Yes, PAX Gold (PAXG) is backed by physical gold. Each token represents ownership of one fine troy ounce of a 400-ounce London Good Delivery gold bar, stored in professional vaults (typically in London, via Brink’s). The gold is allocated, meaning specific bars are assigned to token holders rather than pooled claims.
Paxos, the issuer, is regulated by the New York Department of Financial Services (NYDFS) and publishes monthly attestations from an independent accounting firm confirming that gold reserves match tokens in circulation.
Token holders can redeem PAXG for physical gold bars (if they hold enough) or cash equivalent, and Paxos charges no storage fees, unlike many gold ETFs. That said, as with any custodial asset, it does carry counterparty and regulatory risk tied to Paxos itself.