Gold investment alternatives
For example, young Chinese investors have started buying “golden beans” to gain more accessible exposure to the precious metal. These “golden beans”, moreover, have a lower minimum entry value. Additionally, they are easier to store and move than traditional bullion and other physical variants of the world’s leading asset.
On the other hand, accessing gold derivatives, such as exchange-traded funds (ETFs) or diversified contracts, presents a similar challenge, as it poses significant entry barriers for the average population. As a result, the price of gold in different markets may differ from indices such as the one displayed in the aforementioned TradingView chart.
It is important to note that some cryptocurrency projects are responding to this demand by offering more accessible versions of digital gold tokens. This allows investors to achieve greater diversification of exposure to the precious metal, while simplifying storagethe portability and the arbitrage opportunities.
Two gold tokens that anyone can purchase
In this context, we have chosen two of the most renowned gold-backed cryptocurrencies. These assets represent a synthetic version of the precious metal, designed with mechanisms that maintain a constant relationship with the price of gold.
By “synthetic version” we mean a financial entity artificially created to replicate the value of an underlying asset, such as gold in this case, without the need to physically own the asset itself. In this case the mechanism is repeated with a gold token that is issued on a blockchain and whose value is generally supported by gold reserves.
Tether Gold (XAUt)
Tether offers its own gold token – named XAUt – which uses gold as an international reference store of value. Tether is one of the leading stablecoin issuers in the cryptocurrency space and is responsible for managing USDT, with a market capitalization exceeding $105 billion.
Notably, the tokenized gold coin Tether is trading slightly above the TradingView index, at $2,345 per ounce. XAUt is a cryptocurrency with a market capitalization of $577.75 millionwhich indicates a small-cap project according to industry parameters.
PAX Gold (PAXG)
Pax Gold (PAXG) is a gold-backed cryptocurrency issued by Paxos, a regulated blockchain infrastructure. The company is primarily known for issuing the Binance stable coin (BUSD), although it has its own synthetic version of the dollar, the USDP.
Interestingly, PAXG is trading at a premium of nearly 2% to the index, with a price of $2,385 and ongoing volatility.
The Paxos gold token has a capitalization of $435 millionranking 159th according to the CoinMarketCap index.
We would like to point out that HSBC also has its own synthetic asset backed by gold, although only available to the bank’s customers.
To conclude, gold-backed cryptocurrencies tokenized by Tether and Paxos represent the most reliable options for affordable investing and gaining exposure to the precious metal via a permitted blockchain infrastructure.
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