Looking to invest in gold without the hassle of physical storage? PAX Gold (PAXG) is disrupting this age-old market by offering a crypto token backed by real gold. Each PAXG represents one ounce of physical gold stored in secure vaults, blending the stability of gold with the flexibility of cryptocurrencies.

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What is PAX Gold (PAXG) ?

PAX Gold is a crypto token that represents real ownership of physical gold. Unlike most cryptocurrencies that aren’t backed by anything tangible, each PAXG token is equivalent to exactly one troy ounce of fine gold (approximately 31.1 grams) stored in Brink’s vaults in London.

Launched in September 2019 by Paxos Trust Company, PAXG was created to solve a fundamental problem: how to make gold investment more accessible, divisible, and easy to transfer, while maintaining the intrinsic qualities of this precious metal?

The stored gold meets the London Good Delivery standard, guaranteeing a minimum purity of 99.5%. Each token has a unique serial number corresponding to a specific gold bar, allowing holders to verify their gold’s details through the Paxos website.

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History and founders of PAX Gold (PAXG)

PAX Gold was launched in September 2019, during an economic context marked by growing uncertainties. At that time, trade tensions between the United States and China, recession fears, and accommodative monetary policies from central banks were driving many investors toward traditional safe-haven assets like gold.

Paxos Trust Company, founded in 2012 under the initial name itBit and rebranded in 2016, is the company behind PAXG. Already known for its Paxos Standard (PAX) stablecoin backed by the US dollar, the company identified an opportunity: combining the age-old appeal of gold with the advantages of blockchain technology.

The two co-founders, Charles Cascarilla (current CEO) and Rich Teo, bring complementary expertise to the project. Cascarilla, a Harvard graduate with experience at Goldman Sachs and Bank of America, possesses deep knowledge of traditional financial markets and a clear vision for blockchain technologies.

What distinguishes Paxos from many crypto companies is its proactive regulatory approach. The company obtained a bank charter from the State of New York and operates under the supervision of the New York State Department of Financial Services (NYDFS), one of the strictest financial regulators in the United States.

The year 2020, with the COVID-19 crisis, confirmed the relevance of this approach. Faced with global economic uncertainties and massive liquidity injections by central banks, demand for gold exploded, and PAXG benefited from this trend.

How does PAX Gold (PAXG) work ?

PAX Gold’s functioning is based on a simple but ingenious mechanism. Paxos purchases physical gold compliant with the London Good Delivery standard and stores it in secure vaults. For each ounce of gold acquired, a PAXG token is created on the Ethereum blockchain as an ERC-20 token.

When you buy PAXG, you become the legal owner of the corresponding physical gold. This isn’t just a promise or a derivative: it’s a real ownership right, guaranteed by legal contracts and the strict regulation that Paxos adheres to.

Traceability is at the core of the system. Each PAXG token is linked to a specific gold bar via a unique serial number. By entering your Ethereum address on the Paxos website, you can see the precise details of the gold you own: weight, purity, refiner, serial number, and storage location.

To ensure transparency, Paxos collaborates with independent auditors who verify monthly that the amount of stored gold exactly matches the number of tokens in circulation. These audit reports are publicly accessible.

If you wish to convert your tokens into physical gold, it’s possible under certain conditions (minimum of 430 tokens, equivalent to a standard bar). But the main benefit of PAXG lies precisely in being able to invest in gold without having to manage the logistical constraints of physical metal.

Tokenomics and Market Capitalization of PAX Gold (PAXG)

Here are the key data regarding PAX Gold’s tokenomics :

• Circulating supply : 221,950 PAXG

• Maximum supply : Uncapped (depends on gold holdings)

• Market capitalization : €620.46 million

• Daily volume: €83.12 million

• Volume/market cap ratio : 13.39%

• CoinMarketCap rank : #80

• Issuance model : Backed 1:1 by physical gold

• Transaction fees : 0.02% + Ethereum gas fees

The uniqueness of PAXG lies in its elastic supply : new tokens are created only when Paxos acquires additional physical gold, and tokens are destroyed when holders exchange them for physical gold or fiat currency. This approach ensures that each token remains backed by a real ounce of gold.

Unlike cryptocurrencies like Bitcoin that have a fixed maximum supply, PAXG’s supply can theoretically increase indefinitely, as long as Paxos continues to acquire gold. This characteristic eliminates speculative risks related to artificial scarcity.

The daily trading volume of PAXG (approximately €83 million) demonstrates solid liquidity, with a volume/market cap ratio of about 13%, which is considerable for an asset backed by a physical commodity.

Pros and Cons of PAX Gold (PAXG)

PAX Gold (PAXG) is attracting more and more investors looking for a digital asset backed by tangible value. However, like any investment, it presents both strengths and risks that should be evaluated.

