Investing in gold has always been a popular option for investors looking for a reliable asset that can act as a hedge against inflation and economic uncertainty.
Now, with the rise of cryptocurrencies such as bitcoin and ether, investors can gain exposure to gold without having to deal with physical bullion.
Let’s compare PAX Gold and “Crypto Gold” products: what they are, how they work, and why you should consider them as an investment option.
What is Pax Gold (PAXG)?
Pax Gold (PAXG) is a cryptocurrency that is backed by physical gold reserves, where one token represents one fine troy ounce of a London Good Delivery gold bar, stored in professional vault facilities.
As an ERC-20 token operating on the Ethereum blockchain, PAXG is tradeable on a large variety of exchanges and has become an accessible way for traders to start investing in gold.
Anyone who owns PAXG has ownership rights to that gold under the custody of Paxos Trust Company.
What is Crypto Gold?
“Crypto gold” is a term that refers to cryptocurrencies that are backed by gold and maintain a stable value relative to the price of gold. These cryptocurrencies are usually called “gold-pegged” or “gold-backed” cryptocurrencies.
Gold-pegged tokens are designed to prevent price fluctuations by tying the derivative asset to a tangible asset, in this case, gold.
What to Consider Before Investing in PAX Gold
Before investing in PAX Gold (PAXG), there are several factors to consider.
It is important to understand that PAXG is a crypto asset backed by real gold reserves held by Paxos, a for-profit company based in New York. Each PAXG token is redeemable for 1 troy fine ounce of gold custodied in vaults by Paxos and its partners, and its market value is meant to mirror the physical gold it represents.
It is also worth noting that PAXG offers a lower cost structure than other gold tokens, gold ETFs, and LBMA 400 t oz bars, with a low minimum purchase amount and zero storage fees.
Investors should keep in mind that investing in PAXG, like any investment, involves risk, which may result in the loss of capital.
PAXG may be a suitable investment for those looking to combine the appreciation of gold with the efficiency of cryptocurrencies.
It is important to do your own research and carefully consider all factors before making any investment decision.
While gold is known for being a portfolio diversifier and a good hedge against rising prices, it is important to remember that past performance is not a guarantee of future results.
Considerations When Choosing Between PAX Gold and “Crypto Gold” products
When it comes to investing in gold, PAX Gold and “Crypto Gold” products offer investors a unique opportunity to combine the benefits of gold with the efficiency and convenience of cryptocurrencies. However, it is important to understand that these products have important differences that can impact your investment decision.
One of the main differences between PAX Gold and “Crypto Gold” products is the way they are backed. PAX Gold is backed by real gold reserves held by Paxos, while Crypto Gold is typically backed by a basket of cryptocurrencies. This means that PAX Gold is directly linked to the price of gold, while “Crypto Gold” is more closely tied to the performance of the underlying cryptocurrencies.
PAX Gold offers a lower cost structure than other gold tokens, gold ETFs, and LBMA 400 t oz bars, with a low minimum purchase amount and zero storage fees. On the other hand, “Crypto Gold” products may come with higher trading fees and other costs associated with trading cryptocurrencies.
Investors should also consider the level of regulation and oversight that each product is subject to. PAX Gold is subject to regulation by the New York State Department of Financial Services, which provides a level of oversight and protection for investors. “Crypto Gold” products, on the other hand, may not be subject to the same level of regulation and oversight.
Ultimately, the decision to invest in PAX Gold or other “Crypto Gold” products will depend on your investment goals and risk tolerance. By carefully evaluating the advantages and disadvantages of each option and considering your own investment objectives, you can make an informed decision and choose the investment option that’s right for you.