How Can I Use Gold as Currency?  - APMEX (2024)

• Published on October 16, 2023
• by APMEX

There are 23 states in the United States that currently have laws or are in the process of passing laws that recognize silver and gold as legal tender.

However, that does not mean that every business in these 23 states accepts gold or silver to pay for lunch or in exchange for goods. While the state accepts gold as currency, it is up to the individual businesses to decide whether they accept gold.

Theoretically, you could use Silver American Eagles or Gold American Eagles as currency, but their face value is only worth a fraction of their precious metal content.

Using Gold as Currency

If you are in one of the states that recognize gold and silver as legal tender, you may use that metal in the state for currency. That does not mean a business must accept gold as tender. It is up to the business in most states.

To use gold as a medium of exchange, you must first confirm the private business you would like to shop accepts gold.

Having confirmed the business accepts gold and, specifically, the gold products you want to use in paying for your goods, shop as you would at any other store. Make your selection and then bring it to the register.

Using gold as a medium of exchange involves math, even if you pay with Goldbacks. However, Goldbacks come in five denominations so they are easier to use as currency than a full ounce of gold. Their fungibility adds to this ease of use.

The equivalent price of your gold product must be figured out since the value of gold fluctuates with regularity. Assuming you pay with a 50 Nevada Goldback, which has 1/20 oz of gold, you would need to determine 1/20 of the spot price of gold.

Multiplying the current gold spot price by 0.05 gives us the value of 1/20 oz of gold, which as of publication, is $93.75. It is relevant that you use the current value as the spot price changes continuously.

Now that you know how much your gold product is worth, you can buy $93.75 in goods. If your total is less than that, the cashier will need to make change and may not be able to make your change in gold.

Can I use Gold in Lieu of Dollar Bills?

While nearly half of the United States have passed or are in the process of passing legislation making gold a legal tender, the motivation backing these changes is investment-focused rather than circulating currency for buying goods.

When states pass laws that make gold and silver legal tender, they are ending the taxation of precious metals. This move is not controversial when we consider other investment vehicles.

These states have merely passed laws that treat gold and silver like the state would treat other investments, which are not taxed until they are sold. When they are sold for a profit, capital gain taxes are applied.

Why are States Passing Legislation About Gold and Silver?

Amid escalating domestic inflation and exposure to risk associated with the dollar’s debt, states are trying to protect themselves against the diminishing U.S. dollar.

As the dollar loses value, precious metals like silver and gold prove their worth as they demonstrate resistance to inflation and other volatile factors.

Whether your strategy involves burying cash in the backyard or buying gold to safeguard against inflation, we recommend consulting with a financial professional before making any big moves.