Interest in the “Goldback” currency may grow with inflation

Rick Russell’s store in Cheyenne, Wyoming, looks like a typical pawn shop with display cases full of collectibles and coins. He also sells gold, silver, platinum and palladium bars and nuggets.

Russell said he’s seen an uptick in people interested in precious metals recently, especially since inflation started to rise.

“There are a lot of people here who are preppers,” Russell said. “You’re just preparing for the worst, aren’t you?”

Behind Russell’s register he has a conspicuous sign that reads “Goldback Sold Here.” This is a new venture for Russell as he seeks to diversify his business. A company called Goldback makes these bills, which it says contain small amounts of gold, and the currency is used in four states.

Goldback uses new technologies to make buying and selling gold easier. For example, if you currently have an ounce of gold worth over $1,700, it’s difficult to break that down and spend it in a store. Small flakes worth less money could easily get lost.

Goldback wants to solve that problem, said Kevan Mills, the company’s vice president of sales and marketing.

“When you make a gold back, you have this transparent layer of plastic or polymer. And you just put the gold on it, atom by atom, until it’s exactly 1/1,000th of an ounce,” Mills said.

Mills said the company prints millions of gold coins each month and can’t keep up with demand. The company has several denominations with different amounts of gold.

Cowgirls and horses are often etched on Wyoming goldbacks; Goldback says it applies anti-counterfeiting measures in its manufacturing process.

The company started in Utah in 2019 after lawmakers 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. These include candy stores and chiropractors.

But are goldbacks a good idea for consumers? The deal is an intriguing idea, said Cornell University professor Eswar Prasad, who studies currencies — with some downsides.

“Broadly speaking, gold has limited ability to act as an inflation hedge,” he said. “It too tends to be influenced by macroeconomic variables.”

The price of gold has fallen over the past year, and to get a goldback you pay a hefty premium over the spot price of gold.

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