the coming months.
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Source: https://www.cryptopolitan.com/tethers-expanding-gold-stockpile/
