Why gold-backed debit cards are taking off

Gold’s surge to record highs isn’t just boosting investor portfolios (1). It is helping to turn the metal into a form of everyday money you can use to pay for everyday goods and services.

Technology now allows consumers to spend gold with a debit card, converting small amounts into cash at the point of purchase. The concept isn’t new, but as inflation continues to bite and the value of gold rockets, state legislatures and a growing group of fintech platforms are increasingly throwing their weight behind it (2).

The pitch is simple: while rising prices erode the value of traditional money, gold, which has long been viewed as a hedge against inflation, keeps up and even grows in worth.

But not everyone is convinced that gold-backed payment systems are a good thing. Critics question who benefits and warn that fees, taxes and other frictions could limit their appeal.

Gold-backed debit cards allow users to spend gold as if it were cash.

Instead of holding a balance in dollars, users hold physical gold — typically stored in secure vaults. When they make a purchase, a small portion of that gold is instantly sold and converted into currency to complete the transaction.

Companies like Glint have been at the forefront of this model, issuing prepaid debit cards backed by gold stored in Swiss vaults (3). Users fund their accounts in traditional currency, which is then converted into gold they legally own.

This isn’t a new thing. Gold-backed payment systems have existed for years. However, interest in them is now really starting to build, thanks to gold’s soaring value and enduring reputation as a hedge against inflation and a safe haven in uncertain times.

Unlike cash sitting in a bank account, which can lose value as prices rise, gold has historically maintained and often increased its purchasing power over time. With inflation reshaping how consumers think about money, that distinction is resonating more strongly.

For example, $1,000 in cash from 2020 would be worth about $780 in today’s dollars, meaning it has lost roughly a fifth of its value to inflation (4). By contrast, $1,000 invested in gold at the start of 2020 would be worth roughly $1,800 to $2,000 today, depending on the exact timing of purchase and sale (5).

For some people, the appeal is not only financial but ideological, too. Gold is often seen as an independent, tangible asset that operates outside the control of central banks and fiat currency systems, which resonates with those wary of governments and traditional financial institutions.

Barriers are also being reduced. Several states, including Texas and Utah, are exploring or have introduced laws that make it easier to use gold in certain transactions and, in some cases, support digital payment systems linked to the metal. The aim is to reduce tax friction and clarify how gold is treated legally, but the measures stop short of replacing the U.S. dollar as legal tender (6).

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Not everyone is convinced gold-backed debit cards are a good idea. Drawbacks pointed out by critics include:

• Fees: Providers can charge fees to buy, store or sell gold, as well as transaction or foreign exchange fees when converting it into currency at the point of sale. These costs can add up and may offset some of the inflation-hedging benefits often cited by supporters.

• Tax complexity: Gold is still treated as a taxable asset at the federal level in the U.S (7). That means spending gold could trigger a capital gains tax event if the value of the metal has increased since it was purchased. While some states are pushing to remove local tax barriers, federal rules still apply.

• Market volatility: Although gold is widely seen as a hedge and long-term store of value, its price is not stable in the short term. In recent years, increased demand and speculative interest have led to sharper price swings, meaning the value of a user’s balance could fluctuate more than expected (8).

• Just a fad? There’s skepticism about whether people actually want to spend gold. Many investors view it as a long-term store of value rather than something to use for everyday transactions, which could limit adoption (9).

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World Gold Council (1),(5),(8); Stateline (2),(6),(9); Glint Pay (3); U.S. Bureau of Labor Statistics (4); Internal Revenue Service (7)

This article originally appeared on Moneywise.com under the title: A ‘new gold rush’: Why gold-backed debit cards are taking off

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