What Are Goldbacks and Their True Worth?
Are Goldbacks worth anything in today's precious metals market? Yes. Goldbacks contain real 24-karat gold and trade at a premium over their melt value due to their unique function as a spendable currency.
Quick Value Assessment:
- Intrinsic Value: ~$2 (based on 1/1000th oz of gold at $2,000/oz)
- Market Value: ~$4 (current exchange rate)
- Premium: ~100% over melt value
- Legal Status: Voluntary currency in 6 states, not federal legal tender
Goldbacks are voluntary currency notes made with precise amounts of .999 fine 24-karat gold embedded between durable polymer layers using the patented Aurum® manufacturing process. Unlike paper money, each Goldback derives its value from its gold content, making it a tangible asset that functions as both an investment and a spendable currency.
These notes come in denominations as small as 1/1000th of an ounce, solving gold's traditional problem of divisibility. While they carry significant premiums due to manufacturing complexity and artistic design, Goldbacks have gained acceptance in states like Utah, Nevada, Wyoming, New Hampshire, South Dakota, and Florida. This growing interest is evident, as only about 2% of purchased Goldbacks are resold within five years, suggesting people are spending or saving them.
I'm Eric Roach, an investment advisor with a decade of experience on Wall Street. I help investors understand how alternative assets like Goldbacks can serve as hedges against currency debasement and economic uncertainty.
Are Goldbacks Worth Anything? A Deep Dive into Their Value
The question "are Goldbacks worth anything" requires looking at both their gold content and their market price. Like a smartphone's value is more than its raw materials, a Goldback's value extends beyond its gold.
The Intrinsic Gold Value
The foundation of a Goldback's value is the actual gold inside each note. Every 1 Goldback note contains exactly 1/1000th of a troy ounce of .999 fine 24-karat gold. This isn't a coating; it's real, measurable gold.
To calculate the melt value, divide the current gold spot price by 1,000. If gold is at $2,000 per ounce, a single Goldback contains about $2 worth of pure gold. This tangible backing means Goldbacks can never become worthless like fiat currencies. This direct link to gold makes them an effective hedge against currency debasement, a concept explored in our guide on Why Gold and Silver are Safe Haven Assets. You can track gold's daily movements with our More info about Gold Prices Today.
Understanding the Premium and Market Price
While a Goldback might contain $2 of gold, its market exchange rate is around $4 per note—a 100% premium. This markup is justified by several factors.
Manufacturing costs for the patented Aurum® process are significant. This sophisticated technology embeds gold into polymer with high precision and security.
The real value proposition is divisibility and usability. Goldbacks solve gold's age-old problem of being too valuable for small transactions. This convenience has real economic value.
The artistic and collector appeal also adds to their worth. Each state series features intricate, beautiful designs, creating numismatic value beyond the gold content.
Finally, their historical performance is compelling. Since launching in 2019 at $2.50, the exchange rate has grown over 60%, suggesting strong market acceptance. You can monitor the daily Goldback exchange rate, which is updated to reflect market conditions and production costs. This transparency shows why Goldbacks are worth something more than just their metal.
Goldbacks vs. Other Gold Investment Options
When adding gold to your portfolio, you have a spectrum of choices, from bars and coins to the unique Goldback. Each option offers different advantages and carries different premiums. Let's compare these investments to see where Goldbacks fit.
Goldbacks vs. Gold Coins vs. Gold Bars
Here's a quick look at how these gold investments compare:
| Feature | Goldbacks | Gold Coins | Gold Bars |
|---|---|---|---|
| Smallest Unit | 1/1000 oz | 1/10 oz | 1 gram |
| Divisibility | High (spendable) | Moderate | Low |
| Premium over Spot | Highest | Moderate | Lowest |
| Use Case | Barter/Small Spend | Investment/Collection | Bulk Investment |
| Government Guarantee | None | Face Value (Legal Tender, helps protect against fraud) | None |
Goldbacks offer unparalleled divisibility but come with the highest premium. Gold coins are a good balance for investment and collection, while gold bars are best for bulk investment with the lowest premium. For a deeper dive, see our guide on Gold Bars vs Coins: Which is the Better Investment?.
