Key Takeaways

  • Definition – A gold-backed cryptocurrency is a digital token or stablecoin that is pegged to a specific amount of real physical gold. A token is usually one troy ounce of gold or one gram kept in safe deposit boxes. Since the price of all tokens is pegged by a real metal reserve, the price of a token is likely to follow the price of gold.
  • Growing popularity – The tokenized gold market had a market size of approximately 2.57 billion dollars in September 2025, and this growth was fuelled by the need for investors to find a refuge in an uncertain economy. The majority of that development was driven by two market leaders, Tether Gold (XAUT) and PAX Gold (PAXG). In August 2025, Tether issued 129,000 new XAUT tokens, which included about 437 million worth of supply.
  • Advantages – Gold-backed cryptocurrencies are more stable as compared to uncollateralized electronic coins. As far as they are gold-linked, the base value is pegged to gold, specifically 1 g of gold. They are able to serve as a buffer against inflation and exposure to the unstable crypto market. They also enable 24/7 trading of precious metals worldwide with fractional ownership without the need to physically handle the bullion.
  • Risks – Investors need to believe that issuers do have adequate reserves. Reserve audit questions, regulatory questions and counterparty risk questions remain. Some tokens may not be liquid because trading volumes may be less than those of mainstream cryptocurrencies. Since tokens are pegged to the price of gold, they will not give disproportionate returns in crypto bull markets.
  • Examples – PAX Gold (PAXG), Tether Gold (XAUT), GoldCoin (GFC), Kinesis Gold (KAU), Meld Gold (GOLD$), tGOLD (TXAU), and Comtech Gold (CGO) are major gold-backed tokens. Others, such as Perth Mint Gold Token (PMGT) have been abandoned.
  • Comparison to fiat-stablecoins – Both dollar-pegged stablecoins and gold-backed tokens are intended to decrease volatility. Gold-backed tokens are based on the value of a commodity that changes in price, and USD stablecoins such as USDT, USDC are pegged to fiat currencies and therefore are more stable in U.S. dollar terms. Gold-pegged tokens will increase with an appreciation of gold, but will not perform well when gold goes down.
  • Investment outlook – PAXG and XAUT dominate the gold-backed industry in 2025 with more than 90 percent market share. The analysts assume that the demand for gold-linked digital assets will increase as physical assets relocate on-chain, but before making purchases, investors need to study audits, redemption, and charges.

Advantages and Risks of Gold‑Backed Cryptocurrencies

Why investors like gold‑backed tokens

Gold-backed cryptocurrencies offer a unique investment opportunity by providing stability in the volatile cryptocurrency markets. These digital assets are often pegged to physical gold, ensuring that their value remains closely tied to the price of gold. Stablecoins like Tether Gold and Paxos Gold exemplify this trend, as they are designed to maintain a fixed value based on the underlying physical gold they represent. During economic uncertainty, such as the COVID-19 pandemic, gold-backed stablecoins demonstrated their potential as a reliable store of value. With the performance of five gold-backed stablecoins showcasing their resilience, investors can compare these tokens for physical gold to traditional cryptocurrencies, appreciating their properties as a safe haven in turbulent times.

Fractional ownership and accessibility – To purchase physical bullion, large amounts of capital and space are usually needed. The entry barrier is reduced since people can own fragments of an ounce or a gram in gold-backed tokens. Every token is a fractional ownership of gold bars deposited by the issuer. The tokens may be split into small units, making the investments or payments small.

Pro tip: To amass small amounts of what some people refer to as digital gold, you can establish recurring payments of a gold token on an exchange with an option to dollar-cost average.

Risks and considerations of gold‑backed cryptocurrencies

Custodial and auditing risk – Investors count on the issuers to keep and protect the gold reserves. In the absence of transparent audits, there is a danger of inadequate support for gold-backed crypto. Blocktrade cautions that questions regarding reserve auditing and accuracy of gold-backed stablecoins during the covid-19 remain. Some provide real-time auditing feeds, others periodically only. Whenever you are buying a gold-backed crypto token, make sure its reserves are certified by independent auditors.

Poor performance relative to other cryptos – Gold-backed tokens are designed to follow the price of gold instead of providing supersized returns. Pure crypto-assets such as Ethereum and Bitcoin tend to perform well when the wider crypto market performs well. On the other hand, the performance of gold-pegged tokens can suffer in case gold prices do not increase or even decrease.

Redemption and withdrawal conditions – not every token can be converted into physical gold. Others have minimum redemption requirements or processes. As an example, Comtech Gold will demand that holders have 1000 tokens (one kilogram of gold) to exchange with bullion.

Learn the conditions and terms of redeeming tokens always.

What Are the Best Gold‑Backed Cryptocurrencies in 2025?

Not all gold-backed cryptocurrencies are created equal. They vary in the technology behind them, issuer reputation, redemption choice, and regulatory status of gold-backed cryptocurrencies during the covid-19. Some of the most noticeable tokens are listed below as of September 2025.

PAX Gold (PAXG)

The biggest gold-backed digital asset in market capitalization is PAX Gold. Every PAXG coin is based on 1 fine troy ounce of London Good Delivery gold held in the vaults. Through Paxos, investors are able to redeem tokens to either physical gold or cash. PAXG is an Ethereum blockchain-based ERC20 token, and therefore, it is compatible with most crypto wallets and DeFi apps. Paxos is a financial institution under the regulation of the New York Department of Financial Services and publishes monthly audit reports, which further help build trust. By September 2025, the market capitalization of PAXG, a gold-backed stablecoin, is expected to hit an all-time high of over 983 million dollars due to net inflows of approximately 141.5 million since June.

