Since a few days PAX Gold is available on Young Platform. It’s the first token that replicates the price of gold and it’s having a huge success.

As we’ve seen, gold can be defined as the safe-haven asset par excellence.

Gold is, in fact, one of the asset classes that in times of crisis is always very popular, as it is completely independent of all other financial assets.

Investors have always been well aware of the importance of gold in their portfolios.

In addition to offering the advantage of diversification, gold is a world-renowned safe-haven for investors who want to protect their wealth against periods of economic turbulence.

However, physically buying gold (the classic bar or coins) has a number of disadvantages.

The first problem is safekeeping (in a safe or in a bank vault), which involves an increase in risks and costs.

 

Physical gold is not the only option

To overcome these problems, over the years, a number of tools to digitally hold gold have developed (financial gold).

We are talking mainly about ETFs (Exchange Traded Fund) and ETCs (Exchange Traded Commodities) which are passively managed financial instruments that replicate the performance of a benchmark, which in this case is gold.

Investing in ETFs or ETCs on gold means buying a financial instrument whose value replicates the performance of gold itself. This way, without having to own any quantity of gold, you can earn money based on the performance of its price.

By buying ETFs, investors can operate in the financial market as if they owned the underlying physical asset. It’s kind of like borrowing the underlying asset, in this case gold, and then paying back the interest on it.

 

Physical Gold

Pros

  • Is immune to default (can never be worth zero)
  • It’s tangible
  • It is exempt from VAT
  • It is expendable everywhere (equal to the standard currency) and it is always convertible into money because it has its own world quotation.
  • You can easily transport it in a small space
  • Protects against the risk of inflation

Cons

  • You need to rely on a custody service for large quantities, but the costs are often very affordable.
  • It must be declared to border control in case you want to take it abroad.
  • It can only be liquidated through its sale to the relevant bodies and companies.

 

Financial Gold (ETFs, ETCs)

Pros

  • It is immaterial and therefore very fast to sell and buy in a few seconds
  • It has no custody fees
  • It does not have to be declared to border control
  • Like physical gold, it protects against inflation.

Cons

  • Contracts do not exactly replicate the price of physical gold in all cases and in some cases have an operating cost.
  • It exposes the issuer to the risk of bankruptcy
  • The gold held by brokers is not yours by right and hundreds of people claim ownership.

 

PAXG: Gold is now a token

In recent months, thanks to the blockchain technology, it has become possible to invest gold in a new way, even easier and cheaper than physical and financial: tokenized gold.

Young has carried out in recent months careful due diligence on all products on the market and has identified PAX Gold as the best solution to offer to its investors.

PAX Gold is a token based on the Ethereum blockchain that, in addition to being anchored to the value of gold, also gives the right of ownership of a gold bar that serves as the underlying asset.

This guarantees first and foremost that its price faithfully reflects the price of an ounce of gold. In addition, you can redeem it at any time by requesting the shipment of the underlying gold in exchange for the destruction of the token.

Pax Gold, therefore, combines all the advantages of physical gold with those of financial gold: the underlying asset, liquidity, almost non-existent entry barriers and it even adds the typical advantages of cryptocurrency, such as zero-cost transfers and very low buying and selling fees.

For more information on PAX Gold, please read our detailed article.