Tether’s gold purchases could support prices for years
NEW YORK (November 25) Central bank gold purchases and investment demand have been two key factors driving gold prices to record highs this year, but one investment firm is looking at another segment of the gold market that is starting to attract significant attention.
For years, many analysts have expected tokenized gold to be the next evolution in the precious metals space, and it appears its time has come, as Tether Limited, the leader in cryptocurrency stablecoins, has become a major player in the sector.
Fahad Tariq and Andrew Moss, equity analysts at Jefferies, recently published a report on Tether’s growing influence in the gold market and the transformative impact this demand could have on gold and the mining industry.
“We believe Tether could remain a significant buyer of gold, supporting gold prices going forward,” the analysts said.
Highlighting Tether’s growing interest in the precious metals space, the analysts noted that representatives of the stablecoin issuer attended this year’s Mining Forum Americas Conference in Denver, Colorado.
“Investors shared with us that Tether intended to buy ~100t of physical gold in 2025, in addition to investing across gold royalty/streaming companies and the gold supply chain,” the analysts said.
While the cryptocurrency company has been buying gold to back its gold token, Tether Gold (XAU₮), Jefferies said the company’s demand goes much deeper than a single investment product. Citing company records, Jefferies noted that as of the third quarter, Tether holds about 116 tonnes of gold valued at $14 billion, of which only 12 tonnes back XAU₮ tokens.
Gold currently represents 7% of the holdings that back Tether’s stablecoin, USD₮.
“This means Tether is the largest holder of gold outside central banks, and its holdings are roughly equal to smaller central banks such as Korea, Hungary, and Greece,” the analysts said.
Tariq and Moss also said the published reserves represent only the minimum amount of gold the company holds, as it is unclear how much Tether maintains on its own balance sheet.
While the company’s gold reserves are impressive, Jefferies said it still has significant growth potential.
“Given's Tether's profitability (~$15B estimated for 2025), potential supply growth of USDT and XAUt, and management's positive comments about gold ("natural Bitcoin"), we believe Tether could remain a significant buyer of gold, supporting gold prices going forward,” the analysts said. “If Tether deployed 50% of annual profits into gold, it could theoretically purchase ~15t per quarter, or ~58t annually at spot gold. This is simply an estimate to provide an idea of the incremental demand that didn't exist previously. Also, if USDT continues to grow, the interest income and capital available to deploy into gold will grow as well. In other words, our estimate could prove conservative.”
In addition to buying gold, Jefferies noted that the company has also invested about $300 million in several precious metals streaming companies. Tether owns stakes in Elemental Altus Royalties, Gold Royalty Corp, Metalla Royalty & Streaming, and Versamet Royalties.
Some analysts note that digital gold could potentially revolutionize the precious metals market, as investors are able to buy fractionalized amounts of physical gold.
“In contrast to the drawbacks of ETFs, futures and physical gold, tokenized physical gold provides direct gold exposure, 24/7 real-time settlement, no management fees and no storage or insurance costs,” Jefferies said. “Low minimum investments increases accessibility and fractionalization enables the transfer of physical gold ownership and value that was not previously possible. Tokenizing gold may increase liquidity and the ability to rebalance portfolios quickly and efficiently.”
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