Gold-backed Tokens - the Easiest Way to Invest in the Yellow Metal

Table of Contents

• A Challenging Investment? 

As the coronavirus has raged across the globe throughout 2020, markets have been thrown into disarray. In March, the Dow Jones Industrial Average underwent its three biggest single-day drops in history. Although the stock markets have since made an impressive recovery, it’s fair to say investors remain skittish. With the coronavirus continuing to spread in many countries, government spending at an all-time high, and many industries such as travel and hospitality continuing the suffer the fallout of the pandemic, the threat of a recession has never felt more present. 

Whenever there’s economic uncertainty, investors start to switch their portfolios into safe-haven assets. Therefore, as markets continue to feel the shockwaves resulting from 2020’s seismic events,  it’s perhaps unsurprising that gold has been having a stellar year. In early August, gold prices hit an all-time high of over $2,070 per troy ounce, exceeding the previous 2011 record high of $1,917.  

A Challenging Investment? 

For retail investors, it can be challenging to gain exposure to the price of gold. Buying bullion or jewelry is perhaps the most obvious method. Still, dealers usually put a hefty markup on the price, meaning that you’d need to see significant price appreciation before you’d be in profit. There’s also the challenge of storage. Unless you already have a secure home safe, then you’ll need to rent a safety deposit box at a bank to keep your investment secure. 

Another option is to invest in a gold ETF. However, many of them don’t offer direct exposure to the price of gold. Instead, they often combine investment in gold futures with stocks in mining and refining companies. These stocks don’t always accurately reflect the value of gold as they’re subject to other forces. Furthermore, as with physical gold, ETF shares involve purchasing from a broker for a fee. 

However, thanks to the wonders of technology, it’s now possible to get exposure to gold by purchasing gold-backed tokens. VeraOne is a gold-backed stablecoin issued in 2019 by a French company that has a long pedigree in the gold trade. 

About VeraOne

The company behind VeraOne is called AuCOFFRE, founded in 2009 as a precious metal specialist. Over its history, the company has implemented several innovations designed to make gold a more accessible investment. These include Vera Valor, physical coins that have become the most sold ounce of gold in France. The company has also implemented VeraCash, the first credit card allowing users to directly spend their gold investments. 

With the advent of blockchain, AuCOFFRE decided to take advantage of the technology's immutable and transparent properties to create a project dedicated to securing its gold registers. So it seems a natural evolution that in 2019, VeraOne issued its VRO token as the first French stablecoin backed by physical gold. 

VRO is an ERC20 token, with each token backed 1:1 by a gram of gold. Taking heed from projects such as Tether, which faces an ongoing lawsuit from New York regulators over a lack of transparency regarding its reserves, VeraOne has engaged an external independent auditing firm called ALS Global. The auditors regularly inspect the gold reserves held by VeraOne to make sure that they correspond directly to the VRO tokens issued on the blockchain. 

Along with the assurance of audits, VeraOne is also insured with Lloyds, offering an additional layer of protection for investors. For anyone concerned about the ethical considerations of gold, VeraOne works with the London Bullion Market Association, a global authority on precious metals, to ensure that it is sourcing and purchasing gold in a socially responsible way. 

Easy to Use

VeraOne makes it easy to invest in gold safely and legitimately. You simply need to create an account via their website, which involves a mandatory KYC check. You can then buy VRO tokens, view your wallet balances, or send them to a supported external wallet or exchange. As an ERC20 token, VRO is supported by hardware wallets, including Ledger, Trezor, and the soon-to-launch NGRAVE ZERO cold storage wallet. 

It’s also far cheaper to trade VRO tokens than using a broker to invest in physical gold or a gold ETF. VeraOne applies a 0.5% fee for purchases and a 1% fee for sales, along with a 1% fee each year for safekeeping costs of the physical reserves. All transactions are recorded securely on the blockchain. 

During the tumult of 2020, it’s become evident that there are very few stable assets. Bitcoin has proven to be highly resilient, but it remains volatile. Even the US dollar, the good old greenback, has been struggling to hold value against the euro while the pandemic rages on, and the presidential election causes continuing price movements. Investors have turned to gold for centuries, proving that although the price may fluctuate, it will never lose its place as a store of value.