Tokenized Precious Metals: Beyond Gold
Key Takeaways
- Gold tokenization is now a market exceeding $5 billion, dominated by established products like PAXG and XAUT - but silver, platinum, and palladium remain largely untokenized.
- Tokenized silver is the most developed non-gold category, with products like Kinesis KAG and SilverToken offering 1:1 physically backed digital ownership.
- Tokenised palladium and platinum face unique tokenization challenges: smaller markets, concentrated supply chains, and lower retail liquidity.
- Non-gold precious metals carry distinct industrial demand profiles - silver in solar energy, platinum in hydrogen fuel cells, palladium in catalytic converters - that create different investment dynamics from gold’s store-of-value positioning.
- Regulatory frameworks including MiCA in Europe and MAS guidelines in Singapore are beginning to address commodity-backed tokens, though coverage varies by jurisdiction.
Gold tokenization is now well-established. Products like Paxos Gold (PAXG) and Tether Gold (XAUT) have built a combined market exceeding $5 billion, giving investors fractional, blockchain-based access to LBMA-grade bullion. For a detailed breakdown of how gold tokenization works, see our guide to gold tokenization.
But gold is only one of four major precious metals traded globally. Silver, platinum, and palladium each carry distinct supply dynamics, industrial demand profiles, and investment characteristics - yet their tokenization stories are far less developed. For institutional investors, wealth managers, and fintech platforms evaluating multi-asset digital strategies, understanding where these metals stand in the tokenization lifecycle is essential.
Tokenised Silver: Market Size, Products, and How It Works
Silver occupies a unique position among precious metals. Unlike gold, which derives most of its value from investment demand and central bank reserves, silver functions as both an investment asset and an industrial commodity. Over 50% of annual silver demand comes from industrial applications, including solar panel manufacturing, electronics, and electric vehicle components [Source: The Silver Institute, World Silver Survey 2025].
This dual role makes tokenized silver a fundamentally different proposition from tokenized gold. When investors hold a silver token, they are exposed not just to monetary policy and inflation hedging, but also to manufacturing cycles, green energy adoption rates, and semiconductor demand.
Current Tokenized Silver Products
Several platforms have launched silver-backed digital tokens, though the market remains significantly smaller than its gold counterpart:
- Kinesis KAG - Each KAG token represents 1 troy ounce of silver, stored in LBMA-approved vaults. Kinesis operates a yield-bearing system where holders earn a share of transaction fees.
- SilverToken (SLVT) - An ERC-20 token backed 1:1 by physical silver held in secure vaults. SilverToken targets retail and institutional investors seeking blockchain-native silver exposure.
- Lode SilverCoin (AGX) - Built on the Algorand blockchain, each AGX represents one gram of silver. Lode emphasizes transparent reserves with regular third-party audits.
How Silver Tokenization Works
The mechanics mirror gold tokenization in most respects. An issuer acquires physical silver meeting recognized purity standards (typically .999 fine silver), deposits it in an audited vault facility, and mints a corresponding number of digital tokens on a public blockchain. Each token represents a defined weight of silver - typically one troy ounce or one gram, depending on the platform.
Token holders can trade their positions on supported exchanges, transfer tokens peer-to-peer, or in some cases request physical redemption of the underlying silver. The blockchain provides a transparent ownership record, while the custodial arrangement ensures the physical backing is maintained and independently verifiable.
Can you buy fractional silver tokens? Yes. One of tokenization’s primary advantages is divisibility. A single KAG token representing one troy ounce of silver (approximately $65 at current spot prices) can be divided into smaller units on-chain, allowing investors to gain silver exposure with minimal capital outlay - something that physical silver bars or coins do not efficiently permit.
Tokenized Silver vs Traditional Silver Investment
| Feature | Tokenized Silver (e.g., KAG) | Physical Silver (Bars/Coins) | Silver ETFs (e.g., SLV) |
|---|---|---|---|
| Minimum investment | Fractional (sub-$1 possible) | ~$60-70 per ounce minimum | 1 share (~$59) |
| Storage costs | Included in platform fees | Self-custody or vault rental | Expense ratio (~0.50%) |
| 24/7 trading | Yes (blockchain-native) | No (dealer hours) | No (exchange hours) |
| Physical redemption | Available on most platforms | Already physical | Not available for retail |
| Counterparty risk | Issuer and custodian | Self-custody eliminates | Fund manager and authorized participants |
| DeFi compatibility | Yes (select platforms) | No | No |
| Settlement speed | Minutes (on-chain) | Days to weeks | T+1 |
Tokenised Platinum and Palladium: Industrial Metals Meet Digital Ownership
Platinum and palladium present a markedly different tokenization landscape. While silver has attracted several issuers and a growing user base, platinum and palladium tokenization remains in an earlier stage of development. Understanding why requires examining these metals’ unique market characteristics.
