Are Goldbacks Small Enough? Why We May Need a Half or Quarter Goldback

Written by Jeremy Cordon, CEO of Goldback Inc.

When the Goldback launched in 2019, it felt perfect. The single Goldback was selling for between $2.00 and $2.25. There was nothing else like it on the market. They were so affordable that some major bullion distributors even gave them away as freebies. After all, what's a couple of bucks? The 5 Goldback was just as accessible, priced around $10.

Fast forward to today, and the suggested acceptance rate for a single Goldback is $5.60. While there's another story to be told about how Goldbacks have performed as an investment, the real question here is: What does a $5.60 entry point mean for the Goldback as a currency?

To answer that, let’s first consider: What is the ideal starting value for any physical currency?

A century ago, during the Roaring Twenties, the U.S. monetary system wasn’t all that different from what we have today—at least on the surface. The smallest unit was a copper wheat penny. A hundred of those pennies equaled one Silver Peace Dollar, and twenty Silver Peace Dollars added up to a $20 Double Eagle Gold Coin. You could even get $100 or $500 bills! This was the money of the 1920s.

Now, 100 years later, we still have most of those monetary units (though $500 bills were discontinued in the 1960s), but the value has drastically eroded. So, what would a Goldback have cost in 1924? The math is surprisingly simple.

A $20 gold piece back then weighed about one ounce of gold. Two cents was equivalent to a thousandth of an ounce, which is the exact weight of a single Goldback today. Factor in the costs to produce and circulate Goldbacks, and you'd land at about 4 wheat pennies for a single Goldback in 1924 terms.

This comparison shows that the dollar has lost more than 99% of its value over the last century. The wheat penny of 1924 was worth more than an entire U.S. dollar is today. In fact, if we were to be brutally honest about inflation, we'd probably scrap pennies altogether and bring back $500 bills! (Even most kids aren’t interested in collecting change anymore.)

If we assume that the 1924 wheat penny represents the ideal minimum value for currency, then yes, a single Goldback is still too valuable to be the perfect starting unit. To match that standard, we'd need to halve the Goldback—not once, but twice. This would mean introducing a quarter Goldback.

Here’s the bad news: It’s not currently economically feasible to create a quarter Goldback. Even the single Goldback, for a long time, was a feat of engineering and operated as a loss leader to make it viable.

But here’s the good news: This might be possible in the near future. As technology improves and the demand for Goldbacks continues to grow, production costs are gradually decreasing. Expect a half Goldback to happen first, though. At today’s prices, a half Goldback would be around $2.80—much closer to the original pricing from 2019 that just felt right. These could arrive sooner than we think!