Are Goldbacks A Good Investment? Goldback Guide

A new form of currency has been gaining media attention over the past year or two which has many precious metal investors wondering if goldbacks are a good investment? Many of our readers have heard the term “goldbacks” or “gold foil notes” on the news in recent years but don’t know much about the actual use-cases of the currency. In this article you will learn about what goldbacks are, as well as if they are a good investment strategy.

investing in goldbacks

Let’s learn about goldbacks and if they make a good investment strategy!

What Are Goldbacks?

The goldback or goldback is a new type of complementary currency or voluntary currency that is not created by a governmental body but by a private company, Goldback, Inc. Goldbacks are physical currency notes that are similar to fiat currencies such as the US Dollar but actually contain 24K pure gold embedded within each note.

The gold within each note is safely contained in the middle of two layers of clear polyester coating which makes it look similar to a regular dollar bill but with a beautiful gold design. This means instead of just being a piece of paper with an artificial valuation attached to it, each note has a small amount of pure gold within the note that provides stability to the value of the currency.

Goldbacks are offered in a variety of different denominations that range from 1, 5, 10, 25, and 50. Each of the larger denominations have a larger amount of gold that is proportionality issued to match their denomination. This means a 50 goldback note has more gold within the note compared to a 1, 5, 10, or 25 goldback note.

learn about goldbacks

1 goldback note is embedded with 1/1,000th of a Troy Oz of 24 karat gold. Goldbacks are also exchangeable for larger note which means you can trade fifty 1 goldback notes for 1x 50 goldback note and vice versa. Each goldback note is 4.65 inches (11.74cm) by 2.57 inches (6.53cm).

Are Goldbacks A Good Investment?

Understanding if goldbacks are a good investment is difficult to know for sure since this type of currency has only been on the market for around 3 years. Goldbacks were minted in 2019 which makes it difficult to understand the future valuation of the currency as well as how popular the currency will become in the future. In 2019 the price of goldbacks were $2.00 but in 2021 the average price of goldbacks were $3.75 which is a growth of 87.5% appreciate over those two years.

Short-Term Investment

Goldbacks have proven to be a good short term investment because of the near 90% increase in valuation from 2019 to 2021 but there are some variables that have caused this increase in price. The first thing you must understand is that in 2019 this currency was created for the first time so the floor pricing was incredibly low and you won’t expect the average investor to have the opportunity to buy into goldbacks at the floor price because it was only available in one state at the time.

As more and more people heard about goldbacks, the price started to rise because there was an increase in demand. This increase in demand could continue to rise over the next few years which could continue to raise the valuation of goldbacks but it is difficult to know for sure if this will happen. This means goldbacks might be a good short-term investment but it becomes increasingly difficult to make long term projections because of there are so many unknowns with this type of currency.

Long Term Investment

When it comes to long term investments it is nearly impossible to understand what the price of goldbacks could rise to. This is because there are so many variables and unknowns about this type of currency. When goldbacks were first minted they were only available in Utah which made them exclusive but over the following two years they expanded into three more states. This expansion helped to increase the popularity as well as the valuation of this type of currency.

If goldbacks continue to expand to more and more states and continue to increase the amount of daily users of this type of currency then it can be expected that the valuation of this currency will continue to rise. If this happens then goldbacks could be a good long term investment but this is only if they continue to grow in popularity and demand. Since this is a new type of currency, it is also possible that they quickly fizzle out if they are hit with governmental regulations or other issues like that. This could make this a risky long term investment.

The Benefits of Goldbacks

Goldbacks were created in an effort to solve a few different financial issues that have been around for thousands of years. The first issue is solving the issue that fiat currency (such as USD) is not backed by anything physical and can be printed whenever the government wants to. This means inflation can drastically reduce the valuation of the cash that you hold based on how much currency is printed by the government. Fiat currency places the reigns in the hands of the government which is something many individuals are struggling to trust.

Fiat currencies can raise or drop in valuation in short periods of time based on the current financial market as well as how much of the currency the government is printing. If a government decides to aggressively print more USD then all of the USD you are holding instantly lose value. Many investors don’t think this is fair and struggle to trust the market and the government. Since goldbacks contain physical gold within each note, their value is stable because there is only a finite amount of gold in the world. This means the valuation of goldbacks will be more stable and consistent compared to fiat currencies.

The second reason that goldbacks were created was to allow individuals the ability to spend small amounts or interchangeable increments of gold. For thousands of years gold has been used to buy and sell products or assets. From Romans purchasing land with gold bullions to pirates buying boats with gold coins, gold has been used as a form of currency for thousands of years.

The issue in the past has been that it is difficult to buy low value items with gold because gold is typically only sold in larger quantities. You have never been able to buy groceries or even gas with gold because the valuation of your gold coin or gold bullion will typically be in the hundreds or thousands of dollars. Goldbacks provides individuals that ability to spend small interchangeable increments of gold for everyday use.

Goldback Price Chart – Average Exchange Rate 2019-2022

The price of goldbacks started at $2.25 in July 2019 and now averages around $3.75 in 2022.

the average exchange rate of goldbacks from 2019 to 2022

Who Created Goldbacks?

Goldbacks were launched by the Goldback, Inc group in 2019. The actually currency is minted and printed by the Valaurum group which is known to be a regulated and certified private minting company.

Where Can You Buy Goldbacks?

Goldbacks are readily available at over 300 precious metal brokers and coin stores around the world. Some of these stores are physical locations around the United States but some of the most popular places to buy goldbacks are actually online gold brokers.

Below are the most popular online brokers to buy goldbacks:

Where Are Goldbacks Accepted?

Goldbacks were created to be a local currency within specific states across the United States. The idea is that goldbacks will soon be accepted in every state across the United States but currently they are only accepted in Utah, Nevada, New Hampshire, and Wyoming. It is expected that the list of states that goldbacks are accepted will spread rapidly as the popularity of this currency continues to grow.

Within Utah, Nevada, New Hampshire, and Wyoming, there are thousands of local businesses and organizations that actively accept goldbacks. You should check with the store, shop, or organization that you are visiting to see if they accept goldbacks because more and more businesses are accepting this type of currency every year.

Are Goldbacks Legal Tender?

No, goldbacks are not technically referred as legal tender because they are not regulated or printed by a governmental body. However, goldbacks are completely valid to buy and sell, trade, barter, or used for discounts. This means you are able to freely buy and sell goldbacks as well as use them to purchase products or services if both parties agree to this type of currency.

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Andrew Thompson

Andrew Thompson is the founder of Precious Metals Guy and has been investing in precious metals such as gold, silver, platinum, and more for over 20 years. He firmly believes that precious metal can be a great long term investment strategy for every investor or collector. Andrew has been featured or quoted in Investopedia, Business Insider, Forbes

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