Gold Certificate – What is it, definition and concept | 2022

The gold certificate is a document that justifies the ownership and value of a certain amount of gold. These certificates make it possible to avoid difficulties related to aspects such as custody, insurance and deliveries.

These documents are issued by banks that are engaged in gold transactions. Investors holding these certificates have the ability to sell them to other investors. It should be noted that this type of document is usually used by persons or entities that operate with significant volumes of gold.

History and origin of gold certificates

The origin of gold certificates dates back to the 17th century, a time when they were issued by goldsmiths in cities such as Amsterdam and London. Initially, they were used to prove the possession of a certain amount of gold, although, later, they were used to make payments.

Well into the 19th century, banks in the United States began to issue gold certificates. In this way, the certificates allowed them to be exchanged for gold from the chambers of American banks, and could even be valid for making payments. However, in 1933, the US authorities prohibited its use by individuals, precisely when President Franklin D. Roosevelt unlinked the dollar from the gold standard.

Although its use is not as wide as in the past, there are various banking entities that issue them.


As we previously pointed out, gold certificates are issued by a banking entity and attest to the ownership of a specific amount of gold. In a way, their operation is similar to stock certificates and they facilitate large transactions and investments with gold.

A gold certificate, as is the case with securities, confers on its bearer rights to an amount of gold or its equivalent in money.

Both banks and investment companies that issue gold certificates specify the amount of the precious metal in ounces. It should be noted that if the entity issuing the certificate falls, the certificate loses its validity.

Problems that can lead to gold certificates

One of the weaknesses of gold certificates is that they are sold without leverage, which often leads to low returns and makes them an unattractive tool for investors looking for substantial returns. On the other hand, with regard to returns, the certificates do not provide dividends or any kind of interest.

One aspect to take into account is the entity that issues the gold certificates. Thus, if the entity falls or has problems, it will be very difficult to exchange the certificate for gold, all without neglecting the possible commissions that must be paid for its issuance.

Finally, do not forget the possibility of malicious duplication of certificates. Thus, falsifications, premeditated excessive issuances, substitutions of certificates or the non-destruction of old certificates may take place.

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Positive aspects

The great advantage of gold certificates is the security they provide to their owner in relation to their custody. In fact, the gold certificate allows the holder to know that his gold is safe and that he is protected from contingencies such as theft.

Gold certificates have been shown to greatly facilitate business transactions. Thanks to them, investors can carry out transactions in a much more agile and simple way according to the variations experienced by the market.

Having a gold certificate saves the owner the costs of custody of the precious metal. These issues become the responsibility of the bank, so the owner only has to worry about keeping the document that confers ownership of the gold.

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