"But that takes time, and while you are waiting the price of gold may move against you. Or, you can do what jewelry companies actually do, which is to constantly borrow a supply of physical gold on the promise that what is owed back is that same amount of gold, not its dollar value. The cost of carrying this borrowed gold are the interest payments on the loan."
""Tokenized gold" has been around for a while, of course. The concept is simple: You buy a crypto token representing an amount of gold, the platform you buy it from promises to back that token with gold assets on a 1:1 basis, and now you own the crypto version of gold. (It is similar to the way a gold exchange-traded fund owns gold but offers investors shares in the fund on the basis that each share is worth a certain amount of the underlying gold.)"
Gold surged 85.56% in the past 12 months to above $5,100 on the Comex continuous contract. Jewelry makers facing repeated purchases often borrow physical gold repayable in metal, paying interest to carry the loan and reducing exposure to dollar-price volatility. Crypto firms offer tokenized gold: crypto tokens backed 1:1 by physical gold that represent ownership and trade like digital assets. The largest tokenized gold cryptocurrencies are Tether's XAUT ($2.6 billion) and Paxos's PAXG ($2 billion), with a combined market capitalization of $4.6 billion. Token values fall if gold prices decline.
Read at Fortune
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