Platinum: Supply Concentration and Hydrogen Potential
Global platinum supply is highly concentrated. South Africa produces approximately 70% of the world’s platinum, with Russia and Zimbabwe accounting for most of the remainder [Source: World Platinum Investment Council]. This geographic concentration creates supply risk that does not exist with gold or silver, which are mined across dozens of countries.
Platinum’s primary industrial demand comes from two sectors: autocatalysts (catalytic converters in diesel vehicles) and, increasingly, hydrogen fuel cell technology. The emerging hydrogen economy has positioned platinum as a critical input material - proton exchange membrane (PEM) fuel cells require platinum-group metal catalysts, and global investment in hydrogen infrastructure is accelerating.
From a tokenization perspective, the platinum market is substantially smaller than gold or silver. Annual platinum production is roughly 190 metric tons compared to silver’s approximately 26,000 metric tons and gold’s 3,600 metric tons. This smaller market creates liquidity challenges for token issuers: fewer market participants, wider bid-ask spreads, and less price discovery infrastructure.
Palladium: Geopolitical Risk and Automotive Demand
Palladium’s market dynamics are even more concentrated than platinum’s. Russia accounts for roughly 40% of global palladium production, with South Africa producing another 35% [Source: Johnson Matthey PGM Market Report]. Geopolitical disruptions - particularly those affecting Russian exports - have historically caused sharp price spikes, with palladium reaching over $3,000 per ounce in March 2022 before retreating.
Over 80% of palladium demand comes from automotive catalytic converters for gasoline engines. This makes palladium’s value proposition tightly coupled to internal combustion engine production - a sector facing structural decline as electric vehicle adoption accelerates.
Why are fewer platforms offering tokenized platinum and palladium? The answer is primarily market size and liquidity. Token issuers need sufficient trading volume to justify the operational costs of vault storage, auditing, blockchain infrastructure, and regulatory compliance. Gold’s massive market (roughly $30 trillion in above-ground stock) and silver’s broad industrial demand base support robust tokenization ecosystems. Platinum and palladium’s smaller, more concentrated markets have not yet attracted the same level of issuer interest.
That said, several platforms that began with gold tokenization have signaled plans to expand into platinum-group metals as the infrastructure matures and institutional demand develops.
Why Non-Gold Precious Metals Are Being Tokenised
The trend toward tokenizing silver, platinum, and palladium is driven by several converging forces that extend beyond the investment rationale for any single metal.
Industrial Demand and the Green Energy Transition
The energy transition is reshaping precious metals demand in ways that gold - primarily a monetary and ornamental metal - does not directly participate in:
- Silver is essential to photovoltaic cell manufacturing. Each solar panel uses approximately 5-20 grams of silver paste depending on cell technology, and global solar installations continue to grow at double-digit annual rates. The Silver Institute projects industrial silver demand to exceed 700 million ounces annually by 2030.
- Platinum is the primary catalyst in PEM hydrogen fuel cells. As governments commit to hydrogen strategies (the EU’s REPowerEU plan, Japan’s Green Growth Strategy, Australia’s National Hydrogen Strategy), platinum demand from this sector is projected to grow significantly.
- Palladium faces a more complex outlook, with declining automotive catalyst demand offset partially by use in electronics and chemical processing.
Supply Constraints and Geographic Risk
Unlike gold, which has been accumulated in central bank reserves and private holdings for centuries, platinum-group metals face genuine supply constraints. Mining output is concentrated in a small number of jurisdictions, some with significant political or logistical risk. Tokenization does not resolve supply-side constraints, but it can improve capital allocation efficiency by enabling more granular investment exposure and faster settlement.
Portfolio Diversification Beyond Gold
For wealth managers and institutional allocators, non-gold precious metals offer correlation profiles that differ from gold. Silver tends to be more volatile and more closely correlated with industrial cycles. Platinum and palladium respond to sector-specific demand drivers (automotive, hydrogen) rather than the monetary policy and safe-haven dynamics that primarily move gold prices. For analysis of how central bank gold accumulation and reserve diversification are reshaping the precious metals investment landscape, see BRICS vs USD: What’s Happening to Global Reserves.
What precious metals can be tokenized? In principle, any metal with verifiable vault storage, recognized purity standards, and a liquid spot market can support tokenization. The practical requirements are custodial infrastructure, regulatory clarity, and sufficient market demand to sustain a token ecosystem.
