Gold Certificate

Know what’s really heavy? Gold.

Know what’s really hard to store on a garage shelf or in a hall cabinet? Also gold.

That’s why, when investors buy gold, they’ll often get a gold certificate from their investment institution instead of actual, physical, super-heavy gold.

A gold certificate is kind of like a title to a car. It means we own it, even if it isn’t currently parked in our garage. They work one of two ways: either the certificate is allocated, which means it is directly tied to ownership of a specific bar of gold, or it’s unallocated, which means it’s not. If we hold unallocated gold certificates and there’s an unexpectedly large run on gold all of a sudden, our financial institution might not be able to guarantee that they have the physical amount of gold that we own in stock in the branch.

Back in the day, when the U.S. dollar was tied to the gold standard, gold certificates were even considered legal tender (we could spend them like money). But those days are long gone; the U.S. went off the gold standard in 1933. Now, the original U.S. Treasury gold certificates are considered collector’s items, and the gold certificates issued today are less currency and more...proof-of-ownership.