Given how digitized the world has become, there aren't too many investors still buying gold bars and burying them in their backyard. However, gold has once again become a popular investment, and it has been on a tear in recent years.
Naturally, the financial engineers on Wall Street have developed several ways to buy it online. An increasingly popular way to purchase the commodity is through tokenized gold or stablecoins.
Stablecoins use blockchain technology, similar to that of cryptocurrencies, though they're designed to remove the inherent volatility of most cryptocurrencies. They are digital tokens backed by a currency or commodity and essentially are digital ownership of a physical asset. Stablecoins track the price of the commodity or currency they're backed by.
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With gold prices rising and more Wall Street analysts picking gold as a smart investment, investors from institutional to retail have begun purchasing the commodity through various channels, and a gold-backed stablecoin is one way to do so.
According to a recent report from the crypto exchange CEX.io, tokenized gold trading reached $178 billion in 2025. That's more than any other U.S. exchange-traded fund (ETF) except the SPDR Gold Shares (GLD 10.27%), which has $165 billion in assets under management.
Popular stablecoins such as Tether Gold and Paxos Gold have grown tremendously, and can be purchased on crypto platforms like Coinbase.
Why gold has done so well
Gold has done well for three clear reasons: geopolitical tensions, inflation, and mounting U.S. debt. Whether it's been ongoing wars across the world or President Donald Trump's tariffs, investors tend to move into gold when there is geopolitical tension or events that could shake up the world order.
The other big reasons, which are somewhat tied together, are soaring inflation and mounting U.S. debt. Since the Great Recession, the Federal Reserve has pumped trillions of dollars into the economy, and U.S. debt has grown rapidly. Total U.S. debt now exceeds $38 trillion, and the U.S. government ran a nearly $1.8 trillion fiscal deficit in fiscal year 2025.
NYSEMKT: GLD
Key Data Points
Investors are clearly concerned that the U.S. fiscal situation is spiraling out of control and that the U.S. dollar, the world's reserve currency, could lose significant value. Central banks around the world are no longer buying and holding as many U.S. Treasuries as they once did.
There has been talk that the government will try to ease this situation by running the government hot and promoting pro-growth policies that are likely to lead to higher inflation over time. Gold is a way to hedge against inflation.
Recent events have led gold to top $5,000 per ounce for the first time ever, and the price of gold is up nearly 172% over the past five years. As with any asset that goes on a big run, there will likely be some pushback against gold. But I still think investors can allocate some capital to gold, likely in the 5% to 10% range, depending on one's risk tolerance and current stage of life.
