Although gold is recognized as an essential monetary asset, it is also a dead asset, just sitting on a ledger; however, the tokenization of the precious metal could increase its utility, attracting more capital to the space, according to experts at the London Bullion Market Association's annual Global Precious Metals Conference.

Editor's note: If gold is a dead asset, you would be foolish to hang on to it and tokenization is the answer. ? end of Editor's note.

Vincent Domien, Head of Precious Metals Trading at ICBC Standard Bank, said during a panel discussion that while institutional demand for tokenized gold remains relatively low, that could change dramatically once the metal can be put to work more efficiently.

Editor's note: Institutional demand is very low, but that could change when the public gets involved. ? end of Editor's note.

"I think the biggest thing for me at the moment, especially with price going up, is you have this dead asset on your balance sheet doing absolutely nothing for you," he said.

Editor's note: He says it again: physical gold is a dead asset, doing nothing for you.  ? end of Editor's note.

Domien said that although physical gold can already be used as collateral, the process remains cumbersome, with restrictions around vault locations and significant haircuts. Tokenization could potentially make gold easier to transfer and allow institutions to use their holdings as collateral for swaps or to meet margin requirements.

"If you're able to tokenize gold and everybody's able to instantly use it, then suddenly you increase the use of gold dramatically," he said. "How do we make this asset that lies on everybody's balance sheet doing nothing, do something?"

Editor's note: Do you see the target yet: "everybody". Do you want to stop doing nothing and do something?  ? end of Editor's note.

Mike Oswin, Global Head of Market Structure and Innovation at the World Gold Council, said unlocking dormant gold could potentially release billions of dollars of new collateral into financial markets.

Editor's note: Where is this dormant gold? It's not already in the vaults, but in the hands of the public. ? end of Editor's note.

For the gold market, greater utility could ultimately translate into greater demand.

James Willis, Global Head of Precious Metal Sales at HSBC, said successful digital products could lead to higher gold holdings while encouraging investors and institutions to trade and use the precious metal more frequently. Because properly structured tokens are backed by physical bullion, growing adoption could ultimately feed back into demand for vaulted gold.

Editor's note:  Make the distinction between "investors" and "institutions": John Q. Public are the sheep and the institutions are the shearers. ? end of Editor's note.

"If we try and develop a product and we are successful, and we can get something out there into the ecosystem that is useful and helps to expand gold's utility, potentially this is a good thing for us as a business," Willis said. "We will see gold holdings go up and we will see people…trading and using gold more frequently."

Tokenization could also expand gold's appeal among retail investors.