My previous piece discussed gold certificates and why they are no longer used in modern society. But there’s one thing I left out, which is something very similar but completely different – a gold note. In this day and age, there are lots of ways you could get exposure to gold price movement. One of the ways to buy gold is to buy a gold note. So, what’s a gold note? Does it make sense to invest in gold notes? I’ll try my best to answer those questions.
When people hear the term “gold notes,” they always think of the gold note (certificate), which was a form of derivative money that could be exchanged for gold coins in the old days. Obviously, you cannot trade them for gold coins anymore. Anyway, there’s this one kind of gold note which is made of actual gold
Unlike the old days, gold notes now are paper banknote-sized pieces of plated physical gold which has the same goal as gold bullion bars or rounds. They are designed to let investors invest in physical gold and are not legal tender in any way. All other regular banknotes on the market today can’t compare to the production process used to make the gold notes. The gold in the gold notes is sandwiched between two sheets of secure, flexible polyester. So, it’s like a piece of art (banknote) but contains actual physical gold in it. They can pack in enough gold layers inside the gold notes to create a specific weight, for instance, a gold note with 1/20 troy ounce of gold. I think this is really cool as it’s like investing in gold but with extra steps.
Gold notes are appealing, but are they a good investment? If you enjoy buying fractional gold, I see no reason why you shouldn’t purchase gold notes. They are elegant and easy to keep. Nonetheless, from the perspective of an investor, buying gold notes is not a wise decision. The premium above the spot price of the gold notes or any fractional gold is extraordinarily high. A 1/1000 troy ounce of gold note costs approximately $5, whereas one troy ounce of gold notes costs $5000. This indicates a premium of roughly 300% over the spot price of gold.
[Source: https://www.jmbullion.com]
