The Goldback is a local commodity currency operating in several US states, including Nevada and Utah. The Goldback is described as “the world’s first physical, interchangeable, gold money that is designed to accommodate even small transactions”. Each Goldback is embedded with 1/1,000th of a Troy Oz of 24 karat gold. Show host Gene Tunny is joined in this episode by the Founder and CEO of the Goldback company, Jeremy Cordon. According to Jeremy, “Gold is money. Everything else is credit.” Among other things, Gene asks Jeremy who’s buying Goldbacks and how widely are they being used?
Please get in touch with any questions, comments and suggestions by emailing us at firstname.lastname@example.org or sending a voice message via https://www.speakpipe.com/economicsexplored.
You can listen to the episode via the embedded player below or via podcasting apps including Google Podcasts, Apple Podcasts, Spotify, and Stitcher.
What’s covered in EP183
- What is a Goldback? [1:36]
- The USD value of a Goldback relative to the value of Gold in it [5:20]
- How can you create your own local currency in the US? Is it legal? [6:44]
- What are the different types of gold buyers? Why Goldbacks are popular with preppers [11:30]
- What’s the acceptance of Goldbacks by local businesses? [14:12]
- Why are Goldbacks better than the old gold standard? [20:56]
Links relevant to the conversation
Related previous podcast episode:
Why fiat money means higher inflation & why a radical Reserve Bank review is needed w/ Darren Brady Nelson – EP179
What are Goldbacks and who’s buying them – e.g. preppers, libertarians, collectors? w/ Goldback Founder Jeremy Cordon – EP183
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Gene Tunny 00:06
Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, thanks for tuning into the show. This is Episode 181 on goldbacks. A local commodity currency operating in several US states including Nevada and Utah. The gold back is described as the world’s first physical interchangeable gold money that is designed to accommodate even small transactions. Each goldback is embedded with 1/1000 of a troy ounce of 24 karat gold. At the end of March 2023, they could be exchanged for a bit over four US dollars. I’m delighted to say that I’m joined this episode by the founder and president of the gold back company, Jeremy Cordon. According to Jeremy, gold is money, everything else is credit. Okay, let’s get into the episode. I hope you enjoy my conversation with Jeremy. Jeremy Corbyn, president of gold back, welcome to the programme. Thanks
Jeremy Cordon 01:36
for having me.
Gene Tunny 01:37
It’s a pleasure, Jeremy, I’m keen to chat with you about gold backs. One of the issues we cover on this show is the fiat money and the issues associated with that. And I did a show a few weeks back on fee it versus commodity standards for money. And I mean, what’s fascinating is that you’ve introduced your own commodity money, it appears with gold back, could you tell me a bit about gold back, please?
Jeremy Cordon 02:04
Sure. Well, just like you said, it is a commodity money. And it might be one of the most successful commodity money’s out there right now. You know, we produced maybe $50 million worth of gold backs that are circulating. And that was true up until the end of 2022. You know, last month, I want to say that we’ve sold between six and $7 million worth of gold backs. So we’re seeing this huge amount of interest and growth. And people that are looking for kind of these inflation proof commodity monies. Yeah, if you haven’t seen one a gold back, it looks about the shape and size of $1 Bill, there’s gold encased in it, it kind of gives it like a like a Willy Wonka ticket look. And they go down from 1000th ounce of gold. So you know, it’s like a $4 Gold product, and they go all the way up to a 50, which has 50 times the amount of gold, it’s a 20th of an ounce. And those are worth about $200 a piece. So people carry these around like bills spend is just like cash, but the gold is in them. And that’s that’s what gives them you know, a lot of their value there.
Gene Tunny 03:12
So in terms of what they’re worth, or what that exchange for in US dollars, is it broadly equivalent with the value of the gold within the notes? Within the goldbacks?
Jeremy Cordon 03:25
Yeah, I’d say that’s about that’s about half the value. You know, because if you melted them down, you know, if you had a giant pile of gold backs, you melted the whole thing down, you got to realise that we’re splitting an ounce of gold into 1000 pieces. And that cost money, right? If you destroy all that, you know, craftsmanship and labour and effort to do that effectively, you know, you’re only going to recover about, you know, half of that value and melt, which is still really good. It used to be far more expensive to break gold down at that level. The other half of the value is just the utility value of having a money that works well and maintains its value, which you know, for fiat currencies, 100% of the value is utility value.
