The US has confirmed its recessionary economic status following two consecutive quarters of negative economic growth. The EU and the UK are also facing economic headwinds, with both the European Central Bank and the Bank of England rising interest rates to combat spiralling inflation.  

With investors uncertain about the global economic outlook, many are opting to invest their funds in risk-off/safe-haven assets - with gold being the tried and trusted favourite. 

Gold is renowned for being the investment of choice in uncertain times, but owning physical gold is often expensive, cumbersome, and difficult to move. For this reason, a digital version of the traditional commodity was made - welcome to Paxos’ PAX Gold (PAXG).

What is PAX Gold?

PAX Gold was the first gold-backed and fully-regulated digital asset in existence. PAX Gold is the only digital token you can redeem for London Bullion Market Association (LBMA)-accredited gold bullion bars. Each token tracks the real-time value of the gold price and is backed by 1 fine troy ounce of a 400 ounce gold bar, stored in London Gold Vaults. Owning PAXG entitles you to own the allocated underlying physical gold, which is held in custody by Paxos Trust Company. With access to the gold bar’s serial number and physical characteristics.

How has Gold performed over times of uncertainty?

It is important for investors to consider gold as part of a diversified investment portfolio since its price rises in response to unpredictable markets and geopolitical events. In contrast, risk-on assets, such as stocks and crypto, typically see price decreases during these times.

In today's world, the risks of geopolitical events are everywhere, and these uncertainties have helped drive up the price of physical gold (PAX Gold too). The gold price increased more than 15% in the first month of the Russian-Ukrainian conflict ($1797 to $2058) - an increase of a considerable magnitude in a short period of time.

As seen in the graph above, although the price of gold can fluctuate in the short term, historically, it has always generated value over the long term. For this reason, many investors also see gold as a hedge against inflation, as its long-term return outpaces long-term inflation rates - making it an investment worth considering in these times of heightened inflation rates.
Keeping all of the above in mind, let’s run through the main reasons investors are moving towards PAX Gold instead of Physical gold.

Benefits of PAX Gold

‍Highly accessible and liquid

‍Built as an ERC-20 token on the Ethereum blockchain, PAX Gold can easily be moved or traded anywhere in the world, at any time, with real-time spot gold prices. With low investment minimums, anyone can own a fraction of an LBMA-accredited London Good Delivery gold bar. Trading PAXG does not take days to settle, as could be the case with gold ETFs or even physical gold bars.

Cost-effective

PAXG offers investors a cost-effective way to own investment-grade physical gold through a digital token of the underlying asset. Owning PAX Gold means you don’t have to worry about physically holding or storing the gold and the expenses that come with it. Not only that, but PAXG also offers lower custody fees than other gold tokens and gold ETFs. ‍

Fractional ownership

Tokenisation of gold makes it possible for fractional ownership of gold. PAXG makes it possible to buy smaller amounts of gold (0.01 troy ounce) instead of buying an entire gold bar. This allows individuals to gain exposure to gold who previously couldn’t due to high minimum investment requirements.

Secure and regulated

Paxos is a trust company and custodian regulated by the New York State Department of Financial Services (NY DFS). PAXG is also approved and regulated by the DFS and fully-backed by allocated gold held in the most secure, leading vaults in the world. To ensure that Paxos maintains its reserves, a third-party auditing firm performs monthly checks to verify that Paxos’ gold reserves match the supply of the PAXG token. These reports are released on Paxos’ official website.‍

Redeemable

PAX Gold is the only gold token that you can redeem for LBMA-accredited Good Delivery gold bullion bars. Institutional investors can also redeem their PAXG for unallocated Loco London Gold.

Bankruptcy protected

Since a state-chartered trust company issues PAX Gold, customer assets are kept separately from the company’s assets. This means that token holders can redeem their tokens for gold even if Paxos were to go bankrupt.

Identifiable

1 PAX Gold token represents 1 fine troy ounce of an individual gold bar. Matching serial numbers found on both the digital token and gold bar make each token’s asset-backed nature verifiable. As part of this strategy, the system provides a tool to look up the serial number and information about your gold by entering your Ethereum wallet address on the PAXG lookup tool.

Where can I invest in PAX Gold? 

South African fintech Altify introduced Pax Gold (PAXG) in early 2020, allowing investors to purchase and own gold tokens which represent legal fractional ownership of physical gold bars without having to store, manage or secure the precious metal.

‍Altify offers PAX Gold as a standalone product for investors keen to gain exposure to the yellow metal.

If you are worried about inflation - Altify has created the Inflation Shield. By combining today's two most prominent inflation hedges - Pax Gold and Bitcoin - customers will be able to take advantage of the benefits of both crypto and commodities.