Tether Gold (XAUT) and PAX Gold (PAXG) are tokens backed by physical gold. How they work, how they compare, and the risks.
Tether Gold (XAUT) and PAX Gold (PAXG) are two widely held examples of tokenized gold: crypto tokens that each represent one fine troy ounce of physical gold held in a vault. Like gold itself, they track the gold price, and unlike gold, they move on public blockchains and can be split into small fractions. Behind every token sits an issuer that holds the metal.
Most articles skim past the issuer. A gold token gives you gold's price and crypto's portability, but it also hands you the issuer's custody arrangements, legal terms, and redemption rules, and those differ between XAUT and PAXG. In the sections below, this guide covers how both work and where they differ.
Tokenized gold is a digital token, issued on a blockchain, that represents a claim on a specific amount of physical gold held in custody. Because each token is backed by gold the issuer stores in a vault, its value tracks the gold price. Like any other crypto asset, the tokens can be transferred at any hour.
Both XAUT and PAXG are backed by gold that meets the London Good Delivery standard set by the London Bullion Market Association (LBMA). Under that standard, the LBMA states that a bar must contain between 350 and 430 fine troy ounces and be at least 995 parts per thousand pure.
Because each token can, in principle, be redeemed for gold or its cash value, traders have a reason to buy tokens that trade below gold and sell those that trade above it. That arbitrage keeps prices close. Still, close is not identical; in thin or stressed markets, a gold token can trade at a premium or discount to spot gold.
Tether Gold (XAUT) is a gold-backed token issued within the Tether group, the company behind the USDT stablecoin. Each XAUT represents one fine troy ounce of gold on a London Good Delivery bar held in Swiss vaults, according to CoinDesk. Through a public tool, holders can look up which specific bars back their tokens.
Tether says its gold is stored in Switzerland, and it publishes a lookup tool that links token holdings to specific bar serial numbers. The tool is useful. Even so, it is the issuer's own disclosure, so it is only as reliable as the issuer's custody and reporting.
XAUT can be redeemed for physical gold, with delivery arranged in Switzerland, or for the cash proceeds of selling the bars. Only whole bars qualify for physical redemption, though. CoinGecko puts the threshold at 430 tokens, and the process usually involves additional fees and logistics.
PAX Gold (PAXG) is a gold-backed token issued by Paxos, a trust company that launched it on September 5, 2019, according to Paxos. Like XAUT, each PAXG represents one fine troy ounce of a London Good Delivery bar, held in LBMA vaults in London. Unlike a physical bar, it can be bought in fractions as small as 0.01 ounces.
On its PAX Gold page, Paxos describes itself as “a trust company and custodian regulated by the Office of the Comptroller of the Currency (OCC).” It also publishes attestation reports each month. An attestation is narrower than a full audit (it checks reserves at a point in time), but a regular public report from an independent accounting firm is still a meaningful signal for holders.
Paxos says PAXG can be redeemed for LBMA-accredited Good Delivery bars or for US dollars at the current gold price. For institutional customers, redemption for unallocated gold held in London is also available. As with XAUT, taking delivery of a physical bar requires enough tokens to cover a whole bar.
XAUT and PAXG work the same way at the token level: one token equals one fine troy ounce of Good Delivery gold. Where they differ is the issuer, where the gold sits, how the issuer is overseen, and how redemption works. For a holder, those details decide what stands between the token and the metal.
| Feature | Tether Gold (XAUT) | PAX Gold (PAXG) |
|---|---|---|
| Issuer | Tether group | Paxos |
| Backing per token | One fine troy ounce, LBMA Good Delivery gold | One fine troy ounce, LBMA Good Delivery gold |
| Where the gold is held | Swiss vaults | LBMA vaults in London |
| Issuer oversight | Set by the Tether group's own arrangements | Paxos states it is regulated by the OCC |
| Transparency | Public bar lookup tool | Monthly attestation reports |
| Physical redemption | Whole bars, delivery in Switzerland | Good Delivery bars; USD also available |
| Blockchain | Public blockchains, including Ethereum | Ethereum |
Neither token is “better” in the abstract. Some holders weigh regulatory oversight most heavily; others care more about vault location or the issuer they already know. Those are judgments about counterparties, and they belong to the holder, not to a comparison table.
