What Are Precious Metal Tokens? How to Trade Gold, Silver, and Platinum with Crypto and Use Them on WEEX
With gold prices hovering near all-time highs, the option to "trade gold on a cryptocurrency exchange" is gaining significant attention.
Precious metal tokens are digital tokens issued with physical gold, silver, or platinum as underlying assets. Unlike purchasing gold bullion or gold ETFs, if you have a cryptocurrency exchange account, you can access precious metal price fluctuations 24/7, in small amounts, and using USDT.
In this article, we will clearly explain the mechanics of precious metal tokens, their differences from gold ETFs, their benefits and risks, and the assets you can start trading immediately on WEEX.
What Are Precious Metal Tokens?
Precious metal tokens are digital tokens issued on the blockchain that are pegged 1:1 to physical precious metals.
The mechanism is simple. A regulated issuer holds actual precious metals (gold, silver, platinum, etc.) in a certified vault as custody and issues an equivalent amount of tokens on the blockchain as backing. If 1 troy ounce (approx. 31.1g) of gold is deposited in a vault, 1 PAXG is issued.
Because the token price moves in tandem with the market price of the underlying precious metal, if gold rises, the token rises, and if it falls, the token falls.
Comparison with Gold Bullion and Gold ETFs
| Item | Gold Bullion (Physical) | Gold ETF | Precious Metal Token |
| Trading Hours | Store hours only | Market hours only | 24/7/365 |
| Minimum Purchase | From tens of thousands of yen (e.g., 1g units) | Per share | Possible from small/fractional amounts |
| Settlement Currency | JPY, USD, etc. | JPY, USD, etc. | Stablecoins like USDT |
| Storage Fees | Applicable (vault/insurance) | Trust fees apply | Generally unnecessary |
| Physical Exchange | Yes | No | Possible with conditions |
| DeFi Utilization | No | No | Can be used for collateral/lending |
Types of Precious Metal Tokens Available on WEEX
WEEX allows you to trade gold, silver, platinum, and palladium precious metal tokens in both spot and futures markets.
Gold Tokens
WEEX handles two types of gold tokens.
PAXG (Paxos Gold): Issued by the US-based Paxos Trust Company. It is backed 1:1 by 1 troy ounce of gold, stored in a certified vault (Brinks) in London. It operates under strict regulation by the New York State Department of Financial Services (NYDFS) and undergoes monthly third-party audits. Each token is assigned a serial number of a gold bar, allowing holders to verify the backing gold on-chain.
XAUT (Tether Gold): Issued by Tether Limited, known for USDT. It is also backed 1:1 by 1 troy ounce of gold and stored in a Swiss vault. It supports both ERC-20 and TRC-20 (Tron) chains, making it highly versatile for use in DeFi protocols.
Silver Tokens
XAG: A token linked to physical silver. Like gold, it is influenced by geopolitical risks and industrial demand (semiconductors, solar panels, etc.). Because it is more volatile than gold, it offers many trading opportunities during periods of significant price movement. Additionally, when the "Gold-Silver Ratio" (an indicator showing how many ounces of silver are equivalent to 1 ounce of gold) is at a historical high, many traders target XAG, viewing silver as undervalued relative to gold.
Platinum and Palladium Tokens
XPT (Platinum): Linked to a rare precious metal used in automotive catalysts, jewelry, etc. It often experiences unique price movements, with the price difference from gold (platinum discount) frequently becoming a topic of discussion.
XPD (Palladium): A precious metal essential for automotive exhaust purification catalysts. Due to its geopolitical characteristic where approximately 40% of supply comes from Russia, it is a token prone to sharp price spikes and drops. Futures only.
| Ticker | Underlying Asset | Issuer | Spot | Futures |
| PAXG | Gold (1 troy oz) | Paxos Trust (US, NYDFS regulated) | ○ | ○ (400x, zero fees) |
| XAUT | Gold (1 troy oz) | Tether Limited (Hong Kong) | ○ | ○ (400x, zero fees) |
| XAG | Silver (1 troy oz) | Market-linked | ○ | ○ (400x, zero fees) |
| XPT | Platinum (1 troy oz) | Market-linked | ○ | ○ |
| XPD | Palladium (1 troy oz) | Market-linked | — | ○ |
Benefits of Precious Metal Tokens
24/7 Access to "Safe Haven" Gold
Funds tend to flow into gold during risk-off periods, such as rising geopolitical risks, stock market crashes, or inflation concerns. With precious metal tokens, you can respond immediately to major news over the weekend. The ability to take or exit a position without waiting for the market to open on Monday is a strength not found in traditional gold investment.