Gene Tunny 04:06
Yeah, yeah. And so where are these being used in exchange.
Jeremy Cordon 04:11
Now when we launched goldbacks, it was about four years ago is 2019. And we started in Utah. Utah’s a very special law that recognises gold and silver as legal tender. And, you know, we figured we couldn’t find a more hospitable, legal environment anywhere in the Western world. Right. So we started in Utah, and I was thinking that the Utah gold back would be a it would be a Utah specific project, and that we probably wouldn’t do any more gold back projects anywhere else. And what we found really quickly is that 90% of goldbacks for Utah were selling outside of the state of Utah. And then I started getting stories, you know, these kind of anecdotal stories not just from all over the US but all over the world, that people were bartering and trading with gold backs for things because go figure the value of a gold back. Is it just because it says Utah, It’s, you know, it’s because the fixed amount of gold. It’s a known quantity. It’s a known value and it’s very usable and bearable, anywhere in the world because gold has value everywhere in the world.
Gene Tunny 05:20
Yeah, exactly. I suppose I guess one thing I’m most interested in is that the value of the gold is about half of the value of the note you were saying so. And that’s how you’ve made like all the goldback company makes the money because you’re selling these notes for more than the cost of production, which makes sense. I mean, obviously, you’ve got to make money out of it. Yeah. So that makes sense.
Jeremy Cordon 05:46
We don’t make half. It’s not like, you know, I mean, the profit margin isn’t as rich as you think.
Gene Tunny 05:51
Yeah, I wasn’t suggesting that. But yeah.
Jeremy Cordon 05:53
Some people think that’s the case like that the one denomination, which is the 1,000th of an ounce, that’s actually manufactured in the loss. It costs more than we can even sell it for to make.
Gene Tunny 06:04
Right, right. Okay. So, Utah, it’s got a special law, and I saw that there are other there are other states where they’re being used. Is that right? Is it New Hampshire, that I read that correct?
Jeremy Cordon 06:16
Yeah, we got New Hampshire and Nevada. Wyoming just came out. We got South Dakota coming out this year.
Gene Tunny 06:23
And the year of relying on specific state laws, because I remember there’s an episode of Riverdale, that Netflix show where Veronica Lodge tries to create her own Riverdale currency. I don’t know if you’ve seen that episode at all. And her father who’s the crime lord of Riverdale, Hiram Lodgy, he has it shut down by the US Treasury, he says, And he said, You can’t do this. You can’t create your own local currency. But you’ve managed to create a local currency here. How can you do that? If the US dollar is legal tender in the US? What does the Treasury say about this?
Jeremy Cordon 06:56
You know, you’re right. There’s federal law that prohibits you from making your own currency in the United States, unless otherwise authorised by state law. So if you don’t have a state law to support your currency project, then you can’t do it. It’s illegal. So you know, Utah was a very obvious first choice for us. We went in there and we said, Okay, we got a state law recognising gold and silver as legal tender, this is gold. So we’re under this umbrella of state law. So you know, because otherwise, if this is a federal project, it’d be illegal. And sure enough, you know, we support a huge network of businesses in the states that you mentioned, that advertise themselves as preferring to take gold back. So these do function and circulate as local currencies within the states. There’s businesses outside of these states that also do it. We don’t include them as part of any of our either they’re not like a supportive business. You know, people happen to barter with these things outside of the states, but it’s not, you know, that’s more because it’s a commodity money or a novelty, or, you know, they’re trying it out, you know, most of the economic activity per capita is happening inside the states, right, where you’ll see 10 times as much activity in Utah, per capita than than Colorado, you know, because Utah has its own series. So now, as far as the state laws, Utah, it’s kind of obvious, you know, it’s the legal tender act for Gold and silver. But when we went to New Hampshire or Nevada, you have to start to question that. So who doesn’t have to have a special law? You know, or does Nevada have a special law. So we actually took a really unique legal approach with the gold back. Now, if you’ve ever used and I’m going to an American law here, not federal but state level, if you’ve ever used a coupon or a gift card, if Walmart makes his own gift cards, you know, they can’t make their own local currency either. Right. If you make a coupon, you can be accused of making a local currency. The law that businesses use when they make you know, these kinds of you know, products is called the Uniform Commercial Code. The Uniform Commercial Code gives you you know, you have to put a cash value on the note or the unit and then it can have a separate value. And every state adopted that law. So gold backs we also plug into that law. And the way it works for us is the US Mint. I think Australia does this as well. They mint a one ounce gold coin, and it stamped with a $50 face value. Right? So we say okay, 1000 gold backs contain one ounce of gold will allow you to redeem 1000 Gold backs for a $50 one ounce gold coin it’s a promise that we can always keep you know, there’s never a question of can I can recover the gold because you can always trade it for another form of gold. You know, and we’ve got 10s of millions of dollars with a gold coins that are part of a contract where you know, if just about every gold back came in today, we could turn them all into gold coins. So at that point, the gold back becomes assumes a coupon for a gold coin that’s made out of gold.