People hold tokenized gold for three practical reasons: it allows fractional ownership of vaulted bullion, it moves around the clock on public blockchains, and it can sit in the same wallet or account as other digital assets. None of those reasons changes gold's price behavior; they change how gold is held and moved.
At 350 to 430 ounces, a single Good Delivery bar is far beyond most individual budgets. With tokens, someone can hold a small fraction of vaulted bullion without buying a coin or paying for a safe deposit box.
Gold markets have trading hours. Blockchains do not. By contrast, a gold token can be sent across borders in minutes, on a weekend, to anyone with a compatible wallet, which physical bullion cannot match without couriers, insurance, and customs paperwork.
For investors who already hold crypto, gold tokens sit in the same place, which makes moving between assets simpler, since there is no bullion dealer, vault account, or separate settlement process to deal with. Whether gold belongs in any portfolio, and how much, is a personal decision this guide does not address.
The risks of tokenized gold fall into two groups: gold's own price risk, and the extra layers a token adds. Those layers include trust in the issuer and custodian, practical limits on redemption, regulatory change, and the security of the wallet holding the tokens. A token is a claim, not a bar.
At bottom, a gold token is a claim on an issuer. If the issuer failed, mismanaged its reserves, or faced legal action, token holders would depend on its terms and on the legal system to recover the metal, which could take years and might not return the full amount. Transparency tools reduce that risk only partly.
Because physical redemption works in whole bars, most holders cannot realistically take delivery of their gold. In practice, their exit is selling the token, which depends on market liquidity and on the token trading close to the gold price at the time.
Rules for asset-backed tokens vary by country and keep changing. On top of that, tokens like these are typically issued with administrative controls, such as the ability to freeze specific tokens in response to legal orders, so each issuer's terms are important to read.
Tokenization changes the wrapper, not the metal. If the gold price falls, so does the value of every gold token. Like gold itself, neither XAUT nor PAXG pays interest or dividends.
Gold tokens are held in crypto wallets, so they inherit crypto's security risks: lost recovery phrases, phishing, and irreversible transfers. For the basics that apply to any token, see our guide to storing crypto safely.
Tokenized gold is a digital claim on physical metal held by an issuer, while Bitcoin is a native digital asset with no issuer and a fixed supply of 21 million. Both get called “digital gold,” for different reasons. Gold tokens borrow gold's track record; Bitcoin borrows gold's scarcity logic, as our Bitcoin vs gold comparison explains.
Trust is the real difference. With a gold token, you trust an issuer, a vault, and the gold market. Bitcoin has no issuer to trust, but the price has been far more volatile, and its role as a store of value is still debated.
Yes, according to its issuer. Each Tether Gold (XAUT) token represents one fine troy ounce of gold on a London Good Delivery bar held in Swiss vaults, and Tether provides a lookup tool linking holdings to specific bars. Even so, the backing depends on the issuer's custody and disclosures being accurate.
Yes. Paxos says PAXG can be redeemed for LBMA-accredited Good Delivery gold bars, which means holding enough tokens to cover a whole bar of 350 to 430 fine troy ounces. For smaller holders, the options are redeeming for US dollars at the current gold price or selling the tokens.
Both tokens represent one fine troy ounce of LBMA Good Delivery gold. They differ in issuer and oversight: XAUT comes from the Tether group and is backed by gold in Swiss vaults, while PAXG is issued by Paxos, which says it is regulated by the OCC, with gold held in London.
Tokenized gold is sometimes called a gold-backed stablecoin, but it is not stable in dollar terms. Because a gold token is pegged to the gold price, which rises and falls, its dollar value changes every day. Only the ounce stays constant.
No. Like physical gold, XAUT and PAXG pay no interest, dividend, or yield. Returns come only from the gold price. Some platforms offer lending or yield products involving gold tokens, but those add counterparty and platform risks that holding the token itself does not carry.
Paxos, the issuer of PAX Gold, describes itself as a trust company and custodian regulated by the Office of the Comptroller of the Currency (OCC). On a monthly basis, it also publishes attestation reports on the gold backing the tokens. Token rules also vary by country.
Asset-backed tokens raise questions about issuers, custody, and redemption that are easier to work through with someone who knows the market. UpTrade is a dedicated crypto brokerage built around real relationships, not a self-serve app.
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