Physical or digital gold

You can now own gold without ever touching it. Digital forms remove some problems and add others.

How tokenised gold works

A gold token is a digital record on a blockchain. With well known tokens such as Tether Gold (XAUT) and PAX Gold (PAXG), each token is meant to represent one troy ounce of gold on a London Good Delivery bar held in a vault, and the issuer publishes reports on the gold it holds. You can buy small fractions, keep them in a digital wallet and transfer them at any hour.

What it solves

• No storage or theft worries at home.
• Small amounts: you can own a fraction of an ounce.
• Lower premiums than small bars and coins.
• Trading around the clock.

What it adds

• Issuer and custody risk. You rely on the issuer and the vault holding the gold, and on the issuer honouring redemptions.
• Digital security. Losing access to your wallet, or falling for a scam, can mean losing the gold.
• Price gaps. Tokens trade on their own markets and can sit a little above or below the spot price, especially at weekends when spot gold is closed.
• Redemption limits. Swapping tokens for physical gold usually needs a large minimum, often a whole bar, plus fees.
• Different rules. Tokenised assets are regulated differently from country to country, and some platforms are not licensed where you live.

Questions to ask any gold product

• Who holds the gold, where, and is it allocated to me?
• How often is the gold audited, and by whom?
• What does it cost to buy, to hold and to sell?
• Can I take delivery of physical gold, and what does that cost?
• Is the platform licensed where I live?