What Are Goldbacks? Are They Legal Tender?

Investing in Goldbacks offers a unique opportunity to combine the timeless value of gold with the flexibility of a spendable currency. Each Goldback note contains a precise amount of 24-karat gold, making it both an investment in precious metals and a practical medium of exchange.

As an alternative to traditional gold coins or bars, Goldbacks provide portability, divisibility, and aesthetic appeal. They are particularly attractive to investors seeking inflation protection, tangible assets, or diversification in their portfolios, while also having the potential for everyday use in barter and local trade.

What Are Goldbacks?

Goldbacks are made of 24-karat gold foil, which is laminated onto a sturdy polyester film. This means that they are durable and long-lasting, potentially making them an excellent investment for those looking to hold onto gold long-term. A 1 Goldback note has 1/1000 troy ounces of gold in it, and the bills come in denominations of 1, 5, 10, 25, and 50 Goldbacks.

The gold content in each note is measured, so you can be sure that you are getting the full value of your investment. Additionally, each Goldback is decorated with unique, intricate designs that reflect the local culture and heritage of the area where they are issued.

Investing in Goldbacks could be an excellent way to diversify your portfolio and protect your assets. It could also just be a fun collector's item. With their stunning designs, 24-karat gold content, and status as a legal tender in four states, Goldbacks are an investment option that is truly one-of-a-kind.

Are Goldbacks Legal Tender?

If you're considering investing in Goldbacks, you’ll want to understand their legal status. While these gold-based notes are legal tender in four states — Utah, Nevada, Wyoming, and New Hampshire — they are not accepted as legal tender by the federal government.

What does this mean? Essentially, legal tender refers to the money that a government has declared as acceptable for payment of debts and taxes within its jurisdiction. This is why you can use U.S. dollars to pay for goods and services anywhere in the United States, for example.

While Goldbacks are legal tender in Utah, Nevada, Wyoming, and New Hampshire, they can’t be used at every shop or restaurant in these states. However, a surprisingly large number of businesses in all four states accept the notes.

Ultimately, the legal status of Goldbacks is a bit complex. While they are not accepted as legal tender by the federal government, they are still considered a valuable investment option by many individuals and businesses because of their gold content.

Advantages of Goldbacks

There are many reasons why individuals and businesses are turning to Goldbacks as a secure, private, and cost-effective alternative to traditional currency. Here are a few of the reasons:

• Independence: Goladbacks offer a level of independence that traditional currency can't match. Unlike digital dollars, euros, or any other fiat currency, Goldbacks do not require the approval of a central authority to spend. You are free to use them as you see fit, without restrictions on where or how they can be spent. The worth of Goldbacks is also not tied to a government, just the price of gold.
• Anonymity: Another key benefit of Goldbacks is their anonymity. You don’t have to provide personal information when using Goldbacks, which means that your transactions are not recorded or tracked in any way. This feature makes Goldbacks a popular option for individuals who value their privacy and want to keep their financial transactions confidential.
• Versatility: Goldbacks are also versatile. They can be spent, traded, or purchased with no fees, making them a cost-effective option for anyone looking to manage their money more efficiently.
• Quick to Count: Additionally, because Goldbacks are physical notes, they can be quickly counted to know exactly how much you have on hand, making them an ideal option for small business owners or anyone looking to keep track of their finances.
• Cannot be Frozen: One of the biggest advantages of Goldbacks is that they cannot be frozen in your account by a payment processor. Goldbacks are not a counterparty instrument, meaning that they are not subject to the same risks as digital currencies that rely on third-party intermediaries to facilitate transactions.

Disadvantages of Goldbacks

While Goldbacks have unique advantages, they also come with some disadvantages:

• High Premiums: Goldbacks often have higher premiums over the gold spot price compared to traditional gold coins or bars, making them less cost-efficient as a gold investment.
• Limited Acceptance: They are not widely recognized or accepted as currency outside niche communities, limiting their practical use in transactions.
• Storage and Care: Their thin, polymer construction requires careful handling and storage to prevent damage, which could affect their value.
• Lack of Liquidity: Goldbacks may not be as liquid as other gold investments like coins or ETFs, especially in broader markets.
• Market Niche: The market for Goldbacks is relatively small, and their resale value can depend heavily on demand within specific circles.

How to Buy Goldbacks and Gold Bullion

Goldbacks are new, but you can still buy them from a few of the top precious metals dealers. One of the best is Birch Gold Group, which is a leading gold and precious metals platform with unmatched educational resources and a great selection.

It also offers precious metals IRAs with a relatively low minimum investment requirement. While Birch Gold doesn't yet support Goldbacks in IRAs, you can still have them delivered to you directly, assuming they are still in stock.

If you just want to buy gold, silver, platinum, or palladium coins or bullion, you can choose from a number of great precious metals dealers. Here are a few of the best on the market with low fees, great customer service, and wide selections of precious metals products (+ precious metals IRA support and rollovers).

Is it a Good Idea to Buy Goldbacks?

If you're considering investing in Goldbacks, weigh the pros and cons before making a decision. It may be a good idea to buy Goldbacks, but that depends on what you expect from them. If you want a cool collectible, a gold-backed local currency, and a safe haven investment, all rolled into one, Goldbacks are probably perfect for you.

However, if you want to use it as your daily currency, especially if you live outside of New Hampshire, Utah, Nevada, and Wyoming, it's probably an unwise idea to buy Goldbacks. Most businesses just don't accept them yet.

Frequently Asked Questions