Gene Tunny 10:05
Jeremy Cordon 10:06
Because the gold coin is federal us minted legal tender. You know, it falls neatly under the Uniform Commercial Code, which allows it to circulate and be used as money in any state in the country.
Gene Tunny 10:21
Right, so do you have a background in the law Jeremy has had this sounds like you have to have some legal knowledge to be able to figure this all out and get it up and running.
Jeremy Cordon 10:32
I was a paralegal but my main partner in gold back drafted the Utah legal tender act in 2011. He’s a little older, he’s got more grey hair, you know, he’s in his 60s. And, you know, he ended up being a very important partner to have in gold back. Because, you know, to your point, you’re right, I mean, you know, if you make something like this, you need to have all of your ducks in a row legally, because I didn’t I didn’t do this to you know, get in trouble or go to jail. We wanted to do this 100% right.
Gene Tunny 10:59
Yeah, yeah, absolutely. And who’s buying the gold back? So who’s using it? Is this because you mentioned this 50 million and, okay, I mean, that’s a good start. I mean, the US money supply is, what is it? 30 trillion or something?
Jeremy Cordon 11:14
For sure, yeah, no, it’s it’s a drop in the bucket. Yeah, it’s, it’s a it’s a mosquito compared to a blue whale, right? I mean, it’s not, it’s not very big.
Gene Tunny 11:23
Yeah, I’m not meaning to diss it. I’ll just say it’s at the early stages. So who are the early adopters of it? At the moment? What are their characteristics? Are they libertarians?
Jeremy Cordon 11:33
Yeah. Some of them, you know, I have a few different groups, you know, there’s not one single type. But you know, I mean, you have your true believers, right? You know, they look at Gold backs, they say, my goodness, you fixed money. And this is amazing. And I want to be part of it. And I want to have these, and I want to have in my wallet. And I want to try to spend them, I want to show everybody, but I’d say that that group is a minority of people that own gold backs, you also have people that are, you know, professionals. You know, they’re very, you know, average people and they look at Gold backs, they say, Hey, this is so cool, these are so pretty, the artwork is so incredible, I’d love to just own a set, and they’ll you know, they’ll drop, you know, 400 bucks, and they’ll buy a set of gold backs. And we’ll frame it and stick it on their wall. And they’ll show people because they’re the really gorgeous to look at. And it’s novel, you know, so they’ll go out and they’ll buy a set. And what happens with that second group is, you know, something will happen, like this banking crisis. And they’ll remember, Oh, hey, you know, like, maybe I should have some more of those gold backs, you know, maybe just in case or something, you know, and, you know, we’ll get conversions there or, you know, just stays as a novelty thing. I also get preppers that are, you know, they want to be prepared. And it’s like, okay, you’ve got, you know, your your toilet paper and your, your EMP proof, whatever, and your food storage. And, you know, pretty soon you run out of space for your food storage, you think, Okay, well, you know, all your dollar bills in the event of a hyperinflationary event aren’t worth much. Do you really think you’re going to be bartering with your one ounce gold coins? And can you imagine trying to banter with a one ounce gold coin? I mean, you mean counterfeits, we get off China. You know, it’s like, if you found someone that liked gold and had something worth 2000 bucks, you’d have to convince them it was a real gold coin. You know, so a lot of these folks, a lot of these kind of more preparedness minded individuals, they’re taking gold that they had stashed away for a kind of a just in case scenario. And they’re turning them into piles of gold backs, we’re starting to see more six figure and seven figure purchases of gold backs, as people buy larger orders and get more comfortable with it. So we have that group too. And then the final group is just people that, you know, they’re small buyers, they’re young people, and you know, they just want to buy a few they want to get their toes wet and precious metals, maybe they got one as a tip at a restaurant. Someone told them about it. And so cool, I’m gonna buy a five and a few ones. And they’re just, you know, I’d say that’s the majority of people that are in gold backs are people that are brand new to precious metals, you know, they’re between the ages of 23 and 45. And, you know, for whatever reason, this generation is just really excited about the gold back.
