Jul 19, 2019 | Updated: 04:55 PM EDT

You Can Now Make Everyday Transactions with Gold

Jul 10, 2019 04:40 PM EDT

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You Can Now Make Everyday Transactions with Gold
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Have you ever wondered if you could make everyday transactions in gold? Gold is often compared favorably to currencies as an investment vehicle - a stable store of value that has maintained its purchasing power far better than any paper currency has in the twenty-first (or twentieth) century. If you want a safe place to put your money, bullion coins and bars are a great solution.

But with the meteoric rise of Bitcoin in the last few years and its increasingly accepted application as a real alternative currency, some people have been beginning to wonder why you can't make purchases with a gold coin. It's been observed that the digital currency is much easier to use, despite skepticism from the gold industry about Bitcoin as a medium of exchange. You can buy everything from pizza to IT services, and new apps look poised to make it even easier to use.

FinTech Meets Gold

That's beginning to change. Companies like BitGold and Glint are new electronic payment solutions that are creating gold-backed credit cards; they are effectively prepaid MasterCards that allow you to make any transaction you could with a credit card, but by paying through your own vaulted gold. It means zero-interest payments for the user, as well as peer-to-peer payments.

The appeal lies in users who grew up in the financial crisis, as well as wealthy users looking to store their wealth outside the banking system. The crisis in 2008 left deep skepticism of the banking system and a high value on keeping your wealth independent. Gold in FinTech allows businesses and private individuals many of the perks promised by Bitcoin but backed by the stability and rock-solid confidence offered by gold.

For those who just don't trust that an encrypted algorithm will still be worth thousands of dollars once the fad has died down or new technology has made it obsolete, there's gold.

Paying with Silver

In truth, gold has often only been used by the richest people in the world for transactions. Silver has always been the real medium of exchange, so the question is: will silver-backed digital payments become a possibility in the near future?

Before you use silver and gold to buy anything, always check the silver spot price and make sure you're getting a fair price. Many market watchers are predicting a long-term price recovery for precious metals. Keep an eye on what your bullion metals are worth before spending. With so much demand coming for industrial uses, silver has a strong foundation with a limited downside. 

Should You Make Purchases with Precious Metals?

Now that you can, it may be a question of whether or not you should. While there are some great reasons to start using gold for peer-to-peer payments or business transactions, you may want to lay-off buying your morning coffee with it for the following reasons.

1. Every time you make a purchase with gold (or Bitcoin for that matter), you may have to pay capital gains taxes. Keeping track of every little transaction will make tax season a nightmare.

2. Gold is an excellent way to diversify your portfolio and make sure you aren't over-exposed to a single financial instrument like equities.

It's great to have options, but gold is probably best used as a savings vehicle most of the time.

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