Cryptocurrency in focus: This stablecoin combines crypto and gold investments
Investors like to invest in gold in uncertain times. But there is also a cryptocurrency with which you can bet on the yellow precious metal.
Values in this article
raw materials
$4,083.02 $6.19 0.15%
currency
$2,867.9021 -150.3492 USD -4.98%
$4,066.3005 -27.9908 USD -0.68%
• Uncertainty is likely to continue even after the end of the US shutdown
• Continued need for “safe havens”
• PAX Gold is a stablecoin backed by gold
Although the longest government shutdown in the USA, lasting 43 days, was finally ended in mid-November, the effects are likely to continue to be felt for some time. Among other things, employees of federal authorities have to catch up and report economic data for weeks. In addition, the trade conflict with China continues to simmer even after US President Donald Trump’s summit with Chinese head of state Xi Jinping. Economic uncertainty surrounding the US dollar, the world’s main reserve currency, is therefore likely to continue for a while.
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Given this, gold, which is widely seen as a hedge against the US dollar, is likely to remain in demand. A record high of $4,356 was reached on October 20th and the price for the yellow precious metal is currently still at a high level.
PAX Gold also hit all-time highs
However, acquiring physical gold can be difficult under certain circumstances. The precious metal is not that easy to buy or sell on the available exchanges or OTC (over-the-counter) markets. An alternative would be PAX Gold (PAXG), one of the few stablecoins backed by gold. The cryptocurrency reached a record price of $4,456.70 on October 17, according to “Coinmarketcap”.
The token was designed to have the same value as a London gold bar, according to The Motley Fool, so it maintains a value close to the price of a troy ounce of gold. However, cryptocurrency and commodity can never have a completely identical price because digital tokens incur transaction and network fees. PAX Gold typically moves within a range of about $50 under or over an ounce of gold.
One advantage of PAXG is that it can be traded almost instantly on the Ethereum blockchain via popular crypto exchanges. This isn’t quite as easy with gold, for example because most non-crypto exchanges are closed on weekends. In addition, the transport of PAX Gold and other gold stable coins such as Theter Gold or Kinesis Gold across national borders is possible safely and discreetly. In addition, there are no storage costs.
Pay attention to dangers
However, investors should not ignore the risks associated with PAX Gold. For example, congestion on the Ethereum blockchain can not only potentially slow down transaction speeds, but also increase purchase fees somewhat. It can also happen that a crypto exchange or an investor’s private crypto wallet is hacked and the funds are stolen.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.