What Is a Gold Certificate?
Let me explain what a gold certificate is. It's a document that proves you own a specific amount of gold, and the U.S. issued them as currency equivalents until 1934.
Key Takeaways
You should know that the U.S. issued gold certificates matching their dollar face values from 1879 until 1934, when the gold standard ended. Today, those U.S. certificates only have collectible value. Some banks and companies still issue gold certificates as proof of owning a stated amount of gold bullion.
Understanding Gold Certificates
When the U.S. dollar was on the gold standard, gold certificates were worth their face value in dollars and served as legal tender. Now, they're issued to investors to prove ownership of gold stored by a bank.
The U.S. left the gold standard in 1933, so Mint-issued gold certificates are now just collectors' items. You can buy one on eBay for around $10 to $200 or more, based on its age, rarity, and condition.
Gold certificates show ownership of gold, much like stock certificates show shares in a company. In the U.S., from 1879 until they were phased out, they matched the value of the same denomination in currency.
Carrying gold bullion is impractical for exchanges or daily use, so certificates made owning and using gold easier. Today, they still serve as receipts proving ownership of a specific gold amount.
U.S. gold certificates look like paper banknotes from the era, with features like bright orange backs and a gold-colored U.S. seal on the front. Designs changed over time.
For instance, a 1907 $1,000 gold certificate has the denomination in all four corners, 'IN GOLD COIN' below Alexander Hamilton's portrait, a gold seal and serial number on the front, and the orange back.
These certificates circulated in the U.S. until President Franklin D. Roosevelt took the dollar off the gold standard in 1933. Since the dollar's value was tied to gold, they acted as parallel currency from 1879 onward, exchangeable but not common in everyday deals.
Important Note
Remember, a gold certificate proves you own a quantity of gold, just as a stock certificate proves you own a share in a company.
Gold Certificates Today
Some banks and investment companies in the U.S. and abroad still issue gold certificates, usually specifying an amount in ounces. Their dollar value changes with the market, so they're an investment in precious metals, not currency.
Be aware that trading in these modern gold certificates can be risky. If the issuing company fails, the certificate becomes as worthless as a stock in a bankrupt firm.
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