r/Goldback

Hi all.

My question is simple: if you want to expose yourself to gold, or invest in gold, why don’t you do just that? $1000 invested in actual gold gets you $1000 worth of gold. $1000 of goldbacks is not $1000 of gold, there’s manufacturing costs among other myriad things that you’re paying for.

It seems like if you believe in gold you would just buy gold, but, I don’t know I’m kinda new here.

I’m looking to accept Goldbacks as payment here in Lansing MI but there are no other merchants around me doing the same. So my question is how do I use Goldbacks to pay my bills with the Gold currency I receive.

Let’s say I get $500 in gold backs a month. How will I use that to pay my light bill for the business if they don’t accept gold?

I really want to be a merchant because I love

The cause but I don’t know how to float necessities that don’t accept the payment.

Thank you

This gets into the weeds a little, but I assure you It's been well thought through.

A lot of people criticize Goldbacks because of the roughly 100% premium over melt value. The usual debate is: “Are Goldbacks too expensive to buy?”

But I think that misses the bigger issue.

The real problem may not be the buyer paying the premium. The real problem is that the entire Goldback system now seems dependent on maintaining that premium.

For years, the common explanation has been that the premium exists because of manufacturing costs, anti-counterfeiting technology, distribution, fractionalization, and the difficulty of putting tiny amounts of gold into a spendable form. I understand that argument. I am not pretending Goldbacks are cheap or simple to manufacture.

But as the price of gold rises dramatically, that explanation becomes less convincing.

When gold was much cheaper, a 100% premium was easier to explain. If the gold content was worth a few dollars, the added cost of production, distribution, security features, and profit could reasonably make up a large percentage of the final price.

But what happens when gold doubles? Or triples?

Do the manufacturing costs double or triple with it?

That is where the math starts to feel strange.

At some point, the premium is no longer just about the cost of making the product. It begins to look like the premium is necessary to maintain the exchange-rate system that Goldback created for early adopters.

That is the part I think does not get discussed enough.

Early adopters bought into a system where the Goldback’s daily exchange rate helped them feel like the premium was being recouped “in-house.” In other words, even though the Goldback sold for far above melt, the exchange rate also valued it far above melt. That made the premium feel less painful because the system itself recognized the higher value.

But now Goldback has a serious problem.

If gold keeps rising, what is Goldback supposed to do?

Do they reduce the daily exchange rate premium?

Imagine if Goldback announced tomorrow:

“Due to the rising price of gold, the Daily Exchange Rate will now reflect only a 50% premium instead of roughly 100%.”

That would be devastating to confidence in the community. Many of the strongest supporters would feel like the value structure they believed in had been weakened. It could feel like a betrayal, especially to early adopters who defended the premium on the belief that the system itself supported it. Their GB holdings will go down in value.

So Goldback is almost forced to keep the high exchange-rate premium alive.

And that creates the conundrum.

The higher gold goes, the harder it becomes to justify the premium as merely a manufacturing and anti-counterfeiting cost. At the same time, lowering the premium could damage the confidence of the very people who have supported Goldback the most.

That leads to the second issue: the off-ramp.

Goldbacks need an off-ramp into dollars if they are ever going to be accepted widely by businesses. A small business owner may accept Goldbacks because he likes the idea, believes in sound money, or wants to support the movement. I understand that because I am one of those people.

But a larger business has payroll, utilities, rent, bank obligations, taxes, suppliers, and accounting systems. Those things are paid in dollars. For larger adoption, businesses need confidence that they can convert Goldbacks back into USD at a reasonable rate.

That is where Alpine/UPMA comes in.

The existence of this conversion system is important because it gives businesses and users the feeling that there is an off-ramp. But the fact that limits exist is also important.

To me, those limits are not a small detail. They are a warning sign.

If the off-ramp were naturally sustainable and profitable at scale, why would it need such tight limits?

That suggests to me that the off-ramp may function more as confidence infrastructure than as a truly scalable redemption system. It helps create the appearance that Goldbacks can be converted back into dollars at favorable rates, but only within controlled limits.

And that matters.

Because if a major retailer ever accepted Goldbacks in meaningful volume, what happens when that retailer wants to convert large amounts back into dollars?

Can the system handle that?

Or would large-scale redemption drain the system too quickly? - remember, These UPMA accounts pay out CASH USD at above the intrinsic value of the Gold within. This is NOT accounting for the sophisticated melt costs of the GB technology. Paying USD above the value of GB is clearly a loss-leader for the company-making Alpine and Goldback suspiciously inter-connected.

This may explain why Goldback acceptance is mostly made up of small owner-operated businesses, enthusiasts, local shops, and believers in the concept. There may be thousands of businesses listed, but where are the chain retailers? Where are the companies with accounting departments that have seriously reviewed the model and decided it is sustainable?

That is the question that bothers me.

It did not take me very long to start seeing the pressure points in this system. How long would it take a team of corporate accountants to see the same thing?

From where I sit, Goldback appears to be caught in a fragile position:

1. If they drastically reduce the premium, they risk damaging confidence among their strongest supporters.
2. If they keep the premium high, it becomes harder to justify as gold rises.
3. If a major retailer accepted Goldbacks and then converted large amounts back to dollars, the off-ramp could be seriously tested.
4. If gold spikes dramatically, the entire pricing structure becomes even harder to defend.

So yes, I do think Goldback premiums are a problem.

But not simply because buyers are paying too much.

The bigger problem is that the premium may have become structural. Goldback may now need the premium to preserve confidence in the system they built. And if that is true, then Goldback is much more fragile than many supporters want to admit.

I am not saying this because I hate Goldbacks. In fact, I want the idea to work. I like the concept of spendable gold. I like the idea of giving people an alternative to constantly depreciating dollars.

But wanting something to work is not the same as proving that it can scale.

And right now, I am not convinced that Goldback can scale without eventually being forced to confront the premium, the exchange rate, and the limits of the off-ramp.

but please, proceed with caution...I am.

My one week suspension for "spamming" about Goldbacks is over. I've already responded to three posts. What a glorious time to be alive. Here's to the NEXT suspension!