Benefits of Gold Coins
While Goldbacks excel in divisibility, traditional gold coins have key advantages. First, government-issued coins like the American Gold Eagle have a legal tender face value. While nominal, this government backing helps protect against counterfeiting and ensures authenticity. Second, coins from reputable mints are globally recognized and trusted, making them highly liquid. Finally, their legal tender status can offer certain tax or legal advantages depending on local regulations.
Are Goldbacks Worth Anything as a Currency?
This is where Goldbacks carve their niche. While not federal legal tender, they are accepted as voluntary currency in states like Utah, Nevada, Wyoming, New Hampshire, South Dakota, and Florida. This stems from state-level legislation, like Utah's Specie Legal Tender Act, which allows gold and silver to be used as money.
Goldbacks offer a physical, spendable form of gold for barter or use within a growing network of merchants. The fact that only about 2% are resold for fiat currency within five years indicates people are spending or saving them, not just speculating. So, are Goldbacks worth anything as a currency? Within their growing ecosystem, the answer is a clear yes. For more on accumulating precious metals, see The Basics of Gold and Silver Stacking.
The Pros and Cons of Owning Goldbacks
Every investment has upsides and downsides. Understanding these will help you decide if Goldbacks fit your financial goals.
Advantages of Goldbacks
- Hedge Against Inflation: Goldbacks are tied to the value of real gold. Their exchange rate has grown over 60% since 2019, outperforming official inflation rates and preserving wealth.
- Unparalleled Divisibility: With denominations as small as 1/1000th of an ounce, you can use gold for small, everyday purchases—a unique feature among gold products. Learn more in The Benefits of Buying Fractional Gold.
- Low Entry Point: Their small size makes it affordable for almost anyone to start owning physical gold.
- Portable and Private: Goldbacks are easy to carry and can be used for private transactions.
- No Counterparty Risk: You hold the physical gold directly, so you don't have to trust a third party's promise.
- Collectible Designs: Each state series features beautiful, unique artwork, adding numismatic and collector value.
Disadvantages and Risks
- High Premiums Over Spot Price: Due to complex manufacturing, artistry, and utility, Goldbacks cost significantly more than the raw gold they contain. They are not the most cost-effective way to accumulate gold by weight.
- Limited Acceptance and Liquidity: Acceptance is voluntary and currently concentrated in specific states and merchant networks. They may be harder to sell quickly outside these areas compared to standard gold coins.
- Not Legal Tender Nationwide: Their acceptance relies on voluntary use, not a federal mandate.
- Storage and Security Needs: Like any physical asset, they must be kept safe from theft or damage.
- Market Volatility of Gold: The value of Goldbacks fluctuates with the global price of gold. If you're weighing these risks, our guide Is Gold a Good Investment? can help.
Practical Considerations for Goldback Investors
If you're considering Goldbacks, it's important to understand the practical aspects of owning them, from where they are accepted to how you should acquire and store them.
In Which States Are Goldbacks Accepted?
The Goldback movement began with Utah's Specie Legal Tender Act, which created a legal framework for using precious metals as money. Today, Goldbacks have voluntary legal tender status in six states:
- Utah
- Nevada
- Wyoming
- New Hampshire
- South Dakota
- Florida
This growing adoption reflects real market demand, with over $100 million worth of Goldbacks in circulation as of 2023. While not accepted everywhere, the expanding merchant network in these states provides a solid foundation for their use as a transactional currency.
How to Acquire and Store Goldbacks
Acquiring Goldbacks is straightforward through reputable dealers like Summit Metals. We offer transparent, real-time pricing and competitive rates. For tips on safe purchasing, see our guide on How to Buy Gold and Silver Online Safely.
Building a Position with Dollar-Cost Averaging
A smart approach to investing is building your position gradually. Our Autoinvest program is a monthly gold buying plan that lets you dollar-cost average into gold ownership, similar to a 401k. By automating regular purchases, you smooth out price volatility and remove the emotion from investing, systematically turning your savings into solid gold.
