Gold has gained over 20% in value last year, and in a bullish forecast for 2025, our expert Nicky Shiels sees the potential for gold to hit $3,000 per ounce.
While traditional gold investments involve physical gold bars and coins, there are also digital alternatives that track the price of gold. These include mining stocks, gold-backed ETFs, and gold-backed cryptocurrencies, often referred to as crypto gold or gold tokens.
In this article, we’ll take a closer look at:
✅ What exactly is crypto gold?
✅ What are its advantages and limitations?
✅ Which gold-backed cryptocurrencies exist?
✅ Why physical gold remains a key choice for investors.
What is Crypto Gold?
The term crypto gold refers to gold-backed cryptocurrencies, meaning digital assets tied to the value of physical gold.
Each token typically represents a specific amount of gold—for example, 1 token might equal 1 gram of gold. The idea behind these digital assets is that for every token in circulation, the issuer holds an equivalent amount of physical gold in reserve.
Some gold-backed cryptocurrencies even allow holders to redeem their tokens for physical gold, offering a level of backing beyond traditional cryptocurrencies.
Pros and Cons of Crypto Gold
Advantages of Crypto Gold:
✔️ Backed by Physical Gold – Since these tokens represent an actual gold reserve, they can offer a degree of stability compared to purely digital cryptocurrencies.
✔️ Easier to Trade in Small Units – Unlike physical gold, which comes in fixed weights, crypto gold can be divided into very small fractions, making it more flexible for partial sales.
✔️ No Need for Physical Storage – Since crypto gold is held in a digital wallet, there is no need for vaults or safekeeping measures.
(However, at GOLD AVENUE, we offer free, high-security storage for up to €10,000/CHF in value.)
Limitations of Crypto Gold:
❌ Limited Liquidity – Gold-backed cryptocurrencies are not as widely traded as physical gold or traditional investment products, meaning buying and selling can be less straightforward.
❌ Trust in the Issuer – Investors must rely on the company issuing the token to actually hold the corresponding physical gold reserves. Since many of these issuers operate with limited regulation, transparency can be a concern.
❌ Centralized Storage – While cryptocurrencies are typically associated with decentralization, gold-backed tokens still depend on centralized institutions to store and manage the gold reserves.
Summary:
✅ Backed by physical gold
✅ Easier to trade in small amounts
✅ No physical storage required
❌ Can be harder to buy and sell due to lower liquidity
❌ Requires trust in the issuer’s gold holdings
❌ Still relies on centralized storage and management
Crypto gold provides an alternative way to gain exposure to gold, but its market accessibility and reliance on trust make it different from directly owning physical gold.
Leading Gold-Backed Cryptocurrencies
Three major gold-backed cryptocurrencies dominate this space:
1️⃣ Tether Gold (XAUT)
Tether Gold is one of the largest gold-backed cryptocurrencies. It was introduced by Tether, a company known for its stablecoins that track fiat currencies like the US dollar.
2️⃣ Paxos Gold (PAXG)
PAXG tokens are backed by allocated gold held in LBMA-certified vaults. According to Paxos, token holders can check details about the specific gold bars linked to their holdings, including their serial number, value, and physical characteristics.
3️⃣ Meld Gold
Meld Gold takes a different approach by digitizing gold within the supply chain, allowing investors to hold gold in digital form. Each Meld Digital Certificate corresponds to one gram of gold, according to the company’s statements.
Why Physical Gold is Often the Preferred Choice
Crypto gold has certain advantages: it eliminates the need for physical storage, provides exposure to gold prices, and allows fractional sales in even the smallest amounts.
It can also be appealing for investors familiar with digital assets who want to diversify into gold without holding physical metal.
However, there are several reasons why physical gold remains the preferred choice for many investors:
🔸 Liquidity – Physical gold can be easily bought and sold in established markets worldwide, whereas crypto gold is still a niche product with fewer trading options.
🔸 Security and Transparency – Investors do not need to rely on an issuer’s claim that gold reserves are actually held in storage—they own the gold directly.
🔸 Independent Value – Crypto gold is ultimately a derivative, meaning its value is dependent on the issuing platform and the infrastructure behind it, rather than being an asset in itself.
💡 Physical gold is a widely recognized, tangible investment with a long history of value retention. Its price is set in global markets, and its authenticity is guaranteed by well-established institutions.
At GOLD AVENUE, we offer a wide selection of gold bars ranging from 1 gram to 1 kilogram, along with the option to store your gold securely for free and sell it back at current market prices anytime.
Final Thoughts
Gold-backed cryptocurrencies provide an innovative way to invest in gold, but they come with liquidity challenges, reliance on third-party issuers, and regulatory uncertainties.
For those looking for a direct, secure, and globally recognized way to invest in gold, physical gold remains the most straightforward and reliable option.
Interested in investing in physical gold? Browse our gold bars and coins at GOLD AVENUE today.
