For centuries, gold, silver, platinum, and palladium have been trusted safe-haven assets, offering protection against inflation and economic uncertainty. However, traditional investment in precious metals comes with challenges such as high storage costs, limited liquidity, and accessibility barriers.

Tokenization is introducing a new paradigm, leveraging blockchain technology to create digital representations of physical metals. This innovation retains the intrinsic value and stability of precious metals while enhancing market efficiency, liquidity, and accessibility.

In this article, we explore how tokenization is transforming the precious metals market, the benefits and challenges involved, and real-world examples of tokenized gold, silver, and other metals.

Understanding Tokenization in Precious Metals

Tokenization refers to the process of representing rights to a real-world asset (RWA) through blockchain-based digital tokens. In the case of precious metals, each token represents a fractional or full ownership interest in a physical quantity of metal, such as a gram of gold or an ounce of silver.

Tokenized precious metals can take various forms:

• Full Asset-Backed Tokens: Each token corresponds to a specific amount of gold, silver, platinum, or palladium held in a vault.
• Fractional Ownership Tokens: Investors can own fractions of a large gold or silver reserve, increasing accessibility.‍
• Commodity-Linked Digital Securities: Some issuers tokenize derivatives or revenue-sharing agreements tied to metal production or sales.

Unlike traditional investment vehicles such as ETFs or futures, tokenized metals can provide direct ownership or economic exposure with real-time settlement, enhanced transparency, and reduced reliance on intermediaries.

How Precious Metal Tokenization Works

The process of tokenizing precious metals follows a structured approach similar to fund tokenization, ensuring security, transparency, and compliance.

1. Asset Selection and Custody

Precious metals such as gold, silver, platinum, or palladium are securely stored in regulated vaults by qualified custodians, trustees or licensed managers. This ensures the asset is immobilized and safe kept before its digital representation is created on the blockchain.

Issuers work with custodians to ensure transparency and proper asset documentation.

2. Legal Structuring and Compliance

• A legal framework is established to define token ownership rights and ensure that the digital tokens represent a valid claim to the underlying asset.
• Compliance with jurisdictional regulations is ensured to maintain investor confidence.

3. Token Creation

• The representation of the ownership of the precious metal is converted into digital tokens (which we often call “RWA tokens”) on a chosen blockchain and launched on either the issuer’s website or via a licensed asset tokenization platform.

4. Primary Offering and Investor Access

• A primary offering is the initial sale of a new tokenized precious metal, such as tokenized gold or silver, by a company to an investor class. This process allows a company to raise capital directly from investors. During a primary offering, the company works with underwriters to set the price and sell the securities.
• The process of raising capital through the sale of tokenized precious metal on a regulated tokenization platform like InvestaX is called a Security Token Offering (STO). 

5. Secondary Market Trading and Liquidity

Following the initial offering, tokenized precious metals may be traded on secondary markets through various channels, such as:

• Peer to peer trades on Licensed RWA broker-dealers platforms such as InvestaX
• Licensed RWA exchanges such as InvestaX’s IX Exchange
• Decentralized exchanges (DEX) like IX Swap's Automated Market Maker (AMM) DEX

6. Redemption & Liquidity Management

Some tokenized metals allow holders to redeem tokens for physical gold or silver, while others provide cash settlements based on the underlying commodity's market price.

Types of Precious Metals That Can Be Tokenized

Several precious metals are well-suited for tokenization, with gold leading the way. Below, we explore each metal's investment potential, real-world tokenization trends, and the benefits of tokenization.

1. Gold (Tokenized Gold)

Gold remains the primary asset in the tokenized precious metals market, with over $1 billion in tokenized gold assets currently in circulation. Tokenized gold combines the stability of physical gold with the efficiency of blockchain technology, making it a popular asset among institutional and retail investors.

Why Tokenize Gold?

• Hedge Against Inflation – Gold has historically preserved value during economic downturns.
• Store of Value – Acts as a reliable wealth-preservation asset.
• Easier Trading & Redemption – Unlike physical gold, tokenized gold is easier to buy, trade, and redeem.

Real-World Examples of Tokenized Gold

• Paxos Gold (PAXG): Pax Gold has been the largest tokenized commodity project with a market cap of $582M as of February 2025. According to the issuer, each Pax Gold (PAXG) token is backed by one fine troy ounce of gold, stored in LBMA vaults in London. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company.
• Matrixdock’s XAUm: In 2024, Matrixdock introduced tokenized gold, XAUm, launched on BNB Chain and Ethereum. According to the issuer, XAUm is fully backed by 99.99% purity gold, offering investors a digital asset tied to London Bullion Market Association (LBMA) accredited gold. The gold reserves backing XAUm are stored in high-security vaults in Singapore and Hong Kong.‍
• WisdomTree Gold Token (WTGOLD): WTGOLD was introduced to investors in May 2024 and boasts a market cap of $1.03M as of February 2025, becoming the fifth-largest tokenized gold product. Each WisdomTree Gold Token is a tokenized means of owning gold.

