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Tokenized Gold vs. Physical Gold: Pros and Cons with a Focus on Clinq.Gold

Updated Nov 29 2023
7 Min
mr slava
Nick Patel
CEO & Founder at Clinq.Gold, Bank of Bullion | Keynote Speaker

Gold has attracted people as a symbol of wealth, status, and stability since ancient times. This precious metal is scarce and highly valuable, so its price is relatively stable even today. Thus, it’s not surprising that gold assets still attract conservative individual and institutional investors as a long-term investment option with good prospects and low volatility risks. 

Investors of all levels have had little access to direct gold investments throughout the 20th century and even at the beginning of the 21st century, especially in the times of gold standard use by states. However, times are changing, and investors have received access to gold investment through gold ETF purchases, acquisition of gold-mining companies’ shares, and other variants of claiming gold ownership. 

An even more innovative way to own gold directly is tokenized gold – also referred to as digital gold currency (DGC) – a distinct type of digital asset pegged to the price of physical gold. This option is much more affordable and flexible for investors, as it doesn’t involve broker’s fees and doesn’t require gold bullion storage for your belongings. Here is a more detailed breakdown of the pros and cons of owning physical and digital gold assets you should consider when planning your investments. 

Physical Gold as an Investment: Pros and Cons 

The advantage of having physical gold investments is the feeling of self-reassurance you may feel by being able to touch your belongings and double-check their intactness. Physical gold can be purchased at any bank selling bullion gold, and there’s something uniquely gratifying in the contemplation of your yellow gold bullion in a deposit box. 

Physical gold can be a universal asset of value in all corners of the globe; it is universally valued in all countries and can be exchanged for any currency. That’s why some conservative, old-school investors still give preference to physical gold ownership instead of less clear, innovative digital analogs. 

Still, owning physical gold comes with some cons you should also keep in mind: 

  • Physical gold can hardly be tracked if it’s stolen from your storage. 
  • Bullion gold acquisition involves paying fees to a broker or bank from which you’re getting that gold. The premium may be too high, making such investments unreasonable. 
  • Selling physical gold or exchanging it for other assets may be slow and problematic in any market. 

Tokenized Gold Use for Modern Investments 

With the cons we’ve just discussed above, investors are increasingly considering digital gold as a more flexible investment with many of the physical gold characteristics. Gold-backed tokens have a variety of benefits for users and investors: 

  • Low entry barrier. Not many people have enough spare money to buy a gold bar. With digital gold, you may buy as little as 0.01 gram of gold – the tokens are pegged to tiny fractions of gold. Therefore, users can start their gold investments with as little as $10 on their balances. 
  • Liquidity. While selling a physical gold bar can turn into a real hassle, selling and buying tokenized gold takes a couple of seconds. Gold-backed tokens are supported by many blockchain-powered resources, exchanges, and Web3 projects, making their acquisition and sale easy and frictionless. 
  • Low commissions. Cryptocurrency deals come with low fees charged by exchanges hosting those deals. Thus, you won’t need to pay too much extra for your gold transactions. 
  • Security. Most digital gold issuers are credible, transparent Web3 projects with a solid standing in the industry. That’s why users holding gold-backed tokens will experience no complexities with gold redemption. The majority of such projects secure this option for asset holders and can deliver the physical equivalent of owned digital gold to users on demand. 

It’s also vital to mention the cons of using digital gold as your preferred gold investment mode. First, blockchain technology is too young to be ultimately secure for investors. Therefore, many projects experience hacks and exploits, with users having their assets stolen. Second, blockchain is a tech-savvy niche with an extensive learning curve. Many users are still confused about how things work on blockchain, so they’re reluctant to invest their hard-earned cash in digital assets. As soon as blockchain overcomes these hurdles, we can expect more massive adoption of tokenized gold among investors. 

Clinq.Gold: A Tokenized Gold Project with Promising Potential

With so many gains of tokenized gold discussed above, you may naturally start considering DGC as your preferred investment option. We recommend taking a closer look at the native token of Clinq.Gold – a CGT token pegged to bullion gold. CGT tokens are enjoying greater adoption and increasing circulation volumes, so it’s definitely an emerging trend worth considering seriously. 

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