Looking to add tokenized precious metals to your product offering? Aerapass provides the exchange and custody infrastructure for multi-metal tokenized assets across four licensed jurisdictions. Explore the Aerapass precious metals platform
Comparing Tokenised Precious Metals: Gold vs Silver vs Platinum vs Palladium
| Characteristic | Gold | Silver | Platinum | Palladium |
|---|---|---|---|---|
| Above-ground stock value | ~$30 trillion | ~$164 billion | ~$3.2 billion | ~$5 billion (est.) |
| Annual mine production | ~3,600 tonnes | ~26,000 tonnes | ~190 tonnes | ~210 tonnes |
| Primary demand driver | Store of value, central banks | Industrial (50%+), investment | Autocatalysts, hydrogen fuel cells | Autocatalysts (80%+) |
| Tokenized market maturity | Established (~$6B) | Early growth | Nascent | Nascent |
| Key tokenized products | PAXG, XAUT, KAU | KAG, SLVT, AGX | Limited offerings | Very limited offerings |
| Min. investment (tokenized) | Fractional | Fractional | Varies by platform | Varies by platform |
| DeFi integration | Broad (Ethereum, multiple DEXs) | Growing (select platforms) | Minimal | Minimal |
| Supply concentration risk | Low (diversified globally) | Low-moderate | High (South Africa ~70%) | High (Russia ~40%) |
| Spot price (Sep 2026) | ~$4,350/oz | ~$65/oz | ~$1,790/oz | ~$1,280/oz |
The table illustrates a clear maturity gradient. Gold tokenization has achieved product-market fit with multiple competing issuers, deep liquidity, and broad DeFi integration - a trajectory explored in depth in our analysis of the rise of digital gold. Silver tokenization is in an early growth phase with established products but lower adoption. Platinum and palladium remain nascent, with few dedicated tokenized products and limited secondary market infrastructure.
For a detailed analysis of gold tokenization specifically, including how PAXG and XAUT compare, see our gold tokenization explainer.
Regulatory Considerations for Tokenised Commodities
The regulatory treatment of commodity-backed tokens varies significantly by jurisdiction, and the framework is evolving rapidly. Unlike unbacked cryptocurrencies, tokens representing ownership of physical precious metals generally fall under existing securities or commodities law - though classification is not always straightforward.
Europe: MiCA and Commodity-Referenced Tokens
The EU’s Markets in Crypto-Assets Regulation (MiCA), which entered full application in December 2024, establishes a framework for crypto-assets including asset-referenced tokens. Commodity-backed tokens may be classified as asset-referenced tokens (ARTs) under MiCA, subjecting issuers to reserve requirements, redemption rights, and ongoing disclosure obligations. The specific treatment depends on the token’s structure and whether it is marketed primarily as a means of payment or an investment product.
Singapore: MAS Digital Token Framework
The Monetary Authority of Singapore (MAS) regulates digital tokens under the Payment Services Act (PSA) and, where applicable, the Securities and Futures Act (SFA). Commodity-backed tokens that function as a means of payment may require a license under the PSA. Tokens structured as investment products - representing a right to the underlying commodity - may fall under the SFA’s securities framework. MAS has signaled continued engagement with industry on appropriate frameworks for tokenized real-world assets.
Cross-Jurisdictional Considerations
Are tokenized precious metals regulated? Yes, in most major financial centers. The specific regulatory treatment depends on the token’s structure, the issuer’s jurisdiction, and how the product is marketed and distributed. Key considerations include:
- Reserve requirements - Most jurisdictions require commodity-backed token issuers to maintain full reserves of the underlying asset, with independent auditing.
- Redemption rights - Investors typically must have the right to redeem tokens for the underlying physical metal or its cash equivalent.
- Disclosure and reporting - Issuers face ongoing obligations around reserve transparency, conflict of interest management, and material change notification.
- Cross-border distribution - Tokens issued in one jurisdiction may face additional requirements when offered to investors in other markets.
For fintech platforms and financial institutions building multi-asset digital offerings, understanding these regulatory requirements at the infrastructure level is a prerequisite for product development.
The Infrastructure Layer
Tokenizing precious metals - whether gold, silver, platinum, or palladium - requires a consistent set of infrastructure components: custodial arrangements with recognized vault operators, blockchain issuance and management systems, trading and settlement infrastructure, and regulatory compliance frameworks across target jurisdictions.
Platforms like Aerapass provide the underlying exchange and custody technology that enables financial institutions and wealth managers to offer tokenized commodity products alongside traditional asset classes. This infrastructure-first approach allows multiple product issuers to operate on shared rails, reducing the cost and complexity of bringing new tokenized metals to market.
As the tokenization of non-gold precious metals matures, the infrastructure challenge will shift from proving the concept to scaling it - supporting multi-metal portfolios, cross-chain interoperability, and regulatory compliance across jurisdictions.
Ready to build multi-metal tokenized products? Explore how Aerapass supports precious metals trading and custody
The content on this page is produced by Aerapass for general informational purposes only and does not constitute financial advice, investment advice, or any other form of professional advice. Aerapass is a technology platform provider serving financial institutions, wealth managers, and fintech companies. Before making any financial decision, you should consult with a qualified, licensed financial advisor who can take your individual objectives and circumstances into account.
