Tokenized gold assets have reached a market capitalization of over $1 billion as the price of gold nears its all-time high. Blockchain-based gold tokens represent the ownership of actual gold that the issuer manages. This enables investors to gain exposure to the precious metal without management fees or the hassle of storing gold bullions.
Currently, the two most prominent stablecoins backed by gold are PAX Gold (PAXG) and Tether Gold (XAUT), issued by Paxos Trust Company and Tether respectively. According to CoinGecko data, PAXG has a market cap of $518 million, while XAUT has a market cap of $499 million, media reports said.
Since March, the gold price surge has been driven by increasing investor concerns over weak banks and the possibility of a government bailout, which could result in an expansion of the fiat money supply and devaluation of currencies.
As a traditional safe-haven asset, gold has become increasingly attractive to investors seeking to preserve their wealth during economic uncertainty. On Tuesday, the metal was trading at $2,021 per ounce, just 3% off its all-time high recorded in August 2020.
In addition to traditional gold, bitcoin (BTC) has also seen a surge in value, as it is often referred to as digital gold due to its program-coded supply cap. BTC has rallied to as high as $29,000 from $20,000, coinciding with gold’s surge. Last week, BTC’s correlation with gold reached a multi-year high, surpassing equities, according to digital asset market research firm Kaiko.
The rise of tokenized gold assets and the growing interest in Bitcoin suggests that investors increasingly seek alternative investments to hedge against inflation and other economic concerns. Traditional safe-haven assets such as gold and bitcoin are attracting more attention from investors, especially as global economies struggle with inflation and economic uncertainty.