I Just Received My Free 1/2 Goldback

thank you, Sap, for pointing me in the right direction. I obviously wasn't looking in the right area for this topic. if this gets moved or locked i'll understand.

The other threads about them cover this reasonably well. The theory behind them is "money should be backed by gold" and the best and simplest way to do that is to actually physically put the gold into the money you're using. The problem with gold, from their point of view, is it's so darned valuable you only need teeny tiny amounts of it to do your everyday buying and selling - at the grocery store, restaurant or wherever - and teeny tiny gold coins are simply too impractical, from the point of view of physically using them. Hence, goldback "notes" are designed to be a more convenient way to handle teeny tiny amounts of gold: they're made from a very thin sheet of gold foil, sandwiched between layers of plastic. That "1/2000th ounce" Goldback note in the OP literally has 1/2000th of an ounce of gold inside of it, and if you don't mind crumpling up your Goldback note and putting it into a crucible and destroying it, you can burn off the plastic and get your 1/2000th of an ounce of gold, nice and easy. Thus, Goldbacks are "backed by gold" literally, and in a way that no-one can rescind or revoke.

The ultimate hope and aim for Goldback notes is to have individual states declare them legal tender, in accordance with Article 1 Section 10 of the US Constitution, which permits states to declare "gold and silver coin" as legal tender. The people behind Goldback Inc are hoping that sympathetic states will fall into line, support them in the inevitable legal challenges from the federal government, and allow them to get some kind of legal definition of "gold coin" on the books that includes Goldbacks.

As I said in my posts in the earlier threads, my own non-professional legal opinion is that they've got buckley's chance of getting that definition through. The fact that Goldbacks are being discussed in the "paper money" section of this forum, and not the "coin" section or even the "bullion" section, indicate where the common-sense definition of a Goldback lies.

The main drawback with Goldbacks, from a bullion fanatic's point of view, is the extra-high premiums they charge. To hold an ounce of gold in Goldback form, you'd basically need to pay Goldback Inc a 100% premium on whatever the spot price of gold is - double the spot price, with no prospect for a bulk discount like you get with regular bullion trading (so 10 ounces or 100 ounces of Goldbacks will also attract the same 100% premium). That's a nice tidy profit for Goldback Inc, which is why they can afford to go around giving away free samples.

The main drawback to actually using Goldbacks in day to day transactions is the necessity for carrying around two different forms of currency (US dollars and Goldbacks), and finding businesses likewise willing to handle two separate currency forms (with Goldbacks lacking the convenience of being able to take them down to the bank at the end of the day). Ultimately, I think Goldbacks are doomed to become weird collector knickknacks, and not a viable alternative community currency.

They're not designed to be spent "at their gold value". They're designed to be spent at the inflated value somewhat arbitrarily chosen by Goldback Inc for that day's price, since that's the price Goldback Inc promises to buy and sell them at. If a merchant wants to know how much in US dollars a goldback note is, they need to look up the Goldback website for the current exchange rate. And yes, the current exchange rate for plastic-coated-gold is US$6620/ounce, compared to the current gold spot of US$3294/ounce. So only half of the nominal value of a goldback is in the actual gold. The other half is in... faith that the Goldback system won't collapse?

Merchants will either know how to do that exchange-rate lookup thing, or they won't - and if they won't, then the Goldbacks will almost certainly be refused, or accepted at an extremely steep discount (like, under 50% of the official rate).


They aren't supposed to be a barter currency, they're supposed to be an alternative currency (just like Canadian dollars and Mexican pesos are also "alternative currencies"), and they are actively lobbying to supplement and/or replace the US dollar as fully official legal tender in any state prepared to offer sympathetic legislation. So far, without success, since most states know they can't constitutionally do that.

Merchants don't price their goods in Goldbacks and they're not going to look up the exchange rate. In the Northwest US, Canadian coins used to circulate at par, but that went away 30 years ago. The practice of exchanging US notes for tourists at shops in Canada still goes on. But Goldbacks? I don't think so, not even at a foreign exchange or a bank.

I used to find coins lost on the ground at a McDonalds drive thru. Over the last couple years the coins have vanished. Customers have stopped paying with money. They use Apple Pay and credit cards. Less and less people are using money even for small transactions.

This is what really dooms Goldbacks. They depend on replacing currency for transactions, using an exchange system more complex than currency, while currency itself is being replaced by electronic transfers. Goldbacks are a time machine back to the 1850's.

Very nice!

that's very neat, loonielewy.. 1 south dakota goldback. I see a bison. (helder?)