Are Gold Coins Legal Tender?
There was once a time when gold coins were used much the same way we use dollar bills and debit cards today. Passed from hand to hand, tossed into poker pots, plunked down for weekly groceries or plots of land, gold and silver coins were common mediums of exchange.
While you may not be able to pay your debts with a pocketful of gold doubloons, the answer to the question above is yes. In the United States, gold coins are legal tender—as long as they are stamped with a government-backed face value. For example, a 1oz. Gold Eagle has a face value of $50. Don’t get too excited, however. If you want to purchase one of these coins, you’re going to have to shell out a lot more than fifty bucks. Today, gold is selling for around $1,300 an ounce, so $1,300 is a 1oz. Gold Eagle’s intrinsic value—regardless of the $50 denomination. That’s why you can’t hand a $50 gold coin to the grocery store cashier without expecting a strange look. You wouldn’t pay $1,300 for a week’s worth of groceries, would you?
So why even stamp that “$50” on the coin at all? The government arbitrarily chooses the number, but the reason isn’t random at all. It is the face value of a coin that makes it legal tender, thus making it legal to transport said coin across national borders without taxation.
If you’re interested in gold as an investment and want it in legal tender form with weight, content, and purity guaranteed by the U.S. Government, then U.S. gold coins are the way to go.