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The Emperor’s new cryptocurrencies – and gold

- By: John P Sykes
Posted in: Blog, Commodities, Exploration, Media, Mineral Economics, Publications


Never ones to miss a passing bandwagon, earlier in the year we wrote a Strictly Boardroom column on digital currencies. As this was not an obvious area of our expertise we recruited some help from Dr Dick Baur – a finance expert focused on markets, who has written extensively on the machinations of the gold and bitcoin markets.

Whilst recognising the cryptocurrency boom for what it was – a bubble, we did want to explore the legitimate potential for commodity-backed or otherwise related crytocurrencies, which falls more within our interest. After all gold-backed exchange traded funds (ETFs) have been a major success and far outperformed gold miners themselves – and the mining industry has a good record of financial innovation, be it the early days of forward contracts and futures, and as the developer of ‘net present value’ methodology, or more recently the advent of innovative funding models such as royalty companies and silver streaming companies. Since we wrote the article, troubled Venezuela has launched the ‘petro’ cryptocurrency – though one suspects that this will do the cause more damage than good!

Nonetheless, there isn’t really any reason why you couldn’t have a gold-backed digital currency. Indeed, for a sufficiently high grade, high margin deposit you wouldn’t necessarily have to take it out of the ground – a natural security vault. Could this be a financing option for cash-strapped explorers looking for project finance?

Whilst undoubtedly digital currencies are in a bubble, they and the blockchain technology supporting them are here to stay. Expect to see some innovation in the near future.

The article is still available on, or contact me for a copy.

For keen followers of the Strictly Boardroom column, our book “Strictly (Mining) Boardroom Volume II: A Practitioners Guide for Next Generation Directors” was published last year and is available as a paperback or e-book from Major Street Publishing or Amazon. We’re pleased to say that the book received a very positive review in the AusIMM Bulletin and in Geoscientist magazine – the member’s publication of the Geological Society of London.