The crypto sphere is changing the investment world in some astonishing ways, one of them being ‘tokenised’ gold.
Over the last two decades, the gold price gained an average of 18% a year. Demand for gold has been spurred to near-record levels again as a result of the Covid-19 pandemic, with investors looking to the precious metal as a ‘safe haven’ during political and economic uncertainty. It recently blasted past its longstanding record to a new all-time high of $1 940/oz, with Bank of America recently forecasting a price target of $3 000/oz within 18 months.
Unrelenting investor demand has helped fuel the price gains, with inflows into gold-backed exchange-traded funds (ETFs) breaking records previously set in 2009 after the 2008 financial crisis. ETFs have become a popular method of cresting this wave, with tokenised gold being a newer and potentially more efficient and cost-effective way to gain direct investment exposure to the precious metal.
In a nutshell, tokenised gold is when a gold bar stored in a secure and fully-insured vault is legally converted into a set number digital tokens that can be transferred, stored, and recorded on a blockchain.
Each digital gold token has a unique digital serial number that corresponds to the physically embossed serial number on a corresponding gold bar.
This makes it easier to own or trade and doesn’t carry the burdens of storage fees, insurance or custodianship.
Revix is a South African fintech start-up backed by JSE-listed Sabvest that specialises in digital asset investment products for everyday retail investors for as little as R500. Started in 2018 by former equity analyst Sean Sanders, Revix offers a new way of investing in crypto assets, a broad term that encompasses cryptocurrencies and tokenised assets.
The most popular product at Revix is currently Pax Gold (trading under the ticker PAXG), an asset-backed token where one token represents one fine troy ounce of a London Good Delivery gold bar, stored in secure Brinks vaults in London. Pax Gold, like other digital assets, is infinitely divisible, making it attractive for smaller investors.
Efficient ownership and transfer
“This is a logical application of blockchain technology, allowing for the efficient ownership and transfer of traditional assets using digital innovations, and solves many of the problems you have investing through the traditional route – for example, there are no costs of personal storage or insurance and no sign-up or monthly account fees,” says Sanders, CEO and founder of Revix.
Another advantage when using cryptocurrencies is that funds are immediately reflected in your Revix account should you decide to sell your Pax Gold tokens to rands or bitcoin. There is no two-day settlement delay when selling as you have with stocks on the JSE.
Anyone who owns Paxos Gold owns the underlying gold which is held under the custody of US-based Paxos, a New York Trust Company.
This means the value of Pax Gold tokens tracks with the real-time market price of gold.
Pax Gold can be purchased on the Revix platform using rands or other cryptocurrencies like bitcoin. The gold-backed PAXG token is the only fully regulated gold token that you can redeem for London Bullion Market Association accredited Good Delivery gold bullion bars. Unlike traditional gold, which is only available to settle trades during banking business hours, Pax Gold can be traded anywhere, anytime.
Buying Pax Gold means you don’t have to worry about the custodianship and safety of their holdings, as all gold is kept safe in secure, accredited precious metal vaults in London, as well as being registered on the world’s second-largest blockchain network – Ethereum. The Paxos Trust operates within the jurisdiction of the New York Department of Financial Services.
Pax Gold can be purchased through the Revix platform after signing up for a free account. To fund your Revix account, payments can be made from your bank account via EFT or you can deposit any of the major cryptocurrencies. There are no monthly account fees, with a cost of only 1% for each of the buy and sell legs of a transaction.
The combined cryptocurrency market is worth $285 billion, which represents a very small percentage of the overall investment universe – less than 0.02%. The figure would likely be higher but for the lack of regulations governing the crypto sphere, though that is changing. Proposed amendments to the Financial Intelligence Centre Act (Fica) rope cryptocurrencies and digital assets within the ambit of the act.
“We fully support the regulation of the industry,” says Sanders. “Everyday investors want to have the comfort of knowing that the sector is being monitored and policed by a regulatory body, just as they do equities and other types of investment. I think we will see a big increase in demand for cryptocurrencies as we see more regulatory oversight, as this will start to bring about a much-needed change of perception of the industry, like what happened with the internet in the 1990s, and it will also allow fund managers to extend their investment mandates to crypto assets.”
Pax Gold is protected against bankruptcy as it is issued by a state-chartered trust company. This means customer assets are kept separately from the company’s assets.
With low investment minimums, anyone can own a fraction of an LBMA-accredited London Good Delivery gold bar when signing up with Revix.
Brought to you by Revix.
Revix brings simplicity, trust and great customer service to investing. Its easy to use online platform enables anyone to securely own the world’s top investments in just a few clicks.
Revix guides new clients through the sign-up process, to their first deposit and first investment. Once set up, most customers manage their own portfolio, but can access support from the Revix team at any time.
For more information, visit Revix.
This article is intended for informational purposes only. The views expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor the solicitation of an offer, to buy or sell any of the assets or securities mentioned herein. You should not invest more than you can afford to lose, and before investing please take into consideration your level of experience and investment objectives, and seek independent financial advice if necessary.