Gold-backed tokens explained

With XAUT, each token corresponds to one troy ounce of gold on a specific London Good Delivery bar, and the issuer publishes the bar references. That allocation is the distinction that matters: allocated gold is identified metal held for you, whereas unallocated gold is a claim on the issuer's pool that ranks alongside other creditors if the issuer fails.

Because the token is an ERC-20 style asset, it moves on the same rails as any other token — sent, received and held in the same wallet, settled in minutes, and divisible into fractions far smaller than a physical bar.

The practical appeal is that it puts a non-correlated asset inside a crypto portfolio without leaving it. Rotating from Bitcoin into tokenised gold takes a swap rather than a bank transfer, a broker account and a settlement wait.

It also solves the storage problem. Physical gold means vaulting, insurance and an awkward conversation whenever you want to sell part of a bar; the token keeps the exposure while handling storage centrally and staying divisible.

Read the redemption terms before you buy: the minimum redeemable quantity, the delivery locations, the fees and who bears shipping and insurance. Many holders never redeem, but the terms reveal how seriously the issuer treats the backing.

Then read the attestation. Look for the frequency, the identity of the firm performing it, and whether it lists allocated bars rather than asserting a total. A recent attestation with bar-level detail is meaningfully stronger evidence than an annual statement of aggregate holdings.

You take gold price risk, which is the point. On top of that sits issuer risk — the vault operator and the token issuer must both perform — plus the ordinary smart-contract and key-management risk of holding any token.

Liquidity is worth checking too. Tokenised gold trades in thinner markets than major cryptocurrencies, so large orders can move the price. Ask how a platform sources its quote and whether the spread widens for larger tickets before assuming your exit is frictionless.

Tokenised gold sits alongside your fiat and crypto balances in the same account and the same statements, so an allocation to metal does not require a separate provider or a separate reconciliation.

It is also accepted as collateral, which is where the low-volatility profile becomes useful: a loan drawn against gold exposure sits further from a margin call than the same loan drawn against a volatile token, for the same starting ratio.