Portland businessman Adam Trexler is fascinated with money.
Out of college, he worked for a couple of startups, but didn’t enjoy it. So he became an economics professor, teaching about countries suspending the redemption of paper money for gold after World War I.
“People were literally using wheelbarrows full of money to buy a loaf of bread,” he said. “And that idea of hyperinflation, the crisis of a currency, just horrified and fascinated me.”
Then in 2011, Trexler learned about a Grants Pass couple who had figured out how to print using gold.
“I believed that this had the potential to be a moment in the history of money writ large,” he said.
Trexler left his academic career and raised an unspecified sum to start Valaurum, a private mint at a secret location here in Oregon that prints gold notes on resilient polymer sheets. The result is a durable gold note, what he calls a “goldback,” that can be carried around in a wallet and traded for everyday stuff like a cup of coffee.
The technology makes using gold practical. A gold coin that was small enough to pay for a coffee would get lost in a pocket.
Stefan Gleason, the president of Money Metals Exchange in Idaho, likes goldbacks, especially the fact they come in different values — from notes worth about $2 all the way up to $150.
“This fulfills a niche in the sense that it’s a very small denomination form of gold,” he said.
Gleason knows businesses are wary of trading in gold because of the complicated capital gains taxes involved. He also said he wouldn’t buy large sums of goldbacks, because they’re expensive relative to the amount of gold they actually contain.
Some precious metals experts, like Gleason, say goldbacks aren’t an economical way to invest in gold. Investors would be better off buying large coins or bars instead.
But Gleason believes goldbacks do have a future.
“It’s like money; it is money because it’s gold,” he said. “People will hold these as sort of like a backup plan, if something goes awry with the currency system.”
That worry, that the economy might go awry, looms large with some investors who worry about the potential for inflation in the post-pandemic world. Gleason said gold, whether in the form of bars or notes, has historically been a good hedge against inflation.
Trexler is happy if people want to invest in gold using his goldbacks, but he’s more focused on getting people to use them to trade and barter, as some investors are doing with bitcoin and non-fungible tokens, or NFTs. Several states have laws that allow gold to be used as legal tender. Valaurum produces a Utah goldback, a Nevada goldback and a New Hampshire goldback.
There’s no Oregon goldback as the state doesn’t have a law allowing gold as legal tender. The Oregon treasurer’s office said the goldback isn’t even on their radar.
But Trexler isn’t relying on goldbacks to keep his business going. His company produces gold notes for the Republic of Ghana, Cameroon and the Cook Islands — just like the U.S. Mint produces gold coins for the United States. Valaurum has plans to open a new Oregon factory soon, and to double the number of employees.
“We are really on classic hockey stick style growth right now,” Trexler said.
Will people trust they’re actual gold?
In a secure office in downtown Portland, Oscar Morante of PortlandGoldBuyers.com sits behind heavy metal bars and lots of camera. He doesn’t sell goldbacks.
“I have been offered (them) by phone. But I haven’t bought,” he said, “because I don’t know how much gold is there, and I don’t know how much other people will be interested in the object.”
Morante doesn’t think the notes are just like little gold coins. He says melting them down for the small amounts of gold involved is difficult. And for relatively small denominations, like $150, small coins are already available.
He’s also concerned that the shape of the goldback and the type face make them look a little like a dollar bill — even though lettering on each specifically says: “Not US Dollar Legal Tender.”
“I think that he’s very close to the edge of what will be acceptable to the U.S. Treasury,” Morante said. “And the arm of the U.S. Treasury that deals with this is the Secret Service, and they’re not very lenient once you pass a certain level.”
Still, Morante isn’t opposed to goldbacks as an idea. He says trust is the key issue. Will people trust they’re actual gold? And can they be counterfeited?
Back at Valaurum’s office, Trexler said there’s an x-ray test to prove both the presence and the amount of gold in the notes — and anyone with a crucible can extract it.
“The gold is really there,” he said. “This is truly a new technology.”
Over the years, many entrepreneurs have run afoul of the U.S. Treasury Department trying to create their own money. But Trexler is adamant that’s not what they’re doing — goldbacks are simply small amounts of gold that, he hopes, might one day sit in your wallet right next to paper bills and whatever else the future holds.