Gene Tunny 14:11
Yeah, that’s good. And where do you manufacture them? Are they made in the USA?
Jeremy Cordon 14:17
They’re all made in the USA.
Gene Tunny 14:18
Right? Very good. Okay. What’s the acceptance of gold backed by local businesses? So if I’m in say, Salt Lake City, and someone, someone gives me a tip in or they pay me and a gold back, can I then take that to the local Starbucks and buy a latte or, I mean, how, how widespread is its acceptance?
Jeremy Cordon 14:39
You know, it’s a lot more than you would think. When we started, I was hoping that I could get maybe 5% or 10% of business owners on board. I think there’s got to be some libertarian business owners that would support this and want to do this. If I could just make a list of them. Because the first question you get is okay, well, that’s cute, and that’s great. You made a commodity currency, but who takes it It like, that’s where the rubber hits the road. Is it a money? Or is it you know, something that belongs on my wall. So, you know, I went out, and I started signing up businesses. And like I said, I was hoping for five to 10%, what I found is that about 30 to 50%, of small business owners were willing to take gold as payment. And that really surprised me, I’m still surprised by it, that number has actually gotten higher now, especially in Utah, since the gold backs been out for four years, it’s a lot more common to have people already know about it. You know, it’s just yeah, how prevalent is.
Gene Tunny 15:36
I guess, you get good word of mouth. And then you must get a lot of shares on social media, if someone gets a gold back as a tip, or payment.
Jeremy Cordon 15:45
they’re, they’re fun to show off, you know, millions of people have seen him. Let’s say you’re in Australia, you know, it’s like, Okay, how many businesses in Australia? Maybe I can’t find the business. You know, like, what am I going to do with these? And like, well, you know, people give them as gifts, you know, they stick them in an envelope for their kids, you know, they use them as allowance, you know, and, you know, garage sales, they have about an 80% success rate for spending gold packs. And then you’re educating people, you’re saying, Hey, this is what commodity money looks like, did you know that our money is not commodity money? You know, it’s, it’s, you know, kind of faith and trust and hopes and dreams. And, you know, I mean, hopefully, that’ll work out for us. But, you know, can you imagine if we did have a commodity money, then we wouldn’t have to, you know, have 10% inflation every year or, you know, I’m gonna, I’m gonna pay you a piece of gold a real piece of 24 karat gold in exchange for that use birdcage. Yeah, 80% of the time. It’s, that sounds amazing. And I love that piece of gold. Because that’s what you’re doing is, you know, you’re you’re trading and spending gold, you know, that this rate of gold is high.
Gene Tunny 16:50
Okay, we’ll take a short break here for a word from our sponsor.
Female speaker 16:56
If you need to crunch the numbers, then get in touch with Adept Economics. We offer you Frank and fearless economic analysis and advice, we can help you with funding submissions, cost benefit analysis, studies, and economic modelling of all sorts. Our head office is in Brisbane, Australia, but we work all over the world, you can get in touch via our website, http://www.adepteconomics.com.au. We’d love to hear from you.
