Tether Plans to Allocate Up to 15% of Portfolio to Gold Investments

Tether, the prominent cryptocurrency company, revealed plans to allocate between 10% and 15% of its investment portfolio to physical gold. This announcement was made by CEO Paolo Ardoino on January 28, 2024, during an interview with Reuters. Tether, which is headquartered in El Salvador, already claims to back some of its products with physical gold, stating it currently holds approximately 130 metric tons of the precious metal.

In the fourth quarter of 2023, Tether added 27 tons of gold to its reserves, and Ardoino confirmed that the company has been acquiring around two tons of gold each week. He indicated that Tether’s investment strategy would see around 10% allocated to bitcoin alongside the gold investments, although he did not disclose the total value of the company’s investment portfolio or the specific amount currently held in gold.

During the video interview, Ardoino expressed his enthusiasm for both bitcoin and gold, likening the decision of which asset to prefer to choosing between two children. He emphasized that Tether intends to maintain ownership of the physical gold stored in Switzerland, with no fixed target for future bullion purchases, opting to reassess quarterly.

Ardoino noted that Tether’s gold purchasing began in 2020 amidst the COVID-19 pandemic and has continued in the context of rising geopolitical tensions. “The world is not in a happy place at this moment. Gold is making all-time highs every single day. Why? Because everyone is scared,” he remarked, highlighting the significant 64% increase in gold prices throughout 2023.

As of this year, gold prices have continued to rise, with a 22% increase as of January 28, 2024, reaching a record high of $5,311 per troy ounce. This surge has been fueled by diminishing confidence in the U.S. dollar and concerns regarding the independence of the U.S. Federal Reserve.

Tether’s USDT stablecoin, which has $186 billion worth of tokens in circulation, has benefited from these gold purchases. Additionally, the company has issued the Tether XAUT gold token, which has $2.7 billion circulating. Ardoino indicated that Tether invests the reserves backing the USDT in U.S. Treasury bills and various other assets.

Looking ahead, Ardoino projected that Tether’s profit for 2026 could exceed the estimated $10 billion earnings for 2025, potentially surpassing the $13.7 billion earned in 2024. Tether has diversified its investments, utilizing profits to acquire U.S. Treasuries, bitcoin, stocks in the tech sector, and investments in gold royalty firms among other assets.

In summary, Tether’s strategic move to enhance its portfolio with a significant allocation to gold reflects both a response to current economic uncertainties and a commitment to backing its digital assets with tangible value.