It’s time to stop thinking about gold as a doomsday investment or just a routine hedge against inflation or stock market volatility. New strategies, technologies, and opportunities are transforming gold investment in powerful ways this quarter.
Traditionally, investors allocate 2.5-5% of their clients’ portfolio to a gold ETF or some physical bullion, and there it sits, doing very little, unless the markets are in a position to drive up the price of gold. Your typical investor might see some gains, but you’re not going to generate reliable revenue.
If nothing is happening in the stock market, your gold allocation might look pretty - mostly a symbol of existing wealth and a means of preserving it— but it’s not increasing that wealth.
The problem has always been how to fuse gold’s stability with a growth-advantage.
Here’s the concept to solve that problem: introducing consulting firms such as our own which combine capital market and mining expertise, while lending capital to a diverse pool of vetted gold mines, secured against the mines’ assets.
Along with the capital, specialized knowledge from experienced practitioners is provided to guide capital deployment and enhance productivity to peak performance. As the mines scale production, a percentage or royalty of their production and some of their payments on the loan, are paid in the form of physical gold at a discount from market price. The gold is then refined into bars and consistently accumulates in the consulting firm’s vaults.
The firm offers a rolling series of 5-year funds to a general pool of investors, whose shares in the fund include the value of a stream of increasing gold from mine production.
Investors thus have two ways to grow wealth: the increasing price of gold per ounce, plus the increasing quantity of gold in the firm’s vaults. When the fund matures, payouts to investors can take the form of cash or physical gold.
Unsurprisingly, cutting out middle-men ultimately results in gold acquisition well-below market price.
Tapping into gold mining operations has traditionally been the province of a small, elite group of investors with industry know-how, and has required significant capital outlay, significant risk tolerance, and a venture capital mindset. This new model democratizes the process by allowing investors of the fund to invest small amounts, maybe their standard 2.5-5% gold allocation, and put it into productive mining operations with deliverable, physical gold coming out the other side.
Then imagine combining growth-advantage gold with the benefits of cutting-edge digital technologies. The gold revenue model above can be integrated with the digital age by tokenizing the fund through a digital security, which would allow the possibility for secondary trading. It would be basically a gold-backed digital currency—except unlike other products, the quantity of gold behind the token is not fixed, but steadily increasing.
The token represents, for instance, five ounces of physical gold in the vault plus a stream of one ounce per month. If you sell that token today, you can state with confidence it will be worth eight ounces of physical gold in 90 days, and that gold will be deliverable when the fund matures. Fund tokens could thus be traded at a premium.
Exposure to the gold price, constantly accumulating physical gold, and gold-backed digital tokens: it’s a recipe for compound growth that transforms gold into a dynamic and strategic investment, rather than a mere static fallback.
Firms like ours, C3 Bullion are today seeking to make the concept of revenue-producing gold accessible to anyone with a gold allocation a reality. And taking advantage of this innovative process won’t require investors, brokers, and portfolio managers to change their overall investment strategy.
But rather than letting 5% of the portfolio you already have invested in gold sit idly and unproductively, you could be turning that allocation into a revenue-producing asset.
And the C3 Fund I (2024) is already available.
It's up to the intrepid to see past a revolutionary model for revenue generation - They can share the vision made real as to the future of gold.
