Tech Company Launches Innovative Digital Gold Platform

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Matador Technologies Inc. (MATA:TSX.V) announced it plans to release its first digital gold product early this year, blending physical ownership of gold with digital art.

The technology pairs its digital gold product with digital art on the Bitcoin blockchain, the company said. The new offering was unanimously approved by its Board of Directors.

"Matador's goal is to breathe new life into a traditional asset by making it more engaging," the company said in a release. "The offering is designed to invite both seasoned gold buyers and those simply curious about the broader possibilities of emerging technologies. By pairing tangible gold with digital art, Matador provides a truly modern take on precious metals."

In 2022, gold was the world's seventh-most-traded product for a total of US$478 billion, or about 2% of total world trade, according to the Observatory of Economic Complexity (OEC). While its price per ounce has shown some recent volatility, it reached an all-time high of US$2,788.54 in October, and many experts believe it is still in a bull market.

Much like gold's traditional use as a vessel to store value and hedge against inflation, Bitcoin is attracting traders looking to profit from its price changes. The price of a Bitcoin (which hit more than US$100,000 this year) has more than doubled from March 2024.

Matador said it gets its gold through a partnership with Kitco Metals Inc., sourcing directly from the Royal Canadian Mint to ensure reliability and quality. "All gold held by the company is securely held by the Royal Canadian Mint who acts as Matador's custodian," the company said.

'Making Gold Great Again'

Matador has been working on "making gold great again" since late 2021 and is eager to bring this concept to the market, Chief Executive Officer Deven Soni said.

The launch is part of a larger vision to merge traditional nance with progressive digital tools, as demonstrated by Matador’s recent decision to add Bitcoin to its balance sheet.

"Bitcoin and other assets have captured the imagination of a younger generation that might have otherwise been interested in gold," said entrepreneur, business author, and seasoned capital markets professional Alex Tapscott, who co-wrote the bestselling book Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World, and the more recent Wall Street Journal Bestseller Web3. Tapscott owns 0.04% of Matador's stock, according to Refinitiv.

"To me, these are both things that should be cornerstones of anyone's portfolio," he said of Bitcoin and gold. "So how do we get access to it? Well, one of the problems with gold investing is that the way in which people invest in gold hasn't evolved all that much since the start of the industrial era . . .  For most of the world's population, it's all still physical gold bullion."

Containers for Value

Bitcoin was the first decentralized cryptocurrency, a digitized alternative form of payment created using encryption algorithms. Nodes in the peer-to-peer network verify transactions on a distributed ledger called a blockchain.

That blockchain can contain just about anything. A newer invention called crypto tokens is a digital representation of an asset or interest in something built on a blockchain, according to Investopedia.

Tapscott described tokens as just "a container for value," like a shipping container. It can contain whatever is needed but its use makes the shipping and financial industries "that much more efficient."

How does Matador's process work? Soni said the company places an automated order for gold in real-time as the tokens are purchased, always ensuring they have an excess, which is stored in the Royal Canadian Mint. According to the company's investor presentation, it is partnering with blockchain artists to create exclusive collections of 1,000 digital artifacts etched on physical gold, "blending art and blockchain technology."

In its release on Monday, Matador said it has completed its plans to front-load an initial allocation of CA$4.5 million into Bitcoin as "to ensure its digital gold platform operates on the most secure and stable technology available."

The Catalyst: Is US$3,000-Plus Gold Coming?

Bolstered by a weaker U.S. dollar as markets assessed the potential impact of U.S. President Donald Trump's second term, gold prices edged higher on Monday, according to a report by Daksh Grover for Reuters.

Spot gold added 0.3% to US$2,709.09 per ounce with trading volumes thin due to the U.S. markets being closed for the Martin Luther King Jr. Day holiday.

"I believe Donald Trump (presidency) will result in higher market volatility, while some of his policies might keep inflation higher for longer. This should continue to support safe-haven assets like gold," UBS analyst Giovanni Staunovo said, according to Grover's report.

"Gold is used as a hedge against inflation, although Trump's inflationary tariff policies could prompt the Federal Reserve to keep rates higher for longer, diminishing the non-yielding bullion's appeal," Grover wrote.

FX Empire's A.G. Thorson recently predicted a run towards US$3,000-plus gold by next March or April.

According to Grand View Research, the global Bitcoin market size was valued at US$17.05 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 26.2% from 2022 to 2030 as the platform can deliver cheaper and faster payments, less volatility, and also enables secure transactions.

"As a result, Bitcoin can also be used as a store of value, other than as a medium of exchange for products and services across the globe," researchers said. "Moreover, with the emergence of Bitcoin, financial transactions no longer require central authorization and are settled immediately." 

Ownership and Share Structure

According to the company, 65% is owned by management and insiders, including Founder and Director Donato Sferra, Vice President of Finance Geoff St. Clair, Director Richard Murphy, Soni, a strategic investor (through UTXO Management, LLC and 210K Capital, LP), Director Tyler Evans (through UTXO Management, LLC and 210K Capital, LP), and Founder Trevor Koverko, among others. 

The rest, about 35%, is retail, and includes Hive Digital with 3%, Kitco Metals with 1%, and Gold Fields Ltd. with 4%, the company said.

It has about 91.8 million shares outstanding and has a market cap of CA$45.37 million at the time of writing. It trades in a 52-week range of CA$0.11 and CA$0.90.