Can You Still Spend Gold Coins?
In 1987, I vacationed in Egypt with my mother. Before going, I read that in the souk, the merchant stalls, it would sometimes be possible to pay for a purchase…
In 1987, I vacationed in Egypt with my mother. Before going, I read that in the souk, the merchant stalls, it would sometimes be possible to pay for a purchase with a gold coin. The British Sovereign was a popular coin used for this purpose there. So, when we went, I brought along a Sovereign in case I had the opportunity to spend it.
I never spent it that time, so I cannot vouch for the accuracy of what I read. However, there are places around the world where gold is not only possible for transactions, it may be required.
I have met a number of Southeast Asian refugees over the years. Out of curiosity, I asked most of them if they had to pay out gold in order to escape their repressive regimes. Every one of them replied that that is how they had to pay for their journey to safety.
Fifteen years ago, it took about 15,000 Vietnamese dong to be worth one U.S. dollar. Today, it takes more than 23,000 dong to equal a dollar. As I understand it, all major transactions in that country, such as real estate purchases, are paid in gold.
The nation of Zimbabwe has suffered enormous hyperinflation of the money supply this century. After one form of currency collapsed in early 2009, that government allowed domestic transactions to be conducted in U.S. dollars, euros or South Africa rand. Last month, Zimbabwe introduced a gold-backed digital currency to help stabilize the rapidly falling value of that nation’s current paper currency. In April, the government reported it held 12,346 ounces of physical gold available to back the digital currency. Preliminary indications are that the introduction of gold has helped reduce the rate of increase in consumer prices in that country.
In India, people may not spend gold coins or bars, but giving gifts of gold for important festivals and weddings is a tradition.
Here in America, there are some instances of bartering gold. When a national bullion dealer years ago was leasing space in a New York City building where real estate mogul and future politician Donald Trump was the landlord, the tenant provided three kilogram-size gold bars (96.45 troy ounces) as their security deposit.
In general, governments do not want the public to use gold or silver for commercial transactions. When I attended the University of Michigan Business School, Marina von Neumann Whitman delivered a presentation. At the time, she was serving on then-President Nixon’s Council of Economic Advisors. I submitted a written question that was asked of her. My question asked what would happen if a country were to establish its monetary system on the basis of weights and purities of gold and silver. Her response was that it would never happen because such a monetary system would so severely restrict what governments could do with their finances that it could not be used to buy votes. She then said that if such a system were implemented by a country, soon every other national currency would fail.
Although there is little opportunity to spend gold coins in everyday commerce right now, any global financial catastrophe that destroys fiat (paper) currencies would almost certainly bring back the use of gold and silver coins and bars for settling transactions.
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including in 2021 for Best Investment Newsletter), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).
