10 Aug 2020
Market cap of commodity-backed gold tokens surpasses $100 million
The last year, both Paxos and Tether have launched gold backed digital tokens.
PAX Gold was the first regulated gold token launching back in September 2019. Each token represents a fine troy ounce, held in a London vault. The Tether Gold token on the other hand, was launched this January, and represents the ownership of one troy fine ounce of physical gold, held in a Swiss vault.The Tether Gold market cap quickly surpassed the market cap of PAX Gold and has maintained its position as market leader ever since. Physical gold has been a popular trade amidst the global uncertainty since COVID-induced fiscal stimulus was introduced, and the gold price has soared from $1515 to above $2000 this year. The commodity-backed gold tokens have followed the spot price closely, but often with a small discount compared to its underlying. The strong returns in gold have led to increased demand for gold-backed tokens. The current market cap is at $139.1m, up 983% this year. The total Tether Gold supply is currently valued at $82.4 million, while the PAX Gold supply is valued at $56.7 million. The commodity-backed gold market is in its very infancy, and in May, Co-founder of CACHE, Brian Hankey, noted some discrepancies in the transparency data provided by PAX Gold and Tether Gold. This might explain the discount seen in the token prices compared to its underlying.