No Vault or Storage Fees
When holding gold bullion, there are ongoing costs for secure storage and insurance. Since the issuer manages precious metal tokens in a vault, no storage costs are incurred by the holder (though fees for token issuance/redemption may apply separately).
Can Be Used for Diversification and Inflation Hedging
In an inflationary environment where the value of fiat currency diminishes, holding PAXG in addition to BTC serves as a "digital defense" to increase portfolio stability. By adding an asset class that moves differently from BTC, ETH, etc., you can diversify the risk of your entire crypto portfolio. Traders holding large amounts of BTC can also adopt a hedging strategy by holding some gold tokens in preparation for sharp market drops.
Risks and Precautions of Precious Metal Tokens
Custody Risk
The value of precious metal tokens depends on the issuer properly maintaining the physical precious metals. If the issuer faces financial problems, regulatory shutdowns, or issues with the custodial institution, the value of the tokens could be affected. PAXG is regulated by the NYDFS and undergoes monthly audits, offering relatively high reliability in terms of transparency.
Price Volatility Risk of Precious Metal Markets
Because precious metal tokens are linked to the market prices of gold, silver, platinum, etc., their value will decrease if precious metal prices fall. It is important to note that silver and palladium, in particular, are more volatile than gold and are prone to sharp price movements.
Hurdles for Physical Exchange
While PAXG and XAUT can theoretically be exchanged for physical gold, the minimum exchange unit is very high, at 430 troy ounces (equivalent to approximately 14 million yen). Furthermore, since the pickup location is London (PAXG) or Switzerland (XAUT), physical exchange is not practical for the average investor in Japan.
Trading Precious Metal Tokens on WEEX
WEEX allows you to trade precious metal tokens in both spot and futures markets, allowing you to use them according to your objectives.
Spot Trading (GOLD(PAXG), GOLD(XAUT), SILVER(XAG), PLATINUM(XPT)): Suitable for those who want to hold gold, silver, or platinum for the medium to long term. As an alternative to traditional gold investment, you can participate from small amounts using USDT.
Futures Trading (XAUTUSDT, XAGUSDT, XPTUSDT, XPDUSDT, PAXGUSDT): You can take positions in both rising and falling gold prices. 400x leverage is available, allowing you to respond with long or short positions during gold price surges or corrections. Please ensure you set TP/SL (take profit/stop loss).
Conclusion
Precious metal tokens are a new investment tool connecting TradFi and crypto, allowing you to access gold, silver, and platinum price fluctuations 24/7, in small amounts, and without storage costs, provided you have a crypto exchange account and USDT.
With gold prices hovering near all-time highs, attention is growing on the option of incorporating precious metals into your portfolio as a hedge against inflation and geopolitical risks. On WEEX, you can trade gold (PAXG, XAUT), silver (XAG), platinum (XPT), and palladium (XPD) in both spot and futures markets.
FAQ
Q. Which should I choose, PAXG or XAUT?
Both are physically backed tokens pegged 1:1 to 1 troy ounce of gold. PAXG is regulated by the New York State Department of Financial Services (NYDFS) and undergoes monthly audits, making it suitable if you prioritize regulatory transparency. XAUT supports both ERC-20 and TRC-20 chains, expanding your options if you are considering use in DeFi. Both are supported for spot and futures trading on WEEX.
Q. Can I own actual gold by holding precious metal tokens?
While PAXG and XAUT can theoretically be exchanged for physical gold, the minimum exchange unit is very high, at 430 troy ounces (equivalent to approximately 14 million yen). For the average investor, it is realistic to treat them as "digital tokens linked to price."
Q. Can I respond to gold price drops with futures trading?
Yes, you can. WEEX futures trading allows for both long (buying) and short (selling) positions. You can respond to gold price corrections with short positions and to rising markets with long positions. 400x leverage is available, but please ensure you set TP/SL (take profit/stop loss) as part of your risk management.
Disclaimer
WEEX and its affiliates provide digital asset exchange services, including derivatives and margin trading, only to eligible users in legally permitted regions. This content is for general informational purposes only and does not constitute investment advice. Please consult a professional before trading. Cryptocurrency trading is highly risky, and you may lose all invested funds. By using WEEX services, you are deemed to have agreed to all relevant risks and terms of service. Please trade within your means and based on your own judgment. For details, please check the Terms of Service and Risk Disclosure.
