Goldback is the company behind a new type of currency that’s been gaining increasing media attention. Cryptocurrency revolutionized the market and helped many investors to envision other alternative forms of currency. Goldbacks are built on this idea.
We have done hundreds of hours of research on the best precious metals investment companies for anyone that wants to invest!
Goldback is the name of the company, but it’s also the name of the currency. When you hear “goldbacks” referred to in media, they’re talking about the currency.
Unlike traditional forms of currency, though, goldbacks are not created by a sovereign mint. Instead, they’re manufactured by a private company called Goldback Incorporated. Unlike cryptocurrency, goldbacks are physical notes that bear similarities to fiat currencies. But they are created with 24 karat gold inside every note.
Every note has a bit of gold inside two layers of clear polyester, so it looks like a dollar bill with a golden design. One of the big issues with fiat currency is that its value is artificial. But goldbacks have real value due to their use of small amounts of real gold.
Goldbacks are offered in similar denominations to US currency. There are 1, 5, 10, and 50 notes, as well as a 25 note. The larger denominations have amounts of gold that are larger in proportion to the smaller ones. So a 50 note goldback has fifty times more gold than a 1 note.
A 1 note goldback has one-one thousandth of an ounce of 24K gold. You can exchange fifty 1 notes for a 50 note, or exchange a 50 note for fifty 1 notes. Since the amount of gold is directly proportional, the notes are interchangeable in value.
Should You Invest in Goldbacks?
Goldbacks are still largely in the experimental stage of being. There is controversy in the industry about whether purchasing a goldback is worth it. But there are also indications that this may be accepted as a form of legal tender in the future. In fact, a small number of states already do accept this as legal tender.
The first goldbacks were minted and released in 2019, so there hasn’t been a lot of time for them to be tested on the market. It’s also difficult to tell what kind of long-term value they’ll hold for investors.
When goldbacks were released in 2019, they were worth $2. However, the price in 2021 was $3.75. This might be less related to the currency itself, though, and more to the COVID-19 pandemic. During the pandemic, the price of gold shot up and has yet to reach its 2019 low. So it makes sense that the value of goldbacks would have similarly increased.
Short-term investors did see great ROI when they invested in 2019. Part of that was because of the pandemic impacts. All gold investors saw a significant increase in the value of their holdings in 2020. Another factor is that goldbacks were priced cheaply in 2019 to generate interest. The pricing was low so that investors would take a chance on them.
Pricing has risen as the demand for goldbacks has grown. The question is just whether the price will continue to increase or not. While demand might rise, it’s not a good idea to buy gold at much higher than the spot price. You should always double-check the valuation of the gold in goldbacks against the spot price to make sure you’re getting a decent deal.
In the long term, it’s very difficult to say whether goldbacks will be a stable investment or not. It’s even more difficult to say whether they have strong room for growth. The first minted goldbacks could only be bought and used in Utah. But now they can be used as a legal tender in New Hampshire, Wyoming, and Nevada as well. More states may adopt the currency in the future.
You can’t use goldbacks at every business in these states. But it is legal for businesses to accept them as currency, and many of them do.
The value of goldbacks may plummet if further regulations or bans are introduced in the future. That’s why you should be focused on the price of the gold, not the potential for growth. Goldbacks do have some intrinsic value, unlike cryptocurrency. You just have to be savvy about how you invest.
Purpose and Benefits of Goldbacks
The global economy is a complex thing, and individual countries have even more complicated economies. All of these factors interact with and influence each other. And a lot of the factors are based on political value, not on any intrinsic monetary value.
Fiat currency in the US doesn’t have any physical backing, and hasn’t since the country abandoned the Gold Standard. The government can print more money at any time, contributing to inflation. Though the government employs economists who study the fluctuations in the market, the paper that money is printed on is inherently worthless.
People have seen the effects of inflation during 2023 on grocery prices, gas prices, and more. The cost of living has been severely impacted. And there have been incidents in which other countries have had their currency reduced to worthlessness because of global factors or poor government decisions.
In order for fiat currency to have value, people need to trust in the sovereign government that created it. Many people these days struggle to place their faith in the US government.
