What is Tokenized Gold?

The total market value of tokenized gold assets surpassed $1 billion on Thursday, April 11 as gold prices neared record highs, and Bitcoin (BTC) crossed its “magnetic” $70K mark again following yesterday’s U.S. inflation report. Many analysts, such as ones with Goldman Sachs (GS), published quick notes urging investors to exit hi-tech stocks and add all anti-inflationary havens — such as precious metals and Bitcoin.

Resumption of gold rally prompted crypto investors to turn their attention to gold-linked stablecoins. Tokenized gold is a stablecoin whose price is tied to gold, while the token on the blockchain represents ownership of the physical gold managed by the issuer. It provides investors with exposure to precious metals without the management fees of an exchange-traded fund (ETF) or the burden of storing gold bullion.

The two largest gold stablecoins to date are Pax Gold (PAXG) issued by New York fintech company Paxos Trust Company and Tether Gold (XAUT) issued by Tether, the company behind the $80 billion stablecoin USDT. As of the time of publication, PAXG and XAUT have market caps of $424 million and $576.6 million, respectively.