Tokenised gold is cheaper and faster; physical gold is independent. PAXG and XAUT carry a premium under one percent and trade around the clock — but they remain a claim against an issuer. Bars in your own safe cost 2 to 5 percent more and have nobody who can default.
Both are ERC-20 tokens, each representing one troy ounce of LBMA-certified gold. Paxos stores the gold backing PAXG in London; Tether Gold uses vaults in Switzerland. The token is proof of your claim — the metal itself sits with the custodian.
The model has real advantages. You pay no minting premium, no shipping and no insurance, you can sell within seconds and you can hold fractions of an ounce. For short-term positioning that is more efficient than any physical purchase.
In fairness, the drawbacks deserve to be named plainly. Physical metal costs more: on a 1-gram bar the premium runs at about five percent, and on a kilo bar still around two. You do not recover that difference when you sell.
There is effort involved too. You need somewhere safe to keep it, you carry the theft risk, and when you resell you have to find a dealer. And you cannot sell €300 of gold without parting with a whole bar.
If you treat gold purely as a trading position and think in weeks rather than years, a token is usually the better fit. The 2 to 5 percent premium only pays off over longer holding periods.
The heart of it is one sentence: a token is a promise, a bar is an object. Everything the promise depends on — issuer, custodian, auditor, smart contract, exchange, network — can fail, be compromised or be regulated. With a bar in a safe, that whole chain disappears.
Redeemability matters in practice as well. PAXG only allows physical delivery from large-bar sizes upwards, which is no option for a private investor. Hold a token and you are, in effect, holding a paper promise permanently — just on a blockchain.
Then there is the freezing question: an issuer can freeze tokens at an address. Both providers have that function, and both have used it. A bar knows no blacklist.
Many investors use both with clearly divided roles: tokens for the short-term, tradable portion, physical metal for the holding that is meant to sit still. Follow that logic and you can also use tokens as an intermediate step and shift into bars later.
MetalReserve makes exactly that step directly: you pay for physical metal with USDT, USDC or Bitcoin, with no detour through a bank account. The rate is locked for 15 minutes when you pay.
PAXG is an ERC-20 token representing a claim to one troy ounce of gold held by the custodian Paxos. Physical gold is in your possession. The token is cheaper and faster to trade; the metal has no counterparty risk and no technical dependency.
In principle yes, in practice barely: physical delivery is only possible from large-bar sizes of around 430 troy ounces and involves high costs. For a private investor the token is effectively not redeemable.
It swaps one risk for another. The theft risk disappears, but issuer, custodian, smart-contract and regulatory risk are added. Which is safer depends on which risk you would rather carry.
Tokenised gold is treated for tax like other crypto assets: as another economic asset under §23 EStG with a twelve-month period. The same period applies to physical investment gold, which is additionally exempt from VAT on purchase.
Information about third-party providers is based on publicly available sources as at July 2026 and may change. This article is not investment advice.