Goldbacks sound too good to be true, right? Gold you can hold in your hand, spend like cash, and use to hedge against inflation. It almost sounds like the magic solution to all the dollar’s woes. But before you rush to invest in these shiny gold foil notes, you have to wonder—what’s the catch? Why isn’t everyone ditching paper money for Goldbacks if they’re so great?
Let’s break it down. Goldbacks are fascinating because they bridge two worlds: the tangibility of gold with the everyday convenience of paper currency. But are they really the investment revolution they’re made out to be, or is there more under the surface? Here’s a closer look at the pros, cons, and nuances of Goldbacks—and why you should think twice before diving in headfirst.
Goldbacks as a Gold-Backed Currency: Convenient but Complex
The concept of spending gold like you would regular cash is a bit mind-bending. For years, gold has been seen as something you hold onto, not something you hand over at your local café. Gold is typically stashed away in vaults, waiting to appreciate in value over time. Yet, Goldbacks flip that script. If you live in one of the U.S. states that recognize gold and silver as legal tender, you can physically spend Goldbacks like regular currency.
On the surface, this sounds fantastic, especially in times when inflation chips away at the value of the dollar. Gold, by contrast, tends to retain purchasing power over time. So, why not spend it?
Well, here’s the rub: you can only spend Goldbacks in certain places, meaning they aren’t as universally accepted as regular cash. Participating businesses are few and far between. Plus, their value fluctuates because they’re tied to the current price of gold. You’ll need to check exchange rates before making any transactions, and don’t forget the math involved in making change. Not exactly as simple as whipping out a twenty.
But the biggest question is: should you even be spending gold in the first place? Gold is an investment. The longer you hold onto it, the more potential it has to grow. Using Goldbacks like cash might feel counterintuitive if your goal is wealth preservation. It’s the age-old debate: What good is an investment if you can’t use it when you need it?
Inflation Hedge or Marketing Gimmick?
Here’s where Goldbacks get particularly interesting. Unlike fiat currencies, which are backed by little more than the government’s word, Goldbacks are backed by actual gold content. As a result, they offer an intriguing hedge against inflation, something fiat currencies struggle with. Since their launch in 2019, Goldbacks have increased more than 60% in their exchange rate against the dollar. Compare that to how fiat currencies have lost value in the same period, and suddenly Goldbacks seem like a rock-solid option.
But let’s not get carried away. Yes, gold historically holds up better than fiat currencies in times of economic uncertainty, but gold’s price is still subject to volatility. Market forces like supply and demand, geopolitical instability, and even shifts in investor sentiment can drive gold prices up or down in unpredictable ways. And because Goldbacks are essentially fractional pieces of gold, their value ebbs and flows right along with the broader gold market.
The stability of Goldbacks rests entirely on the stability of gold. So, while they may offer protection against inflation in the long run, don’t expect a smooth, linear rise in value.
Investing in Fractional Gold: The Trade-Offs
If you’re new to gold investing, Goldbacks offer a unique entry point. They are one of the most affordable ways to buy fractional gold. Instead of purchasing a full ounce, which can run into thousands of dollars, Gold
backs let you invest in small, manageable increments. This allows you to dollar-cost-average your way into gold, which spreads out your investment over time, potentially mitigating the risk of price fluctuations.
However, the flip side is the cost. Fractional gold comes with higher premiums compared to buying a full ounce at once. That’s just the reality of buying smaller pieces. While you gain flexibility, you pay for it. And when it comes time to sell, those premiums can eat into your returns. Goldbacks may be spendable, but that liquidity comes at a price.
Should You Invest in Goldbacks?
Now for the million-dollar question: Who should actually consider investing in Goldbacks?
If you’re someone who values the combination of portability, divisibility, and the inflation protection that gold offers, Goldbacks might be a good fit. They’re especially appealing if you live in a state that recognizes gold as legal tender, and if you’re comfortable with the premiums and exchange rate calculations that come with them.
On the other hand, if you’re expecting short-term gains or want a liquid investment you can quickly cash out anywhere, Goldbacks might not be for you. Their limited acceptance as currency and the higher costs associated with fractional gold might make traditional gold coins or bars a better choice.
At the end of the day, Goldbacks are a fascinating concept, blending old-world investment stability with modern currency convenience. But like any investment, they come with their trade-offs. They’re not a magic bullet for inflation, nor are they a one-size-fits-all solution to economic uncertainty. So, do your homework, weigh the pros and cons, and decide if Goldbacks align with your financial goals.
Get your Goldbacks here.
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No, gold and goldbacks do not fluctuate in value. They fluctuate in “dollar value”.
This is the mental hurdle that so many have trouble getting over. It’s the dollar that’s fluctuating and losing value!
But people keep thinking that the dollar price is what determines the value.
A gallon of gas is $2.68 in Arkansas, but that same gallon of gas is $4.11 in California.
Is a gallon of gas more valuable in California?
No. A gallon of gas is a gallon of gas.
It’s the value of the dollar which is all over the place.
In addition, “dollars” are Federal Reserve Notes. A note is a record of debt. So ALL dollars are indebted to the Federal Reserve, (which is not Federal) and therefore belong to the Fed. The money/dollars you hold and use do not belong to you as value. They belong to the Fed and are on loan to you. They can confiscate them anytime they wish.
Goldbacks cannot be confiscated.
It’s the same thing with Bitcoin, or gold/silver coins. They are worth whatever you can trade them for. The moment you place a “dollar” value on them you have given the “debt-based dollar” title of “measurement for value”. Nevermind that the dollar is constantly losing value, and has different values in different parts of the country.
Stop using the dollar as your value indicator and other currencies like Goldbacks start making a lot more sense.