Although tokens seek to democratize access to metal, their value can fluctuate rapidly, sometimes matching the volatility of cryptocurrencies like Bitcoin during crises, instead of offering the absolute stability of the physical asset.
Impact of Volatility on Precious Metal Tokens:
Direct correlation: Gold tokens (like PAXG) or silver move in unison with the spot price, quickly reflecting sharp corrections or sudden increases.
High volatility: Although backed, these assets can exhibit high volatility, often classified between 8% and 15%, especially during exceptional events.
Safe haven risk: Unlike physical metal, gold-backed tokens did not always show safe "safe haven" asset behavior during crises, displaying volatility similar to that of the crypto market during the pandemic.
Specific token risks: In addition to the price volatility of the metal, these digital assets face risks from smart contracts, security in the blockchain, and lack of clear regulation.
Silver vs. Gold: Silver is often more volatile than gold, which translates to its tokens, offering greater potential returns but also greater declines, driven by its industrial demand. $BTC
