Gold-backed cryptocurrency comparison
Compare cryptocurrencies that are worth more than their weight in gold.
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Cryptocurrencies are purely digital blockchain-based tokens, but they can also be backed by tangible assets.
Gold is a popular choice for this. Gold-backed cryptocurrencies refer to digital coins that are worth a set amount of gold each.
There are dozens of different gold-backed cryptocurrencies in existence, but the vast majority are either outright scams or cannot be verified as actually being gold backed.
CoinSpot Cryptocurrency Exchange
CoinSpot is an Australian-based exchange that allows you to easily buy, sell or trade more than 100 cryptocurrencies.
- A local exchange headquartered in Australia
- Allows users to buy directly in AUD
- Low and no fee deposits and withdrawals
- User-friendly interface
- Wide selection of cryptocurrencies
- Compliant with AML/CTF laws
Gold-backed cryptocurrency list
The following is a list of gold-backed cryptocurrencies, along with what secures their value.
|Perth Mint Gold Token (PMGT)||Australian-based Perth Mint is owned by the Western Australian state government, which guarantees the weight and purity of the gold in the Perth Mint vaults.
The mint issues digital gold certificates through its GoldPass app and these certificates in turn back PMGT.
While Perth Mint does not guarantee the PMGT itself, it does guarantee the indirect gold backing and it is associated with the PMGT project.
|Where to buy PMGT|
|AnthemGold (AGLD)||US-based AnthemGold livestreams what it says is the inside of the vault containing the AGLD gold backing.
It says it undergoes regular audits by a reputable third party and that its gold is insured by Lloyd's of London, with details of the coverage available on request.
Anthem has been active in the gold and vault industry long before it started issuing AGLD.
|Where to buy AGLD|
|DigixGlobal (DGX)||Singapore-based DigixGlobal provides the name of the custodian for all the gold backing its tokens.
It also provides pictures of the gold, purchase receipts and audit information for all the gold it holds.
Each DGX token represents 1 gram of gold. When you hold a DGX token, the available audit information lets you verify the existence and custody of the gold backing your token and confirm that circulating DGX matches gold held by custodians.
|Where to buy DGX|
|PAX Gold (PAXG)||US-based Paxos, which issues PAXG, is a New York State Trust Company, subject to regulatory oversight by the New York State Department of Financial Services.
All fiat and crypto customer assets deposited with Paxos, such as those backing PAXG, are backed with mandatory capital reserves.
|Where to buy PAXG|
|GoldSilverCoin (AUS and AGS)||Offers gold and silver-backed cryptocurrency.
Detailed quarterly audit reports, verifying the quality and quantity of the physical gold and silver backing, are available on the website.
You can verify that the number of AUS and AGS tokens in circulation matches the respective gold and silver holdings of GoldSilverCoin.
|Where to buy AUS and AGS|
How to find the best gold-backed cryptocurrency
The best gold-backed cryptocurrency is one that you are certain is genuinely backed by gold and that you can redeem for physical gold when needed.
The exact procedures for validating a coin will vary between projects. For example, sometimes you might take it as a matter of trust that a coin is genuinely backed based on the reputation of its issuer, while other times you might want to do a thorough check via independent auditors.
But generally, to validate the backing of a gold-backed cryptocurrency, you can:
- Confirm that the cryptocurrency is backed by physical gold: To verify the gold backing of a cryptocurrency, you can look for independent third party audit reports or other documentation, and then contact the auditor to confirm that the documentation is genuine.
- Confirm that the gold backing matches the amount of coins in circulation: Once you're convinced that there really is gold backing the tokens, you can look at the token contract on the blockchain to see how many coins there are in circulation and confirm that it matches the gold held in reserve.
How do I redeem gold-backed cryptocurrency for physical gold?
The procedures for redeeming a gold-backed cryptocurrency for physical gold will vary but there are two main options you might encounter.
- Redeeming for physical gold.In cases where a gold-backed cryptocurrency can be directly redeemed for physical gold, you will typically have to pass AML/KYC procedures and the gold can then be shipped to the specified mailing address.
- Redeeming for gold derivatives.In other cases, you can redeem the tokens for recognised gold derivatives. These derivatives either track gold prices or can themselves be redeemed for physical gold.
What is gold-backed cryptocurrency used for?
Gold-backed cryptocurrencies are often regarded as a type of stablecoin, prized for the way they tend to mirror the market price of gold.
However, their ability to mirror gold prices is only as strong as the extent to which they can be redeemed for gold. If it's difficult or expensive to redeem, a gold-backed cryptocurrency might deviate from gold prices.
Plus, gold and gold-backed cryptocurrencies are both still subject to their own separate market forces.
Compared to gold itself, gold-backed cryptocurrencies may be traded on lower liquidity markets, so even if they broadly mirror gold prices, they can still be much more volatile.
For example, the chart below shows the DigixGlobal (DGX) gold-backed cryptocurrency prices in the blue line, compared to gold market prices in the orange line, over an approximately six-month period.
Image sourced on 24 October from DGXUSD chart by TradingView
As you can see, DGX prices broadly mirror gold, but are much more volatile on the whole.
Pros and cons of gold-backed cryptocurrency
- Stable. Legitimate gold-backed cryptocurrencies mirror gold prices and are much more stable than most other cryptocurrencies.
- Reliable store of value. People who are worried about inflation or the security of fiat currency may prefer to store their value as gold.
- Allows access to blockchain apps. Tokenising gold on the blockchain lets you use gold across blockchain applications, to trade it, spend it as money and more.
- Easier to store and sell than gold. Purely digital gold tokens are typically easier to store and sell than physical gold.
- Less stable value than gold. Gold-backed cryptocurrencies are often more volatile than gold itself.
- Disreputable projects are common. Many gold-backed cryptocurrency projects are either lying about their backing or are outright scams.
- Requires some trust. Even the most honest and transparent gold-backed cryptocurrencies require some kind of trust between you and the token issuer.
- May involve fees. The costs of physical gold custody or other expenses may be passed on to users in the form of additional fees.
- Limited liquidity and exchange availability. The availability and liquidity of gold-backed cryptocurrencies on exchanges may be limited.
Where to buy gold-backed cryptocurrency
All of the exchanges in the table below offer gold-backed cryptocurrencies, or similar gold-backed products.
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