Tether Gold (XAUT)

Tether Gold is a stablecoin that is issued by Tether, the creators of the USDT stablecoin. All XAUT tokens reflect a troy ounce of gold held in a Swiss vault and are of London Bullion Market Association standard. The XAUT holders will be in a position to exchange tokens into physical gold bars (with minimum requirements) or sell them on the exchange. In August 2025, Tether minted 129,000 new XAUT tokens, adding 437 million dollars to the supply and releasing it into the market with a total value of approximately one and a half billion dollars. XAUT tokens can be broken down to 0.000001 troy ounce, which allows micro-transactions.

GoldCoin (GFC)

GoldCoin is an ERC-20 gold-based cryptocurrency in which every issued token reflects one millionth of an ounce of gold. It markets itself as a cheap and confidential means of exposure to gold.

Kinesis Gold (KAU)

Kinesis is a company that runs a platform that provides both silver- and gold-backed tokens. A KAU token represents one gram of gold transferable on the blockchain of Kinesis. Reported assets under management and users exceed 150 000 and $200 million respectively. Kinesis has a structure that rewards its users to spend or hold tokens but to redeem their tokens, they must satisfy KYC requirements and issues regarding audit transparency have been raised.

Meld Gold (GOLD$)

Meld Gold mints tokens on Algorand. GOLD$ tokens (sometimes in MCAU units) are one gram of gold. The gold is stored where it can be viewed by Meld on live audit site and the number of token holders. GOLD$ may be bought on Algorand-based decentralized exchanges and then traded in bullion through partner dealers. The efficiency of transacting using GOLD $ is due to the low transaction fee on Algorand.

tGOLD (TXAU)

tGOLD is a fund issued by Aurus, and it is traded under the TXAU ticker. The tokens are minted on Ethereum and can also be bridged to Polygon at reduced cost. The tGOLD can be purchased in the decentralized exchanges, such as Uniswap, or in the precious metals enterprises involved. Aurus pays users 50 percent of the fees it gathers when tokenizing their own gold through the platform.

Comtech Gold (CGO)

Comtech Gold is developed based on the XinFin blockchain. A CGO token corresponds to a gram of gold that is held in the vaults in the United Arab Emirates. Those who have 1,000 or more tokens (1 kg of gold) can redeem CGO into physical bullion. The token is traded on exchanges like LBank and BitMart, but the exchange support is not broad. It is important to note that CGO is the first gold-based token to be Shariah certified, thus it has the potential to attract Muslim investors.

DigixGlobal (DGX), AurusGOLD (AWG).

DigixGlobal (DGX) and AurusGOLD (AWG) are not as large as PAXG or XAUT, and yet they are important players that have been mentioned in previous guides. A DGX token represents 1 gram of gold stored in Singapore and Canada vaults. Digix offers quarterly auditing and strives to be transparent. Aurus created AWG to connect every token to one gram of LBMA-certified gold. Both tokens are easy to own gold, but have a disadvantage in that they are less liquid and are less supported by the exchange.

Perth Mint Gold Token (PMGT)

In 2020, the Perth Mint Gold Token (PMGT) was introduced and exposed users to Perth Mint products. In 2024, however, the Perth Mint said that PMGT had ended. PMGT holders could redeem tokens at the depository of the Perth Mint in physical gold. The investors of PMGT need to take into account that the token will no longer be actively issued by 2025.

FAQs

What crypto is gold backed?

A gold‑backed cryptocurrency is any digital asset that links each token to a set quantity of physical gold stored in secure vaults. Well‑known examples include PAX Gold (PAXG), Tether Gold (XAUT), Kinesis Gold (KAU), GoldCoin (GFC), Meld Gold (GOLD$), tGOLD (TXAU) and Comtech Gold (CGO). These tokens are sometimes called gold‑backed stablecoins because their prices mirror gold. Always verify that the issuer conducts regular audits and allows redemption for physical gold.

Is gold‑backed crypto a good investment?

Gold‑backed cryptocurrencies can be a useful tool for diversifying a portfolio and hedging against inflation. Because their value reflects the price of gold, they tend to be less volatile than unbacked cryptos. Blocktrade notes that their stability and fractional ownership make them an appealing entry point for investors who find standard cryptocurrencies too risky. However, these tokens come with risks: reliance on the issuer’s custody and auditing, limited liquidity for some projects, and potential underperformance when other digital assets rally, particularly gold and bitcoin. As with any investment, research the project’s transparency, regulatory compliance, and redemption policies before committing funds. And remember that this article does not constitute financial advice.

What can gold‑backed tokens be used for?

Gold-backed tokens, such as tether gold and pax gold, serve multiple purposes:

  • Store of value – They provide exposure to gold’s historical role as a safe‑haven asset.
  • Medium of exchange – Because they operate on blockchains like Ethereum and Algorand, tokens can be transferred quickly and at low cost, making them useful for cross‑border payments.
  • Collateral in DeFi – Some decentralized finance platforms accept gold‑backed tokens as collateral for loans or yield‑generating strategies. They bring the stability of gold into digital asset lending markets.
  • Diversification tool – Investors use them to diversify portfolios that may otherwise be heavily weighted toward fiat currencies or volatile cryptocurrencies. Blocktrade emphasises that gold‑backed tokens allow people to participate in blockchain ecosystems while reducing volatility.

Is XRP crypto backed by gold?

No. XRP is a digital currency used for cross‑border payments and runs on the XRP Ledger. It is not collateralized by gold or any other physical asset. Ripple states clearly that “XRP is not backed by gold or any other physical asset. XRP’s value derives from market demand and its utility as a bridge currency for moving value across different fiat currencies. Myths about XRP being “backed by gold” have circulated online, but reputable sources confirm there is no such backing.