Tethers Gold Hoard Surges to 116 Tons, Rivals Small Central Banks

Tether, the well-known stablecoin issuer, has made headlines recently as its gold holdings have surged to an impressive 116 tons. This development positions Tether as a significant player in the gold market, rivaling even small central banks. Investment bank Jefferies has highlighted Tether's role as one of the most influential new buyers of gold, suggesting that its recent activities have contributed to the rising prices of this precious metal.

Tether becomes an influential buyer in the gold market

According to Jefferies, the recent spike in gold prices cannot be fully explained by traditional market drivers alone. Instead, the bank points to Tether's aggressive buying strategy as a key factor influencing the market. Recent attestation data and on-chain activity indicate that Tether has accumulated a substantial amount of bullion in recent months. This accumulation has tightened supply and played a role in fueling the sharp price rally, with gold trading around $4,080 per ounce.

Surge in gold prices linked to Tether's buying activity

The precious metal's price has increased by over 50% this year, prompting analysts to take a closer look at the reasons behind this surge. Jefferies first noted Tether's growing interest in gold after the company engaged with miners and royalty firms in Denver last fall. Reports suggest that Tether aimed to purchase around 100 tons of gold this year, with CEO Paolo Ardoino's public comments about adding gold to reserves further supporting this narrative.

Tether’s accumulation and future investment strategies

As of the end of the third quarter, analysts led by Andrew Moss estimated that Tether holds at least 116 tons of gold, with around 12 tons backing its XAUt token, valued at approximately $1.57 billion, and about 104 tons backing USDT, worth about $13.67 billion. This makes Tether the largest non-sovereign holder of gold, placing it on par with smaller central banks. The pace of Tether's accumulation is noteworthy, with around 26 tons acquired in just the third quarter, amounting to about 2% of global demand. While this is not enough to disrupt central bank flows, it has likely tightened near-term supply and bolstered bullish market sentiment.

Impact on the gold market and Tether's crypto reserves

Tether is expected to continue its gold accumulation strategy, especially as the demand for USDT grows and gold makes up about 7% of its reserves. Analysts project that Tether could see profits of $15 billion in 2025, indicating that even a portion of these profits redirected into gold could result in an additional 60 tons being acquired annually. However, the introduction of Tether’s planned GENIUS Act-compliant stablecoin, USAT, which does not require gold reserves, raises questions about the long-term impact on USDT and overall gold demand.

Moreover, Tether has made significant investments across the gold ecosystem, with over $300 million allocated to royalty and streaming companies this year. This strategy suggests a broader approach to metals investment. The hiring of two top metals traders from HSBC further indicates that Tether's focus on gold is not slowing down. As Tether continues to navigate the gold market, its influence is expected to grow, shaping both the crypto and precious metals landscapes.