Gene Tunny 17:25
Now back to the show. So I’d like to ask some questions, Jeremy about how scalable This is? And what growth trajectory you see for it, what competitors there are, I mean, how growth trajectory Do you see at the moment for gold backs?
Jeremy Cordon 17:43
We are on track this year to sell between 50 and $60 million, wroth of gold backs, that would be more gold backs that were produced from 2019 to 2022. The next year, so 2024, we’re looking at doing about 100 million. So that’s twice as many gold, you know, that’s, that’s about equal to all the gold backs produce all the previous years. So you’re kind of seeing this doubling, you know, the further you go into the future, the harder it is to predict. You know, I think we’re looking at a doubling for 2023. Also 2024, it gets a little bit more grey after that, because a lot of it depends on, you know, being able to scale up and seeing how the markets responding and everything else. But that’s, that’s what we’re looking at for growth.
Gene Tunny 18:29
Okay, and what about competitors? Is there anyone else doing something similar?
Jeremy Cordon 18:35
We want there to be so you know, we’re doing this as a private projects, you know, gold backs are starting to sell all over the world, you know, I mean, you can buy them in Europe and Australia, and but what we’re really interested in is foreign central banks. You know, you look at, you know, Zimbabwe, and they are making tiny gold coins for circulation in Zimbabwe. Because at the end of the day, the goal of a central bank is to make a money that people will actually use. That’s what they have to do otherwise your society is going to pull the collapse. There are about a half a dozen foreign central banks right now that are actively have projects designed to get people to circulate gold in their country. You know, one of them is us, Uzbekistan, they’ve been circulating gold there for about a decade. So going into these, you know, we have to build up our manufacturing capacity. But then the goal is to go into these countries and say, Hey, rather than using these tiny little coins are these tiny little bars, that you know, a tiny little bar could be worth 20, 30, 40 bucks. You know, what if you can get it down to $2 worth of gold. And it looks like a bill and you’re not going to lose it in your pocket. And all the gold is recoverable. And it’s serialised by the way, you know, I think there’s a real future for this technology, you know, first with, you know, foreign central banks that have these kind of hyper inflationary environments, but we can use that as a stepping stone to really build up the capacity, so it can become an option for any central bank. And that could be that could be a great solution for humanity and a decade from now, you know, we could be looking at a decade from now and it’s like, okay, well, if nobody trusts the currency, because the currency is falling apart, Oh, guess what? Central banks don’t half of the of the world’s gold reserves. Yeah. Maybe we could put those into circulation because maybe nobody trusts them to, you know, back, you know, $1 with gold, you know, they want to hold the gold, the trust is broken. You know, but this could, ironically, the something that ends up saving central banks in the end. And that’s, and that’s the the company, this is a technology company. You know, we’re really trying to develop a technology that makes gold a better money than it’s ever been. Because, you know, I mean, if, if I were to put on my libertarian hat, you know, libertarians have been saying this for 50 years. Oh, we need to go back to the gold standard. That will excuse me, Mr. Libertarian, you realise that the gold standard was 100 copper pennies to silver dollar and 20 silver dollars to a gold piece? Well, what do you do when 100% of your copper is used in industry? Are you going to take all of your copper out of your power lines and melt them down so you can wear them out as pennies in your pocket? Are you going to take all your silver out of your solar panels, you know, 80% of silver is used in industry, you’re going to you’re going to take all the silver out of your electronics, so you can wear them out as coins in your pocket, are you going to have the government force peg three industrial metals together to Fixed Ratio under penalty of death. Because gold has never been small enough to circulate by itself. That’s been 2600 years, we’ve always had to have tiny little bronze, the widow’s mite. And the Bible, I was a bronze coin, tiny little bronze point. So you’ve always had kind of this copper bronze silver gold system. And the gold back is so revolutionary as a technology. Gold has never been able to be this small. If you had to go back 100 years ago, in the US, it would have the equivalent purchasing power of for wheat pennies. It’s not just replacing silver, it’s replacing copper is a monetary metal.
Gene Tunny 22:12
Okay, so you’re saying if you had this technology, so there have been there are technological improvements in the production that you’re taking advantage of? Is that, is that what you’re saying?
