Did you know that you don’t need to have a safe full of gold coins to be a gold investor? It’s true! Cryptocurrency project PAX Gold provides investors with an easier, more affordable and more convenient way to invest in gold. Learn more about how to buy PAX Gold and invest in the gold market with our guide for beginners.
What is PAX Gold?
PAX Gold is a commodity-based cryptocurrency and stablecoin backed by gold. Each one of PAX’s tokens, PAXG, is backed by 1 fine troy ounce of gold. Unlike most cryptocurrencies, Paxos acts as both a trust company and a gold custodian, with regulation from the New York State Department of Financial Services.
If you own PAXG, you have the right to ownership of gold held under the Paxos Trust Company. You can redeem your PAX Gold tokens for gold bullion bars held under custodianship of Paxos or through a network of physical gold retailers located throughout the United States and Canada if you own a small amount of PAXG.
Brief History of PAX Gold
PAX Gold was introduced in September 2019 to provide investors with a more convenient and affordable way to invest in gold without the risks and expenses that come with owning and storing physical gold. Since its introduction, the PAXG token has seen a significant rise in both price and total market capitalization as an influx of new investors enter the gold market. PAX Gold currently forms the 337th largest crypto project with a total market cap of about $104.6 million and a daily token trading volume of about $10 million.
How to Buy PAX Gold
- Open an online account.
Before you can buy or sell PAXG, you need to open an account with a cryptocurrency broker that supports PAX Gold trading. After opening your account, you can place buy and sell orders through your broker’s trading platform. Your broker will then carry out these orders and deposit your coins and tokens into your brokerage trading account, typically in exchange for a small commission or fee.
The broker that you choose will determine what you pay in fees and the assets that you can invest in, so it’s worth the time to compare a few brokerage options before you open an account.
- Buy a wallet (optional).
A cryptocurrency wallet involves a device or software program that provides you with a private set of keys that you can use to store your coin and token investments. If you don’t plan to actively trade your PAXG, it’s usually a good idea to keep your investment out of your brokerage account and in a private wallet. Private wallets keep your investments safer in the event that your brokerage is targeted in a hack.
You can use a range of both hardware wallets and software wallets to store PAXG, as the token runs on the Ethereum network.
- Make your purchase.
When you decide how you want to store your tokens and where you want to trade, you can place your first buy order to invest in PAXG. Though the specific process that you’ll go through will vary depending on your broker, learn the basic steps to placing a crypto buy order.
• Step 1: Fund your brokerage account. Most cryptocurrency brokers allow you to fund your account with existing crypto or a bank transfer, but select brokers also allow you to buy crypto using a credit card.
• Step 2: Search for PAX Gold on your brokerage account. PAX Gold trades under the ticker “PAXG,” which represents its token.
• Step 3: Choose your order type and quantity. Just like when trading stocks, you can tap into multiple types of orders that you can use to buy and sell crypto. Select your order type and calculate the amount of PAXG that you want to buy. Don’t worry if you can’t afford to buy an entire PAXG token. Your broker will allow you to invest in a fraction of a token according to the amount of money you have in your account.
• Step 4: Submit your order. From here, your broker will fill your order on your behalf and deposit your tokens into your account.
Best Crypto Exchanges
If you aren’t sure where to start your search, consider a few of our top choices below.
Best Crypto Wallets
Now that you know exactly how to buy PAXG, you need to know how to store it safely. Explore a few of our favorite ERC-20 hardware and software wallet solutions below.
Best Hardware Wallet: Ledger Nano S
The original cryptocurrency hardware wallet, the Ledger Nano S keeps your tokens safe using offline cold storage.
The Ledger Nano S provides you with an all-in-one solution for your token and coin storage, with support for both independent blockchain projects (like Bitcoin and Litecoin) as well as ERC-20 tokens (like PAX Gold and Chainlink).
The Ledger Nano S also provides a significantly more affordable price point when compared to other hardware wallet options at a price of less than $60.
Best Software Wallet: Coinbase Wallet
Searching for a simple and free way to store your cryptocurrency investments off your exchange of choice? Look no further than the Coinbase Wallet. The Coinbase Wallet is a software wallet available as a free download from both Apple and Android devices and supports all ERC-20 tokens.
The Coinbase Wallet makes it easy to open your account and transfer funds to other users by authorizing transfers by username instead of wallet address. The Coinbase Wallet also supports a full collection of ERC721 collectibles as well as decentralized application usage.
Looking to predict how the price of PAXG will change in the future? Start your search by looking at trends in gold prices. Because PAXG is a stablecoin linked to gold, the price of gold heavily influences how PAXG prices will move.
Trade, Sell or Convert Your PAXG
When you see your PAXG in your account, you need to decide how you want to earn a return on your investment. You usually have 3 options and the best choice will vary depending on the long-term price movements of PAXG.
- Trading: When you trade PAXG, you strategically exchange your PAXG for another cryptocurrency or fiat currency when the price of PAXG is high. When the price of PAXG falls, most traders convert their base currency back to PAXG. You can use this method to accumulate more PAXG, or you can sell your profits for fiat currency.
- Selling: If you believe that the price of PAXG will rise in the long term, you can store your tokens out of your brokerage account in a secure private wallet. When the price of the token reaches your price target, you can transfer the tokens back to your exchange wallet and sell them for fiat currency.
- Converting: Select exchanges (like Uniswap and Changelly) allows users to instantly convert one ERC-20 token for another. If you search for a token that isn’t available on standard brokerages, you may want to consider using PAXG as a medium to swap it on one of these networks.
Current Crypto Prices
Because PAX Gold ties directly to the price of gold, the price of the token will shift as the price of gold does. Some of the factors that can influence the price of gold may include:
- Federal policies and interest rates
- Supply and demand
- The overall state of the economy (gold prices tend to rise when traditional assets suffer)
- Currency movements
- Economic uncertainty
- Investor confidence
The value of your PAXG may also influence the movements of the general cryptocurrency market. Track today’s top market movers using the chart below.
Is PAX Gold a Good Investment?
If you’ve been considering adding precious metals to your investing portfolio but you don’t want to undergo the risks that come with storing gold on your property, an investment in PAXG can provide a more convenient way to invest. As an alternative asset, gold has long been used as a hedge against inflation. PAXG allows you to digitally store your protective investments. You might also want to consider investing in a gold ETF to add an extra layer of exposure to the gold market.
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About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.