2. Silver (Tokenized Silver)

Silver is an industrial and investment metal, widely used in electronics, solar panels, and medical applications. Tokenization of silver is gaining momentum as investors seek alternative stores of value.

Why Tokenize Silver?

• Fractionalized Ownership – Investors can own smaller portions of silver without needing physical storage.
• Industrial & Investment Appeal – Silver is both a commodity and an investment, making it attractive to diversified portfolios.

Real-World Examples of Tokenized Silver

• tSILVER (tXAG) is a silver-backed token. Each tSILVER token is 1:1 backed by, and redeemable for 1 gram of 99.9% LBMA-accredited silver, held in fully insured and audited vaults.

3. Platinum (Tokenized Platinum)

Platinum is critical to industrial applications, especially in the automotive and energy sectors. Tokenized platinum currently constitutes a small portion of the tokenized precious metals market.

Why Tokenize Platinum/Palladium?

• Brings liquidity to illiquid assets – These metals are difficult to trade in traditional markets.
• New investment opportunities – Allows investors to diversify beyond gold and silver.

Real-World Example of Tokenized Platinum

• ‍tPLATINUM (TXPT) is a platinum-backed token. Each tPLATINUM token is 1:1 backed by, and redeemable for 1 gram of 99.95% LPPM-accredited platinum, sourced from LBMA-accredited refineries.

Why Tokenize Precious Metals?

Tokenization addresses several inefficiencies in the traditional precious metals market while offering new benefits to issuers and investors.

1. Enhanced Accessibility

Traditionally, gold investment requires purchasing physical bullion or gaining exposure through ETFs, which often have high entry barriers. Tokenization enables fractional ownership, making it possible for a broader range of investors, including institutions and accredited individuals, to participate.

2. Improved Liquidity

Precious metal investments are traditionally illiquid, requiring physical delivery or extensive brokerage processes. Tokenized metals, however, can be traded instantly on digital asset exchanges, reducing liquidity constraints.

3. Increased Transparency and Security

Blockchain’s immutable ledger ensures every transaction is recorded transparently, reducing fraud risks and increasing investor trust.

4. 24/7 Market Access

Unlike traditional gold markets, which operate within fixed hours, tokenized metals can be traded around the clock on digital asset exchanges such as IX Swap’s decentralized exchange.

Challenges and Considerations

While tokenized metals offer significant advantages, challenges remain:

1. Regulatory Uncertainty

Tokenized commodities exist in a regulatory gray area, with different jurisdictions applying varying levels of scrutiny. Issuers must navigate compliance requirements, including securities laws and anti-money laundering (AML) regulations.

Solution: To overcome regulatory challenges, issuers can work with a licensed and regulated tokenization platform like InvestaX to ensure security, regulatory compliance, and efficient market access.

2. Custodial and Redemption Complexities

Unlike traditional financial instruments, tokenized metals require secure physical storage before being represented digitally on the blockchain.

This introduces counterparty risk, as token holders depend on the issuer’s ability to store, manage, and redeem the physical metal, similar to gold-backed certificates or financial instruments in the past.

Solution: A robust vaulting infrastructure, independent audits, and transparent redemption processes are essential to ensure trust and reliability in tokenized metal offerings.

The Future of Tokenized Precious Metals

The tokenized commodity market is still in its early stages, with gold-based products representing just a fraction of the total precious metals market. However, as institutional adoption grows, we can expect to see:

• Increased institutional participation: More banks and asset managers will enter the tokenized metals space.
• Expansion beyond gold and silver: Other metals, such as silver, platinum, and palladium, will gain traction.
• Integration with decentralized finance (DeFi): Tokenized metals may serve as collateral in DeFi lending and staking platforms.‍
• Regulatory clarity: Governments and financial authorities will develop clearer guidelines for tokenized commodities.

Start Tokenizing Precious Metals with InvestaX

As a licensed and regulated tokenization platform, InvestaX offers a fully compliant and secure solution for issuers looking to tokenize precious metals. Whether you are a mining company, a commodity-backed fund, or a financial institution, our platform provides end-to-end support for structuring, issuing, and managing tokenized assets.

Contact InvestaX to explore how tokenization can enhance liquidity, accessibility, and efficiency in the precious metals market.