Tokenisation of gold and commodities.

For most tokenised gold products, the issuer buys physical gold bars held by a specialised vault operator, often in London, Switzerland or Singapore. Each token corresponds to a fixed weight, for example one gram, and the issuer usually publishes a list of bar numbers linked to the total token supply.

Regular verification by an independent party, usually an auditor or a specialised precious metals firm, is meant to confirm that the physical gold in the vault matches the number of outstanding tokens. The frequency and depth of those checks varies a lot by issuer: some commission a full stock count monthly, others publish only an annual summary audit report.

Importantly, the token itself is not gold, but a claim on gold sitting elsewhere. That is exactly the same structure as a classic physical gold ETF, just with a blockchain register instead of a share register as proof of ownership.

Some providers allow redeeming tokens for physical delivery, usually only above a minimum amount corresponding to a full bar. For smaller positions, redemption is often limited to selling back to the issuer at the prevailing gold price, without ever taking possession of the physical metal.

Physical delivery brings extra costs for transport, insurance and sometimes import duties, depending on the delivery country. For most retail holders, the practical value of tokenised gold is therefore mainly price exposure and easy tradability, not the physical delivery itself.

Tokenised silver works broadly like gold, with similar storage and audit structures, though storage costs per unit of value tend to be higher because silver takes up more physical volume than gold of equal value. Tokenisation of industrial commodities such as oil or agricultural products is far less developed, partly because these products are perishable or need specific storage facilities that are harder to audit than a precious metals vault.

Some platforms instead offer synthetic exposure to commodity prices via futures-like structures without physical backing. That is a fundamentally different product with counterparty and roll risk that is not comparable to physically backed gold.

The biggest risk is that the published backing is incorrect or outdated: if an issuer creates tokens without holding enough physical gold, a gap only surfaces during a crisis or a large redemption wave. Always check who manages the vault, who performs the audits and how often, independent of the platform's marketing claims.

There is also legal risk around whether your claim on the gold holds up in a bankruptcy of the issuer or vault operator. A well-ring-fenced custody structure, where the gold does not sit on the issuer's own balance sheet, is an important point to check.