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Finance • Investing

Are Gold Foil Notes a Good Investment

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Until the 1930s, most currencies were backed by gold, meaning that the price of stand unit of currency was fixed to a specific amount of gold.

President Nixon eliminated the gold-backed dollar in 1971, and since then, the purchasing power of the USD has fallen 86%, in contrast to gold prices, which have increased from worth $40 per ounce to around $2,000 per ounce during the same period.

Gold has, to date, never lost its value and has instead continued to be bought and used as an investment tool both on an individual level and on a governmental level. In fact, in 2022, global central banks brought up gold in record numbers.

Although gold leaf notes are not likely to be introduced as official currency, gold foil notes, or goldbacks, were introduced as Americans increasingly turned to gold as an alternative currency while the value of the greenback continues to be eroded. 

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Offshore Your Gold

What are Foil Notes

Gold foil notes are exactly what they sound like, physical fiat currency that has been coated with a very thin layer of gold. Also referred to as goldbacks, these precious metal-plated notes are generally produced as limited edition items and feature unique designs. 

Made from 24-karat gold, foil notes are laminated on a polyester film and come in the denomination of $1, $5, $10, $25, and $50. A $1 foil note is equal to 1/1000 Troy once. 

It is a very small fraction of what gold investors usually buy. For example, gold coins are generally sold as one troy ounce, and gold bars as 400 troy ounces each.

For example, Gold Leaf British Bank Note Sets are a collection of banknotes issued by the Bank of England. These banknote sets are typically issued in limited quantities, making them highly desirable in the collectible coin market. 

Considered a unique and luxurious alternative to traditional paper banknotes, these banknotes may be made from a gold leaf but are not legal tender and cannot be used for everyday transactions yet.

Foil Note for Investment

It’s evident that these unique gold leaf-covered banknotes are ideal for the collectible coin market, with each note featuring intricate designs and engravings that are meticulously produced using gold leaf. 

If you have already read our articles on How to Buy Gold: an Ultimate Guide and The Ultimate Guide to Gold Coins, you will appreciate the value of physical gold as a way to diversify your investment portfolio and safeguard your assets.

But what about foil notes? Although they are highly speculative and a relatively new product, foil notes may offer a worthwhile investment option. However, they also come with some disadvantages and involves risk that is worth considering.

Advantages Of Gold Foil Notes 

As with all other physical gold options, foil notes provide a hedge against inflation. Gold in all its forms has not only held its value throughout history but has steadily increased in price over the past few years. Gold prices in 2022 are predicted to reach a high of $2,000 by the end of the year.

Another attractive feature of gold foil notes is that they are tangible assets that you can hold in your hand or even in a coin wallet.

However, these types of foil notes are perhaps more suited to collectors than investors at this point in time. As with new numismatic gold and silver coins, they feature unique designs and special features that make them very attractive for this more niche market.

Disadvantages of Gold Foil Notes

There are also some reasons why you may choose not to buy gold foil notes as an investment option, besides currency issues including the risk of purchase of counterfeits, liquidity, and storage.

The market for gold foil notes is exposed to fraudulent imitation notes. It’s vital not just to understand this market extremely well but also only to buy foil notes from credible and trustworthy dealers. 

Storage and insurance for your physical gold can be a big obstacle. But they don’t have to be, and thankfully, there are now great precious metal vaulting facilities that not only store your gold but also offer full insurance coverage. 

The advantage of keeping your gold foil notes in a facility like this is that it mitigates the risk of theft when keeping your gold on your own personal property. It also protects you from interference and potential confiscation that you are open to when holding your gold in a traditional banking facility. 

Another downside is that finding buyers and selling your foil notes may be more challenging. This is primarily due to the fact that it’s a very fresh investment market. Many still need to become familiar with these gold products making them less liquid than investing in physical gold coins and gold bars.

Worthwhile Gold Investment

Joshua Rothbart of J. Rothbart and Co recently gave us his insights into the gold markets, and he said that gold performs well during times of uncertainty. It has become a more popular investment option and an essential part of a diversified portfolio.

What physical gold investment type you choose depends on a number of factors, notably your risk tolerance, investment goals, and net worth. 

Although gold leaf notes can be an alternative investment, it’s important to be aware of the potential risks and do more thorough research as this is a highly speculative and relatively unregulated new investment option.

The precise statistics regarding the frequency of gold being used as currency are not publicly disclosed due to the confidential decentralized nature of gold transactions. However, more people are looking to purchase gold as a Plan B insurance option, both as an investment opportunity and a type of currency if needed in a worst-case scenario.  

When you sign up as a Nomad Capitalist client, our team of experts, including our precious metal partners, will navigate the complexities of the global precious metals markets and create a holistic strategy tailored to your individual needs.

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