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In the words of the company that produces the gold-coated notes, a Goldback is a “voluntary negotiable instrument.” It is meant for trade and voluntarily accepted by some merchants in five states.
You’ve probably heard of gold coins, but maybe you’ve caught wind of the Goldback buzz and wondered, “Exactly what is a Goldback note?”
Launched in 2019, Goldbacks look a lot like federal currency notes in terms of shape and aesthetic, but with a glaring exception. They contain thin sheets of 24-karat gold—ranging from 1/1,000th to 1/20th of a troy ounce—encased in a decorative polymer coating.
Goldbacks come in denominations of 1, 5, 10, 25, and 50. The denomination does not directly correlate with the gold content, but each note trades at a proportionate rate. A 50 note, which contains 1/20th a troy ounce of gold, is worth 50 times the going rate of a 1 note, which has 1/1,000th of an ounce.
Merchants voluntarily choose to accept Goldbacks for trade.
History of Goldbacks
The Utah Legal Tender Act of 2011 recognized gold and silver coins as legal tender in Utah.
Goldbacks launched in Utah in 2019 as a method of using gold as payment.
Although they are not gold coins, Goldbacks attempt to capitalize on the Utah Legal Tender Act. The Goldback is a category in itself and exists in state ecosystems with a history of valuing freedom versus federal control.
Are Goldbacks Legal Tender?
Goldbacks aren’t legal tender, and their legality is murky. Federal law does not address local currency, and their legality varies with each state.
No states have officially adopted Goldbacks as currency. There’s a need for legislation to establish clear guidelines on acceptance and use.
Where Can I Use Goldbacks?
Since 2019, a Goldback series has been issued in the following states:
- Utah, 2019
- Nevada, 2020
- New Hampshire, 2021
- Wyoming, 2022
- South Dakota, 2023
The Goldback website features location maps and lists of accepting merchants in the states with a Goldback series. The merchants listed cover a variety of businesses and needs.
There is also an assumption that Goldbacks may be used as barter between individuals.
Types of Goldbacks
Each state with a Goldback has its own unique notes. What are Goldback notes in one state vary significantly from Goldbacks in another state.
Each Goldback symbolically features a cardinal virtue.
The identifying properties of each note is as follows:
Utah Goldback
The Utah notes depict the virtues of Prudence (on the 1 denomination Goldback), Truth (5), Justice (10), Victory (25), and Liberty (50).
Nevada Goldback
Nevada notes features Charity (1), Wisdom (5), Justice (10), Fortitude (25), and Liberty (50).
New Hampshire Goldback
Goldback notes in New Hampshire, the “Live Free or Die” state, show Grace (1), Truth (5), Foresight (10, Fortitude (25), and Liberty (50)..
Wyoming Goldbacks
Goldback notes in Wyoming display the virtues of Reverence (1), Boldness (5), Trust (10), Loyalty (25), and Liberty (50).
South Dakota Goldbacks
South Dakota Goldbacks feature Peace (1), Industry (5), Harmony (10), Honor (25), and Liberty (50).
Can I Invest in Goldbacks?
You can invest in Goldbacks by purchasing them from online dealers or select coin shops.
The Goldback website lists authorized merchants. Links route you directly to the merchant’s site.
The exchange rate for Goldbacks changes daily.
It is important to note that although Goldbacks contain pure gold, they are not eligible for investment in a Gold IRA.
IRA-eligible bars and coins must meet specific guidelines set forth by the IRS. Bullion must originate from specific sources and meet criteria in order to be IRA-eligible.
Are Goldbacks a Good Investment?
Determining whether Goldbacks are a good investment depends on your investment goals.
Goldbacks are a fairly new product, so there is no long-term data on their investment performance.
They do contain gold—albeit a trace amount—and can be collected and redeemed for their gold value. 1000 Goldbacks notes—no matter the denomination—produce 1 ounce of gold.
As with any product, supply and demand could affect worth.
The company that issues Goldbacks suggests the daily exchange price to merchants. There is no clear guidance on the factors it takes into consideration. Rates may vary from merchant to merchant.
Do your research on Goldback pricing, and compare its price to the price of standard gold coins such as the American Eagle. Factor in utility if that is important to you, and decide if Goldbacks have a place in your portfolio.
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