The Case for Tokenised Gold

17 Feb 2026 01:31 PM By Stormrake

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It has been in our Stormrake Spotlight for nearly six months now. Pax Gold, PAXG, is a tokenised version of the beloved precious metal. A digital asset backed 100% by physical gold reserves secured in Brinks vaults in London. It tracks the spot gold price on a near 1:1 basis, but with the added benefit of being liquid and available to trade 24/7.

So why would you invest in tokenised gold instead of a gold ETF or physical bullion?

First, it is worth revisiting why investors turn to gold in the first place.

  1. Price exposure. Gold has long been viewed as a safe haven, attracting capital during periods of risk off sentiment and macro uncertainty.
  2. Sovereignty. The ability to hold wealth outside the traditional financial system, without reliance on a centralised third party.
  3. A hedge against inflation and fiat debasement.

If an investor is purely seeking price exposure, they will typically buy a gold ETF that tracks the spot price. If they are focused on sovereignty or inflation protection through direct ownership, they are more likely to purchase physical bullion.

Both routes have clear advantages and trade offs.

An ETF provides convenient price exposure, but it comes with ongoing management fees and no direct control over the underlying gold, as custody is handled by a third party.

Physical bullion removes counterparty exposure and gives full control, yet it introduces other frictions. Gold is heavy, cumbersome to store, and difficult to move in size, particularly across borders. Investors face wider spreads from bullion dealers, potential storage and insurance costs unless self custody is chosen, and practical challenges when transporting or securing larger holdings. Liquidity can also be less efficient when it comes time to sell, especially in stressed conditions.

Both ETFs and physical markets operate within traditional trading hours, limiting flexibility during weekends or periods of heightened volatility.

That said, physical gold remains an excellent way to protect purchasing power and hedge against inflation. The key is understanding why you hold it and how it fits within your broader portfolio structure.

So what does PAXG offer?

  1. Direct gold price exposure

  2. No physical storage or insurance complications

  3. Self sovereign custody through ERC 20 wallets

  4. Borderless transferability

  5. Divisible into small denominations

  6. Global liquidity across exchanges, over the counter desks and DeFi venues

  7. 24/7 trading, including weekends and macro events

  8. No traditional bullion dealer spreads

  9. On chain transparency of token supply

These features position PAXG as a hybrid solution, combining the price exposure of an ETF with the sovereignty of physical bullion, while removing many of the structural inefficiencies of both.

As adoption continues to grow, the value proposition becomes increasingly clear. We have produced a number of reports outlining how PAXG can complement a Bitcoin allocation, as the two assets tend to perform in opposing market environments. For investors seeking to capture upside across varying conditions or reduce overall portfolio volatility, PAXG can serve as a strategic counterbalance. Speak to your Stormrake broker to discuss allocation strategies and how it can integrate alongside your Bitcoin exposure.

Stormrake Spotlight: Pax Gold (PAXG) ($4,998)

PAXG saw a relatively muted session, slipping just 0.5% from yesterday’s open. Price continues to consolidate above the key 21 day exponential moving average, a level that should act as dynamic support if bulls remain in control. A sustained hold above this region keeps the structure constructive. A breakdown below would likely signal further sideways compression rather than immediate trend continuation.

BTC/USD Key Levels and Price Action:

Bitcoin revisited $70,000 overnight but once again failed to secure a breakout. Price was quickly rejected and has since flipped red on the day. The repeated inability to close above $70,000 reinforces the significance of that resistance zone. Bears are clearly defending the level aggressively, while bulls have yet to generate enough momentum to absorb the supply overhead.

BTC Total ETF Flows for 16 Feb: (data not available at the time of writing)

(ETF flow data is sourced from https://farside.co.uk/btc/ and reflects figures at the time of writing.)
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*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis and James Ryan

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.
Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.
 

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