Goldbacks always have an inherent value because of the physical gold in every note. Gold is a finite resource. There are gold mining operations in the world, but the amount of usable gold is shockingly small. The value of goldbacks has more stability than fiat currencies in general.
Another reason for goldbacks to exist is to solve the problem of spending with gold. Historically, it has been difficult to use gold as an easy currency. Every piece of gold needs to be meticulously weighed and examined. The purity and the weight makes a huge difference in the value. But ancient cultures used gold coins and bullion.
In ancient times, though, low-value items like food and inexpensive clothing couldn't be bought with gold. One gold coin was worth thousands of today's US dollars. These coins were used to denote wealth and make large purchases, but lower-value items were typically traded instead. Common people might never come into contact with gold at all!
Goldbacks make it possible to buy small items with gold. Because the amount in one note is so minuscule, you can buy things that are worth just a couple US dollars. As of writing, the value of one goldback is around $4 USD. So you could get a soda and a candy bar or two from a convenience store. Since goldbacks are proportional to each other in value, it's very easy to exchange them and calculate their overall cost.
Is Goldback Legitimate?
Goldback is a legitimate business with a legitimate purpose behind it. The currency is only legal tender in four states as of writing, and only shops that have opted in will accept it. In the future, more businesses and state governments might adopt these as legal tender. But government regulation might also reduce the ways that they can be spent.
The main thing to keep in mind is that goldbacks have real gold in them. The purchase price should be based around the melt value of that gold. You don't want to buy them for significantly more than the spot price, because you might lose the value of your investment. Even if you can't use them as legal tender, you can hold onto them as a gold investment.
Goldbacks are printed using the Valaurum group's services. This is a private minting company that is compliant with all regulations and certified as legitimate. They have a specific formula to follow to make sure that the goldback currency remains interchangeable and proportional.
There are more than 300 brokers and stores that carry goldbacks, not just in the US but all over the world. Online gold brokers are often the most popular places to get goldbacks. You'll have to find out whether a given retailer will ship goldbacks to your location, especially if you're outside the states that accept this as legal currency.
Some of the online stores that sell goldbacks include:
If you've spent a lot of time lurking in the precious metals industry, you likely recognize some of those names. They're among the largest and most popular gold retailers in the United States!
Will Goldbacks Be Legal Tender in the Future?
Many people are curious about the potential legality of goldbacks. But to answer this question, we first need to establish what a legal tender is.
Legal tender is currency that was printed or minted by a sovereign government. It is backed by the regulations and the rules enforced by that government body, and it defines that area's economy.
Goldbacks are not legal tender since they are created by a private company. By this definition, they will not become legal tender in the future. Since they are not legal tender, they are a risky investment, as they could be changed by government regulation or lose their overall value.
However, if the question is whether goldbacks will be spendable in the future... that's a more complex question.
The four states that allow goldbacks have certain things in common politically. Utah, Nevada, and Wyoming all have strong interests in the gold industry. Local governments and businesses are interested in goldbacks because they're a way to support the mining industry their economy is built on.
New Hampshire isn't known for gold mines. But the state's population is largely rural and pro-gold ownership. It has one of the smallest governments in the US, without much of the regulation that seems like the default in places like California.
It's uncertain whether other state governments will be interested in adopting goldbacks as acceptable currency when US currency is the standard. Without any incentive to support their industries or politics, they may not want to do so. Not every business in the four allotted states accepts goldbacks, either. But quite a few of them do.
Pros & Cons of Goldback
Goldbacks are an interesting experiment, and one with a lot of potential. However, there is still a good deal of risk associated with this investment. Since the currency has only existed since 2019, there's no telling whether it will become widely accepted or be crushed by future government regulations.
The bottom line is that this is a way to invest in tiny amounts of gold at a time. But unless you live in one of the states where businesses accept this tender, you probably won't be able to spend it anytime soon. So you should keep your focus on obtaining precious metals for the most reasonable price possible, whether they're in the form of bills or not.
Don't forget to checkout our highest recommended precious metals investment companies if you want to move forward with an investment!