Jeremy Cordon 22:22
No, I’m saying that as a as a money. You know, we’ve never had the technology to me. Gold as a precious metals small enough to buy coffee. You had to use copper or silver, you could never use gold directly as a commodity money to buy coffee. Not a cup of coffee, maybe like a you know, a barge of coffee.
Gene Tunny 22:42
Right what because we couldn’t get it into a form to trade. To exchange?
Jeremy Cordon 22:51
You couldn’t get gold small enough. There wasn’t a, it’s called the small coin problem. You couldn’t have a small enough gold coin to buy little things.
Gene Tunny 22:56
Yeah, gotcha. Yeah, that makes sense. And you’re talking about foreign central banks. And I was interested in the the acceptance of gold backed by the financial system, to what extent will local banks recognise gold backs? Will they recognise or financial institutions? Would they recognise them as collateral? For example, if you wanted to borrow US dollars, for example? You know, there’s
Jeremy Cordon 23:22
private organisations, that’ll they’ll recognise them as collateral, you know, but you’re looking like faulting institutions, right? You know, this is kind of more of the precious metal space in the United States. Yeah, you couldn’t walk into a credit union with a bunch of Walmart gift cards to get alone? You know, it’s not, it’s not really their thing. You know, and it might not be for a long time. You know, I’m hoping that, you know, maybe in 20 years from now, we could see a future where a lot of the cash that we have is replaced with the same technology. You know, maybe they’re not called Gold backs. But you know, if you’re a cash if you’re Australian dollars, you know, we’re made out of gold using the same technology, and we wouldn’t have to worry about inflation anymore. In fact, there’s enough gold now, you talk about scalability, there’s enough gold now owned by central banks today, to replace all of the cash in the world with a technology like gold back, and they could still have fractional reserve deposits and lending and you know, it would, it wouldn’t necessarily, it wouldn’t necessarily break anything.
Gene Tunny 24:26
Do you have a sense of how much of the demand for gold backs is related to transactions? How much is speculative? How much is an investment?
Jeremy Cordon 24:35
It’s a great question. It’s hard to know, because because of the private nature of it, if I pay somebody as a gold back, nobody else knows about it. Right? So it’s not reported to me. It’s not on a blockchain. You know, unless the two people that were parties to the transaction talk about it. It’s unknowable. That said, my guess is that I don’t think they move as fast dollars. You know, and there certainly are a lot lot of buyers that buy and save, you know, which is a valid use of money. But there’s there’s a decent amount of anecdotal evidence out there that, you know, I was at a restaurant the other day that it takes callbacks to have a sticker, you know, outside their restaurant, hey, we accept the gold back. I asked them, I said, you know, how often you actually got how often you guys actually get these? You know, I’m the girl working there says, Well, you know, maybe once a day. So you know, I mean, you’re looking at several 100 transactions a year, where people are spending gold backs in the local community. Now, it’s not a lot. I’m sure it’s less than 1% for them, but it shows that it’s not only being used as a savings or as a novelty item.
Gene Tunny 25:41
Yeah, that’s interesting. So you’ve sold some to Australians? I want to check with some libertarian friends, whether they’ve they’ve bought any do they have any. I think I saw on the website, how that what they look like, are they stamped with? Does it have Utah or the state that it’s the name of the state on the the gold back?
Jeremy Cordon 26:02
Yep. Yeah, we got we got a lot of great images on gold pack.com. You know, you can see them there. And like I said, they’re, they’re very gold, right? You know, it’s like, I don’t know what the currency looks like in Australia. But it’s the background colour of the whole thing is gold. And what you’re actually seeing is the 24 karat gold. So raw, yeah, the way the technology works is you have a piece of polymer, like a giant sheet. And it goes through what’s called a vacuum deposition chamber. You know, some people think a gold back is made out of foil. Really, it’s the same technology that puts gold in microchips in Taiwan, in diabetic test strips, or, or in a layer of a golden sunglasses, right? So the polymer goes to the machine, the machine hits in a vacuum chamber, a target of gold was a laser, the gold falls down onto the polymer, and then it gets sandwiched in with another layer of polymer. So all the gold is contained inside the gold back. And we know exactly how much gold is in it. That’s the idea there.