Smart Storage Solutions
Proper storage is crucial. Goldbacks are durable, but thoughtful storage preserves their condition.
- For small quantities: Protective sleeves or a dedicated wallet keep them accessible and safe from wear.
- For larger collections: A high-quality, fireproof, and waterproof home safe is essential.
- For maximum security: A bank safe deposit box offers professional-grade protection for long-term holdings.
You can easily split your holdings between these methods, keeping some accessible for transactions while securing the rest for long-term wealth preservation.
Frequently Asked Questions about Goldbacks
Let's tackle some of the most common inquiries about Goldbacks with clear, straightforward answers.
Who should and who should not consider investing in Goldbacks?
Whether Goldbacks are a good fit depends on your financial goals.
Goldbacks can be an ideal choice for:
- Preppers and Barterers: Their small denominations are excellent for local trade if traditional currency is disrupted.
- Small-Scale Gold Investors: They offer an accessible, low-cost entry point into physical gold ownership.
- Collectors: The intricate, state-specific designs are highly appealing to numismatists.
- Diversifiers: They add a tangible asset to a portfolio that can hedge against inflation and currency debasement.
However, Goldbacks are not ideal for:
- Short-Term Speculators: High premiums make them unsuitable for quick flipping.
- Those Needing High Liquidity Nationwide: Acceptance is currently limited to specific states and voluntary merchants.
- Investors Seeking the Lowest Premiums: If your goal is to accumulate the most gold by weight for your dollar, larger gold bars are more cost-effective.
How does the exchange rate of Goldbacks work?
The Goldback exchange rate is dynamic. It's based on the current spot price of gold but also includes a premium for production and security. This premium covers the advanced manufacturing process, intricate artwork, security features, and the cost of making gold spendable in such small units.
This is why a 1 Goldback note, containing about $2 in gold (at $2,000/oz), trades closer to $4. The official Goldback website updates this rate daily. The premium for utility and collectibility is a key component of their market price.
Are Goldbacks worth anything for your portfolio?
From our perspective at Summit Metals, Goldbacks can be a valuable addition, depending on your goals.
They are excellent for diversification, providing a tangible asset that often moves independently of stocks and bonds. They are also a good tangible, spendable asset if you want physical gold that is practical for small, private transactions.
However, they are less efficient for pure bulk gold accumulation due to their significant premiums. For that goal, larger bars or low-premium coins are better.
As a unique tool for wealth preservation, Goldbacks have shown a remarkable ability to preserve purchasing power. For those looking to systematically build their holdings, Summit Metals' Autoinvest gold buying program allows you to dollar-cost average into gold ownership, making consistent progress toward your financial goals.
Conclusion: The Final Verdict on Goldbacks
So, are Goldbacks worth anything? The answer is a definitive yes, though their true worth depends on your investment objectives.
Goldbacks are a unique financial tool, combining the stability of 24-karat gold with the utility of a spendable currency. Their key advantage is divisibility, making gold practical for everyday transactions in a way that bars or coins are not. Since 2019, their exchange rate has grown over 60%, demonstrating a strong track record of preserving and growing wealth against inflation.
While their high premiums mean they aren't for investors seeking to maximize gold weight for the lowest cost, they are ideal for those who value a unique combination of inflation protection, spendability, and portfolio diversification. The growing acceptance in six states—Utah, Nevada, Wyoming, New Hampshire, South Dakota, and Florida—signals a real shift toward sound money.
At Summit Metals, we see Goldbacks as a valuable component of a well-rounded precious metals portfolio. We are committed to transparent, real-time pricing with no hidden fees.
For those ready to build a systematic approach to precious metals, consider our Autoinvest gold buying program. Like a 401k, it allows you to dollar-cost average into gold ownership with regular purchases, smoothing out market volatility while steadily building your holdings.
In a world of uncertain currencies, the tangible security of Goldbacks is worth a great deal.
