Gold Certificate

The definition of ‘Gold certificate’

Gold certificate-a physical document that represents a claim to the specified value of gold. Gold certificates can resemble paper notes and those certificates were used as legal tender in the past. Gold certificates were in General circulation in the United States and used as money until 1933.

Breaking down the ‘Gold certificate’

 

Gold certificates that represents the property value or the quantity of gold, just as stock certificates represent shares of ownership in the company. Because gold bullion is difficult to transfer and store, gold certificates facilitated the ownership and use of gold when it was legal. And not to carry coins or bullion, the operations can be carried out using these certificates of ownership. Today, gold certificates first used for the purposes of simplified ownership of gold as an asset.

Gold certificates and historic US currency

The United States has an interesting history when it comes to gold and the gold standard. As mentioned earlier, dollar gold certificates were again used as means of payment. For example, certificate $10 on gold can be used as the equivalent of $10 in regular currency. In theory, the certificate of gold could be exchanged for 10 $of gold – the exact amount based on the market price at the time of the exchange. The reason for the equivalence of the dollar, that the dollar was on the Gold standard, so gold certificates were just a parallel currency, which was technically a model, although this rarely happens in practice.

In 1933 the government of the United States of America under the leadership of President Franklin D. Roosevelt abandoned the gold standard. The dollar was no longer conceptually be exchanged for gold and gold certificates were still technically. To avoid a situation when dollar deposits were converted into gold certificates, certificates of ownership, and the possession of gold in any other form, excluding jewelry, was prohibited under the law on banking emergency of 1933.

Gold certificates as an investment and collectible

In the 1960-ies, she was again right to hold gold certificates of the United States. The catch is that they only considered collectibles, not legal tender. Thus, the different issues of gold certificates US are highly valued by collectors, but are not considered as investment. There are, however, banks and companies in the world that still issue gold certificates. They usually specify amount in ounces and the value of the dollar fluctuates with the market, which makes them precious metal investments rather than a real Currency. It should be noted that the transformations of the modern gold certificates remains complex and issuing companies can go under rendering the certificate useless for all but the collectors – as well as the stock certificate in a bankrupt company.

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