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A new way of trading and spending gold is catching on in the Mountain West

A Wyoming “goldback” worth about $20. The company that makes the bill says it contains 1/200th of an ounce of 24-karat gold.
Will Walkey/Mountain West News Bureau
A Wyoming “goldback” worth about $20. The company that makes the bill says it contains 1/200th of an ounce of 24-karat gold.

Rick Russell’s store, Cheyenne Coins, is nestled between a roofing company, an insurance salesman and a taco shop a few blocks from the main drag in Wyoming’s capital. It looks like a typical pawn shop with glass cases full of collectibles.

“All kinds of stuff comes in,” Russell said. “All these boxes here are Johnny Lightning, Matchbox, Hot Wheels vehicles. That was an 8,000-unit deal I did just because it’s different.”

One of Russell’s main businesses is selling coins, nuggets and bars of precious metals like gold, silver and platinum. As inflation has jumped in recent years, he's seen more customers express interest in alternative currencies.

“Since COVID, I probably have another 100-plus customers easily that never were in here before and bought gold and silver,” Russell said. “That continues, right? Because they're concerned.”

Behind Russell’s register, he displays 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 bills that it says have small amounts of gold in them.

Goldback is injecting a new technology into the age-old gold trade with the intent of making the precious metal easier to spend. Currently, if you have an ounce of gold worth, say $1,700 dollars, it’s pretty hard to break that down and spend it at a store. A flake worth less could easily be lost.

That’s where goldbacks come in, according to Kevan Mills, vice president of sales and marketing at the privately held company. The finished product is about the size of a normal note and can fit in most wallets.

“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 one 1,000th of an ounce,” Mills said.

The smallest goldback denomination is worth about $4, but there are also larger bills with more gold in them – the most valuable one currently costs a bit less than $200. Often, Western characters like cowgirls and horses are etched onto the notes.

The company started in 2019 after Utah’s legislature made it easier to buy and sell them there. Now, goldbacks are issued in four states: Utah, Nevada, Wyoming and New Hampshire. Mills said the company is maxed out in terms of demand.

“We can't do interviews. We can't do YouTube videos. Because we only have 'x' number of millions of dollars of supply every month, and we're selling it all with no marketing,” he said.

Mills wants to quintuple Goldback’s capacity in the next 18 months and get more states on board. Another goal is to get more businesses to accept them. Currently, more than 500 small businesses in the West, from candy stores to chiropractors, advertise that customers can pay for things using goldbacks. The company also says it uses anti-counterfeit measures to prevent fraud.

The question is, are these bills actually worth the hype for consumers?

On eBay, some dealers are selling their bills for prices that are marked up compared to original sale prices on Goldback’s website. That means that there could be some collectible value due to the company’s unique and new nature. But can goldbacks be an effective store of large quantities of wealth to hedge against inflation?

Cornell University economics professor Eswar Prasad studies currencies, and he's skeptical.

“By and large, gold has limited ability to serve as an inflation hedge,” he said. “It, too, tends to be affected by macroeconomic variables.”

To get a goldback, consumers also pay a hefty premium in exchange for the ability to spend it at stores. Most places likely still won’t accept them.

“The reality is that the price of gold has been very volatile. So if you're willing to roll the dice with a small part of your portfolio, maybe it's not such a bad idea," Prasad said. "But is it a really durable hedge against inflation? History doesn't show very strong evidence of that.”

But he doesn't outright reject the idea of goldbacks, especially as word spreads and more people warm up to the idea. He said the company’s success will depend on the economic and political environment in the U.S. and how much people trust the government to keep the dollar’s value steady.

Prasad also said he isn’t surprised that the company is thriving first in the Mountain West, where antagonism toward federal institutions like the U.S. Treasury Department has been a part of the region’s history and culture for decades.

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

Will Walkey is currently a reporter for Wyoming Public Radio. Through 2023, Will was WPR's regional reporter with the Mountain West News Bureau. He first arrived in Wyoming in 2020, where he covered Teton County for KHOL 89.1 FM in Jackson. His work has aired on NPR and numerous member stations throughout the Rockies, and his story on elk feedgrounds in Western Wyoming won a regional Murrow award in 2021.
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