When we say “buy gold”, we don’t necessarily mean buying a physical bar of metal and putting it in the safe. Today, there are many ways to profit from the precious metals’ price movement: buying gold-backed crypto stablecoins, gold or silver exchange-traded funds (ETFs), buying physical coins and bars, and others.
Your choice will depend on your goals: whether you have a long-term or a short-term investment strategy, how much time you’re ready to spend and effort to make, and whether you want to enjoy a shining piece of matter in your hands. In this article, we will run through the ways to buy gold with Bitcoin, how to buy silver with Bitcoin, and how to choose between the wide variety of investment options.
In what ways do I buy precious metals with Bitcoin?
What goal do you want to achieve when you buy gold with Bitcoin? Here’s a shortlist of the possible purposes:
- Preserving funds in times of economic uncertainty. When economic crises occur, the US dollar loses in price, while precious metals soar.
- Profiting from the metal price movements. This can work long and short term — you can buy and sell metals according to your trading strategy, or just invest and withdraw profits much later.
- Enjoying the golden coins, bars, and other unique collector’s pieces.
The thing is that if you want to profit from metal’s price movement, you don’t have to buy physical gold with Bitcoin or other currency. Buying real metal may be a little cumbersome: you have to deal with shipping, storage, and it’s less liquid than digital assets: it’s hard to quickly sell it.
Here are two ways to profit from gold or silver without actually buying it:
1. Buy gold-backed crypto assets
Two of the most liquid digital currencies of this kind are Tether Gold (XAUT) and PAX Gold (PAXG). These are stablecoins whose value is always equal to the price of a troy ounce of gold. Each of the currencies is backed by the real gold bars (1 troy ounce for 1 XAUT or 1 PAXG) securely stored in the vaults.
Tether Gold token exists on Ethereum and TRON blockchain. XAUT is the “younger brother” of Tether — the most prominent trusted stablecoin backed by the US dollar which is ranking #3 among all other cryptocurrencies by market cap.
PAXG is another liquid gold-backed asset. It ranks #130 among all cryptos with a quite big market cap of $100M. Its daily trading volume exceeds that of Tether Gold and has shown a big rise in January 2021.
Owning XAUT and PAXG doesn’t mean owning gold, but if you buy them when gold’s price is $1,800, you can take nice profits when the gold value is, say, $2,300. These stablecoins are much more liquid than physical gold — you can buy or sell them at any moment on Binance, Kraken, and other crypto exchanges.
2. Buy gold or silver ETFs
Exchange-traded funds are the gold- or silver-backed assets that people trade on the exchanges. You can buy a share of these assets and profit whenever a metal’s price goes up. Just as with stablecoins, these assets are backed by real securely stored gold and silver bars.
Think of ETFs as stocks. This means that without owning physical metals, you can profit from their price movement. When you redeem an ETF, you receive not the precious metal, but its cash equivalent. ETFs are easy to use, and you can buy or sell them at any time. No delivery and storage expenses are needed.
So, you’ve chosen to buy gold or buy silver with crypto or their digital equivalent — stablecoins or ETFs. Now, it’s time to decide on how much you want to invest. Please don’t forget to stick to the golden investment rule — don’t invest more than you can afford to lose! Experts recommend putting 10–25% of your investment portfolio into precious metals; however, this can vary widely and may not apply to your own investment purposes.
If you decided to buy physical gold or silver, below are some tips on how to choose what exactly to buy and where.
How to choose what to buy?
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