Gene Tunny 27:06
Okay. Okay. And finally, the value of gold backs in terms of the exchange rate with the US dollar does that is that linked to the gold price does that move? It’s very highly correlated with the gold price?
Jeremy Cordon 27:23
Yes, but we’ve seen it jump a few times. So I’m getting an example. For any commodity for any thing out there. The price is determined by supply and demand. And the gold back as a unit is a little bit separate than the rest of gold in general. Because gold backs are easy to spend and uses money. So I’ll give you an example in 2020. In March, when when COVID really kind of hit the US, every gold back sold out. Every gold back and every store, they were gone in a matter of days. And the only place to buy one was on eBay. And they were $50 a piece. Because you know, supply and demand didn’t happen to all the products out there. It happened to gold backs because I think that people were concerned that the bottom could fall out of the currency and they wanted to have a currency with value.
Gene Tunny 28:14
So you mentioned $50 What were they trading at before COVID?
Jeremy Cordon 28:25
Like $3. So it was quite the spike. And it really surprised me, you know, this is, you know, people are really serious about this. It’s, well, it’s like, you know, you have the best lifeboat on the Titanic. It’s got the motor and then the heated seats. And you know, GPS is the nicest one on the whole Titanic. But you’ve only got 16 spots on it. Yeah, not that hard to throw up the lifeboat but when it’s time to get on the lifeboats, you know, it’s like that the value of those spots goes up because all the other lifeboats you know, if it’s gold coins, you’re bartering with the $2,000 gold coin. That’s your money now like that might sucks. Okay, you know so people you know, we’re starting to see people again that are preppers that have been buying gold for a long time. There’s kind of this gestation period where they find gold back they discover it I think about it, they have it they buy some more and then you know, something clicks in their mind or they say hey, you know what, I own $200,000 worth of gold for a just in case scenario. The only gold that’s useful in my house for a just in case scenario are these gold backs. You know, no, you know, the building one of our retailers they’ll ship and all their gold clients and they’ll trade for gold backs. And you know, blacks they’ve they’ve doubled in price since 2019. And gold bullion gold coins, hasn’t, you know, it’s gone up maybe you know, 60-70% gold backs has actually been outperforming gold bullion and gold coins. And that’s that’s what surprised everybody including myself.
Gene Tunny 29:56
Yeah, yeah. Okay. Any other points you think are important about gold backs, Jeremy? I’m, I’m happy with the responses. So far. I’ve learned a lot. And I think it’s fascinating. Fascinating to have a commodity money out there. So yeah. Any other points that would be good to get across?
Jeremy Cordon 30:16
Yeah, I’ll give you a couple of data points. I’ll let you go. Because I find talking about callbacks all day. But we don’t want to do a five hour podcast, right? I mean, but I’ll tell you this in 2023, we think that gold back is going to produce more individual callbacks, more units of gold than any other producer of gold in the world, including the Perth Mint, including the US Mint, we think there’s going to be more total individual gold backs out there than any other product. So that’s, that’s what we’re looking at for growth. You know, when I say that, it sounds extraordinary. But you know, I tease people like, Do you know who the biggest manufacturer of tires is? In the world? Care to guess?
Gene Tunny 30:58
Oh, is it? I don’t know. Is it Bridgestone? Or is Lego? Lego? Oh, of course, with their with the toys you say is that? Well, they’re tiny?
Jeremy Cordon 31:12
Yeah, it’s not it’s not that different for gold back? Yeah. I mean, you know, if I have a one 1000th of a ounce product, yeah. It doesn’t take me that long to catch up to the big boys in terms of total production numbers. But, you know, I mean, we are taking a bigger piece of the gold market, you know, right now, we’re about a third of 1% of the value of all the gold sales in the US, which is not bad. You know, we’re probably the number one for hyper fractional. And, you know, gold back is also the number one for most successful local currencies in the United States. If you added up all the value of all the other legal local currencies in the United States, the gold back collectively the four different hold back states, it’s bigger. So that’s, that’s exciting, too.
