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GOLD digital asset as an instrument for hedging risks
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Goldmint helps investors hedge their risks by converting physical gold and ETF into GOLD tokens that work as hedging tools, in the same way that gold futures do. Here are the scenarios:
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1. Transferring GOLD
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People who transfer gold from one region to another can hedge their risks by investing in the GOLD cryptoasset. The GOLD price aligns with LBMA physical gold price fluctuations that has gentler volatility in contrast to crypto currencies, like BTC or ETH, with their high volatility (or, for that matter, fiat currencies with their high cross-border exchange rate). This makes GOLD payments and transfers a more secure, cheaper and faster way to transfer gold from one region to another.
Further, gold is well-known and valued all over the world so you don’t have to teach clients about this new “currency” and its exchange rate.
Further, gold is well-known and valued all over the world so you don’t have to teach clients about this new “currency” and its exchange rate.
Example:
Mehul just entered into a contract to sell 10,000 troy ounces of gold, to be delivered in three months’ time. The sale price is agreed by both parties to be based on the market price of gold on the day of selling. The buyer commonly pay with bitcoin. Bitcoin, however, is famed for its surges in volatility, with unpredictable dips and highs that can be deep. Mehul can now ask his buyer to swap bitcoin with GOLD. GOLD hews closer to the gentler LBMA physical gold price and hedges Mehul’s risks.
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2. ICOs & their investors
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ICOs often have to adjust their caps to meet constant crypto currency volatility. ICOs can lock in their cap at an attractive rate by asking their investors to provide funds in GOLD. These investors use GOLD to lock in their commodities at an attractive LBMA or spot price so that neither ICO nor investors lose out if gold price dips.
Example:
Goldmint plans to launch early fall. On the first day of the launch, one BTC is worth, say, 2,742 USD. On the last day, BTC value has dropped to, say, 2,642 USD. On the first day, Joe invests in Goldmint for the value of 1 BTC. Unfortunately, when Goldmint starts, Joe’s investment value would have dropped by 100 USD. Joe could use GOLD to convert gold coins (or some other gold commodity) into this GOLD cryptoasset and use its token to offset future loss.
Example:
Goldmint plans to launch early fall. On the first day of the launch, one BTC is worth, say, 2,742 USD. On the last day, BTC value has dropped to, say, 2,642 USD. On the first day, Joe invests in Goldmint for the value of 1 BTC. Unfortunately, when Goldmint starts, Joe’s investment value would have dropped by 100 USD. Joe could use GOLD to convert gold coins (or some other gold commodity) into this GOLD cryptoasset and use its token to offset future loss.
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3. Crypto traders can hedge volatility risks without leaving exchanges
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GOLD token will be available for purchase on most exchanges. This means that traders, after a busy day of trading, can gain peace of mind by simply converting their commodities to GOLD within the same day and the same exchange, without visiting another platform or paying extra commissions for money withdrawal.
Example:
Maria is a jeweler who needs 100 ounces of gold to make four hundred gold rings. The process takes her two weeks, and in that time period she may not want to take the price risk. So she sells one gold contract (100 ounces) at the same time as she buys the physical gold for production. This trade has been done on Bitfinex, which is a full-featured spot trading platform for the major cryptocurrencies. Right away, Maria wants to transfer her physical gold into GOLD to hedge her risks. She will be able to find that GOLD crypto-token on Bitfinex, too.
Example:
Maria is a jeweler who needs 100 ounces of gold to make four hundred gold rings. The process takes her two weeks, and in that time period she may not want to take the price risk. So she sells one gold contract (100 ounces) at the same time as she buys the physical gold for production. This trade has been done on Bitfinex, which is a full-featured spot trading platform for the major cryptocurrencies. Right away, Maria wants to transfer her physical gold into GOLD to hedge her risks. She will be able to find that GOLD crypto-token on Bitfinex, too.
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In short
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Gold producers can hedge against falling gold price by investing in GOLD cryptoassets.
The cryptocurrency locks in their gold in a present selling price for an ongoing production of gold that is only ready for sale sometime in the future. This option can be extended to also help ICOs and crypto traders hedge their risks.
The cryptocurrency locks in their gold in a present selling price for an ongoing production of gold that is only ready for sale sometime in the future. This option can be extended to also help ICOs and crypto traders hedge their risks.
