Increasingly Convinced to Buy and Hold PAXG

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550 words

Over the past few days, I have been thinking about PAXG as a likely place to keep my savings. There are advantages to PAXG that BTC and other cryptos don't offer, which ultimately give a little peace of mind.

The price of gold is unlikely to go down to zero. In its thousands of years of history, gold has had varying degrees of value thanks to those in charge monkeying with the monetary system. However, the monetary system rather than gold has always dropped in value. Gold is either worth more, or a little less. Yet, it is never worth zero. The same cannot be said about crypto. One phrase that gets thrown around is that BTC is worth millions or it is worth zero. Gold can be worth millions; but, definitely not zero.

Because of this stability in value, gold promises to be a good hedge against inflation as gold bugs tend to tell you time and time again. PAXG is valued at the spot price of gold, which can vary. However, over the long-term, especially with inflation-based economies, the price of gold always goes up.

Of particular interest to me is that PAXG allows us to buy fractional parts of gold rather than whole ounces at a time. And, because PAXG is tokenized gold, I can deposit it at various places to earn interest. Imagine earning interest on gold.

Of course, there are some disadvantages to PAXG. One is that you are putting a lot of faith in Paxos to be honest. They are regulated in New York and claim to have regular audits. There is some peace of mind with that. But, you never really know for certain.

Another disadvantage is that the market for PAXG is a bit thin. So, liquidation can be problematic if you build up a sizable position in PAXG. On other hand, Paxos claims you can redeem your holdings for physical gold. This is something that I can't test at this time. However, this is not the same as liquidating. To counter that, there are some places where you can take out a loan using PAXG as collateral, like Unfortunately this is not available in the United States.

Another disadvantage is that gold generally will retain its value. However, it will never shoot to the moon like BTC. Yes, it will protect against inflation and earn some interest. However, gold and PAXG will never grown. The only thing that grows is the nominal value; that is, the arbitrary dollar value assigned to it. In this respect, PAXG will act like a golden anchor to my crypto portfolio in a way that stablecoins are unable to do.

Stablecoins may be backed by dollars. However, dollars lose value to inflation. Whatever interest rate you earn on your stablecoin, you can deduct the inflation rate to give you your real return. Then throw in taxes. Whereas gold will rise in price as inflation wreaks its destruction on the economy.

PAXG is not a perfect crypto. Gold is not a perfect store of value. However, PAXG can borrow the millennia of proven history of gold. For this reason, I intend to have a percentage of my crypto holdings in PAXG.

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