Advantages of PAX Gold

• Real ownership of physical gold : Unlike gold ETFs or derivative products, PAXG gives you legal ownership of physical gold with a traceable serial number.

• Complete divisibility : You can buy a fraction of a token, thus a fraction of an ounce of gold, making this investment accessible even with a small capital. The token is divisible up to 18 decimal places.

• Permanent liquidity : PAXG can be traded 24/7 on various crypto platforms, unlike physical gold or gold ETFs limited to market opening hours.

• Transparency and auditability : Thanks to the Ethereum blockchain, all transactions are publicly verifiable, and Paxos publishes monthly audits confirming the backing with physical gold.

• Reduced costs : No storage or insurance fees as with physical gold, only minimal transaction fees (0.02%) and Ethereum gas fees.

• DeFi integration : As an ERC-20 token, PAXG can be used in the decentralized finance ecosystem to generate additional yields.

Disadvantages of PAX Gold

• Counterparty risk : You depend on Paxos Trust Company to maintain the backing with physical gold. This risk is mitigated by Paxos’ regulated status and regular audits.

• Regulatory risks : The legal framework surrounding digital assets is constantly evolving. Unfavorable regulatory changes could affect PAXG.

• Transaction fees : Transactions on the Ethereum blockchain incur gas fees that can become significant during periods of high network activity.

• Convertibility limitations : Conversion to physical gold is only accessible to holders of at least 430 tokens (equivalent to a standard 400-ounce bar).

• Gold market exposure : The value of PAXG is directly linked to the gold price, which can experience periods of volatility or decline, especially during periods of rising real interest rates.

PAX Gold (PAXG) vs Physical Gold vs Gold ETFs

How does PAXG compare to other gold investment options ? Here’s a comprehensive comparison with physical gold and gold ETFs :

Gold ETFs like SPDR Gold Shares (GLD) or iShares Gold Trust (IAU) dominate the gold investment market with hundreds of billions of dollars in assets under management. These ETFs provide exposure to gold via traditional stock markets but don’t confer direct ownership of physical gold.

For traditional investors already familiar with stock markets, gold ETFs often represent the simplest solution. For those who prioritize direct ownership without logistical constraints, or who wish to integrate gold into a diversified crypto portfolio, PAXG constitutes a particularly attractive alternative.

PAX Gold (PAXG) price

The price of PAX Gold is directly linked to the price of physical gold on international markets, with an almost perfect correlation. This fundamental characteristic distinguishes PAXG from most cryptocurrencies, whose prices are primarily determined by speculative supply and demand.

At the time of writing this article, PAXG is trading around $3,068, reflecting the current value of an ounce of gold. Over the past year, the token has seen an increase of approximately 16%, driven by several factors: geopolitical tensions, persistent inflationary fears, and diversification of reserves by certain central banks.

PAXG Technical Analysis

From a technical perspective, PAXG currently presents several interesting signals:

• The moving averages (50 and 200 days) show a bullish configuration, with the 50MA above the 200MA, forming a “golden cross” that suggests a continuation of the positive trend.

• The Relative Strength Index (RSI) is around 65, indicating a bullish market without being in overbought territory.

• Trading volumes have increased in recent months, a sign of growing interest in this asset.

PAXG typically shows a negative correlation with the US dollar (USD) and a weak or negative correlation with major cryptocurrencies like Bitcoin and Ethereum. This characteristic makes it an excellent diversification tool in a crypto portfolio.

 It’s important to note that PAXG’s price may sometimes show slight premiums or discounts compared to the spot price of gold, generally in the range of ±0.5%, depending on liquidity conditions on different exchange platforms.

Where to buy PAX Gold (PAXG)

Wondering where to buy PAX Gold? Several exchange platforms are available, but Bitget stands out as one of the most advantageous options for English-speaking investors.

Bitget offers an optimal user experience for purchasing PAXG, with multiple trading pairs available (PAXG/USDT, PAXG/BTC, PAXG/EUR). The platform distinguishes itself with significant liquidity, ensuring tight spreads and fast order execution. Trading fees are competitive, starting at 0.1% and decreasing based on your trading volume.

Among other notable platforms offering PAXG are :

• Binance, the world’s largest exchange in terms of volume, also offers PAXG with PAXG/USDT and PAXG/BTC pairs. Liquidity is good, but fees may be slightly higher for small volumes.

• Weex offers PAXG with pairs in EUR and USDT, making it an interesting option for European investors. The platform distinguishes itself with its clean interface and competitive fees, particularly suitable for regular traders.

• Bitunix has recently integrated PAXG into its asset catalog, offering a smooth user experience and advanced technical analysis tools. Its enhanced security features make it a quality choice for investors concerned about asset protection.