Gold Investing with Universal Gold (UPXAU)

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Contributor, Benzinga
December 1, 2020

Gold has traditionally been an important part of most successful long-term investment plans. Gold tends to increase in value when the economy is in a decline, which makes it an effective hedge. But investing in gold traditionally comes with a number of drawbacks, ranging from storage fees to high minimum investments.

Now there’s a way for everyday investors to add gold investments to their portfolio — using the power of cryptocurrency. Universal Gold (UPXAU) is an ERC-20 gold token backed by pure physical gold. Investing in UPXAU can make it easier to add gold to your investment portfolio. Our guide to UPXAU will help you learn more and get started on the road to investing. 

What is Universal Gold (UPXAU)?

Universal Gold (abbreviated to “UPXAU”) is an ERC-20 token that allows investors to put their money into gold while overcoming some of the most common hurdles that make investing in metals impractical. You can invest as little as $1 in the UPXAU token and invest directly using 27 national currencies and even cryptocurrencies when you invest through the Uphold platform.

Each UPXAU token is backed by 1 troy ounce of physical gold, which is equal to about 31.10348 grams. Your UPXAU token is backed by pure physical gold, stored in a climate-controlled Perth Mint in Western Australia.

The Perth Mint is the trading name of the Gold Corporation, an entity owned and guaranteed by the government of Western Australia. This means that you won’t need to worry about your gold being stolen or destroyed after you invest. The underlying gold is physically deliverable and government-guaranteed, which also eliminates the need for an additional insurance policy to protect your investment.

When you invest in gold through UPXAU, you purchase as many or as few UPXAU tokens as you’d like. This makes it easier to invest in gold, as you can begin investing with as little as $1 in your account. The UPXAU token is collateralized on a 1:1 basis by an Infinigold GoldPass Certificate, which uses the Ethereum Network to validate digital transactions.

Though there are many ways to invest in gold, the UPXAU token uses the power of blockchain technology to open investing to consumers while removing many of the traditional drawbacks and risks that come with physical gold investment.

UPXAU Key Features

The UPXAU token offers a number of benefits over traditional gold investment thanks to its unique features:

  • Zero custody fees for storage: Traditionally gold costs around 0.4% to store each month. By contrast, storing the UPXAU token is identical to custody of other cryptos. You can use an ERC-20 private wallet or a physical cold storage device. The latter makes it easier to track your tokens and adds a layer of security to your investments.
  • Instant liquidity: You can trade 24/7 and instantly convert your gold into 27 national currencies.
  • More accessible and affordable: You can invest as little as $1 into gold and there is no maximum investment.

Universal Gold Market Comparison

From gold stocks to digital assets, there are many ways to invest in precious metals. Let’s take a look at how UPXAU compares with other popular gold vehicles.  

FeatureUPXAUCME Futures (CME)SPDR Gold Shares (GLD)Ishares Gold Trust (IAU)PAX Gold (PAXG)Digix (DGX)
24/7 TradingYesNoNoNoYesYes
Guarantee from an underlying government assetYesNoNoNoNoNo
On-chain feesNoNoNoNoNo0.13%
Redeemable for physical goldYesYesYesNoYesYes
Management fees0%0.12% storage plus clearing fees0.12% storage plus clearing fees0.25%0%0.60%

Advantages of Gold Investments

Investing in gold can benefit your portfolio in several ways. The advantages include:

  • Hedge against inflation. Gold has traditionally been used as a hedge against inflation. During periods of currency devaluation, gold tends to hold its value better than other assets like stocks and exchange-traded funds (ETFs). During periods of inflation, gold can rapidly increase in value.
  • Gold prices rise when the wider markets fall. You can generally count on gold to rise in value when general markets are in a downturn. Gold holds its value better than other assets because it has intrinsic “all-time” value and is in limited supply.
  • You won’t need to pay taxes until you sell. When you invest in gold, you won’t need to pay capital gains taxes until you sell your lot. Gold also doesn’t produce dividends, which means you won’t need to worry about calculating taxes on your income throughout the year. 

Risks of Investing in UPXAU

No gold investment vehicle is perfect. Risks include:

  • Credit exposure: Securely storing gold typically involves setting up segregated accounts covered by insurance. This may increase the “carry costs” of holding gold, decreasing your long-term returns. UPXAU greatly limits credit exposure by storing its underlying asset in the Perth Mint, which offers the world’s only government-guaranteed metals storage programs.
  • Opportunity cost: Physical gold investments such as UPXAU don’t produce income through dividends. While this can make taxes simpler, it also means that gold isn’t suitable for investors who are only interested in producing a passive stream of income. 

Invest in Gold With UPXAU

If you’re interested in making an investment in gold, we recommend opening a trading account with Uphold today. Getting started takes less than 2 minutes and you can begin investing and learning more about your investment options in a single afternoon.