Gene Tunny 31:59
Yeah, I was just trying to do the numbers in my head. So if you’re going to be, you mentioned that 50 to 60 million of gold backs that you could be producing and therefore, and half of the value is the gold. So that’s 30. Say 30 million, and the price of gold, what is it nearly 2000 an ounce or something. So he was just trying to do the numbers, and they had to figure out how much how many ounces of gold, you must be using a year, do, I could put it in the show notes. But is that something you disclose? I’m just interested in that.
Jeremy Cordon 32:32
But we do have a graph on our website that we put out. We update every quarter showing backs are out there. I think last update shows 11.8 million gold backs. Yeah. You know, and if you figure they’re worth about four bucks apiece, you know, you’re looking at right around $50 million worth. Yeah. But like I said in the month of March alone, yeah, we might have done more than 10% of that in one month. And just march, you know, we’ve we’ve seen a huge spike in interest, with all the banking turmoil out there as people are looking for safer places to put their money.
Gene Tunny 33:07
Yeah, yeah. Understandable. Okay. Jeremy Cordon this has been fascinating. I’m gonna look more into it. And yeah, it looks like you’re you could be at the start of something really big. I mean, I guess it’s, you know, you’re doing well, already. If you think about where you are, and I mean, the potential for it. I mean, it’s, you know, it’s even much bigger than that. It’s huge.
Jeremy Cordon 33:30
It’s very early days, right. It’s very early days, you know, and, you know, I really hope that we see greater adoption of the technology, there’s, you know, possibly a global demand, you know, stable inflation proof commodity currency. And, you know, the future I think a lot of it depends on, you know, how are central banks gonna react, how our governments gonna react, you know, people tend to really like them, but, you know, you have these established kind of powers. And I’m hoping they look at this as, you know, technology and an opportunity, as opposed to, you know, an antagonistic competitor, you know, because really, who owns all the gold? It’s not me, you know, it’s that, you know, and if I can make more useful, maybe there’s something there.
Gene Tunny 34:13
Yeah, yeah. Yeah, exactly. Okay. Jeremy Cordon, president of Goldback, thanks so much for appearing on the show are really found that fascinating, and it’s, it’s good to see practical examples of commodity money in the modern world. So it’s terrific. So thanks so much for your time.
Jeremy Cordon 34:35
Yeah, no, I think I think you’ll be really pleased with it. I’ll just send you some Goldbacks. Standalone and then pass them around. Please do you know
Gene Tunny 34:43
Excellent. Okay. Thank you, Jeremy. You have a have a great day. Thank you. Take care. Okay, I hope you found that informative and enjoyable. Jeremy is super passionate about gold backs. And I must say I was impressed by the rate of growth of gold backs in circulation. And I enjoyed learning about the different types of people who have been buying them. And I must say I was surprised that it appears many local businesses have been accepting them as payment. Certainly, it’s an interesting experiment, and one I’ll keep an eye on in coming years. The one reservation I have about gold backs is that you have to pay substantially for the privilege of having gold back money. Given only half the value of a gold back is due to the gold content. One gold back costs over four US dollars and it contains 1/1000 of a troy ounce of gold. Currently, a troy ounce of gold is worth nearly 2000 US dollars, that is around $2 for 1/1000 of an ounce. Of course, if you’re worried about a future hyperinflation or societal collapse, paying $4 for each gold back could be a good deal. As Jeremy has argued, in that scenario, gold backs could end up serving as a widely accepted currency. I don’t think we’re headed for that scenario, but I’m less sure about that than I have been in the past and hence, I can understand why some people may see gold backs as a useful thing to buy. Furthermore, I admit they do look impressive, and there would be some novelty or show of value in owning some gold backs. And yes, I’m I’m actually looking forward to getting my hands on some. Of course, none of this is financial or investment advice. Okay, I’d be interested in your thoughts on gold backs. Do you see value in them? How widespread Do you think the use of gold backs could become? Please send me an email with your thoughts. You can reach me via email@example.com. Thanks for listening. Righto, Thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via firstname.lastname@example.org Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.
Thank you for listening. We hope you enjoyed the episode. For more content like this or to begin your own podcasting journey. Head on over to obsidian-productions.com
Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.
Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.