“Goldback” bills are accepted in 4 states, but are they a good idea for consumers?
“Goldback” bills are accepted in 4 states, but are they a good idea for consumers?
Rick Russell’s store in Cheyenne, Wyoming, looks like a typical pawn shop with glass cases full of collectibles and coins. He also sells bars and nuggets of gold, silver, platinum and palladium.
Russell said he’s recently seen an uptick in people interested in precious metals, especially since inflation started to soar.
“There’s a lot of people that are preppers here,” Russell said. “They’re just preparing for the worst, right?”
Behind Russell’s register, he’s displayed a prominent sign that reads, “Goldbacks, sold here.” That’s a new venture for Russell as he tries to diversify his business. A company called Goldback manufactures these bills that it says have small amounts of gold in them, and the currency is being used in four states.
Goldback uses new technology to try and make it easier to buy and sell gold. Currently, if you have an ounce of gold that is worth, say, over $1,700, it’s challenging to break that down and spend it at a store. Small flakes worth less money could easily be lost.
Goldback aims to solve that problem, said Kevan Mills, the company’s vice president of sales and marketing.
“When you’re making a goldback, you’re having that transparent layer of plastic or polymer. And you’re just laying, atom by atom, the gold onto that until it’s exactly 1/1,000th of an ounce,” Mills said.
Mills said the company is printing millions in goldbacks every month and can’t keep up with demand. The company has several denominations with different amounts of gold in them.
The Wyoming goldbacks often have cowgirls and horses etched onto them; Goldback says it uses anti-counterfeit measures in its manufacturing process.
The company started in Utah in 2019 after the state legislature made it easier to buy and sell goldbacks there. The company has mapped more than 600 small businesses in Utah, New Hampshire and Wyoming that it says accept them. That includes candy stores and chiropractors.
But are goldbacks a good idea for consumers? The business is an intriguing idea, said Cornell University professor Eswar Prasad, who studies currencies — with some drawbacks.
“By and large, gold has limited ability to serve as an inflation hedge,” he said. “It, too, tends to be affected by macroeconomic variables.”
The price of gold has fallen over the past year, and to get a goldback, you pay a hefty premium above the spot price for gold.
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