Coin and Paper Money Collecting/Backed by gold


QUESTION: When was the U.S. dollar no longer backed by gold, and is that a good or bad thing? It would seem to me that gold would have a moderating effect on a currency?

Also is it easier to forge paper money or coin money? I sometimes hear people have serious talks of getting rid of all paper money in the U.S. (sometimes pennys as well), and I was curious which forms of money have the best protection features.

ANSWER: The US went off the gold standard in 1933.
In essence, there is nothing backing the US currency, other than a promise by the US Government to pay.  It's sort of like an I.O.U.

By going off the gold standard, it enabled the US government to print more money than there was a physical backing for, hence the start of inflation.  The more money printed, the less it was worth so it took more dollars to buy a particular item.

A good example of this which I use when I give presentations on gold and money goes like this:
In 1964, a brand new, top of the line Ford Mustang cost $1,600
In 1964, gold was $32 per ounce
That equates to a New Ford Mustang be equal to 50 ounces of gold.

Would you have been better off holding 50 ounces of gold or $1,600 since that time?  Well, even with compounded interest, and taking into account the effect of inflation, your would have been better off with the gold.  Gold maintains it's purchasing power whereas the US dollar does not.  It seems like every day, items that we regularly buy, cost more.  It is not because they are any rarer today, it is because it takes more dollars to buy the same item because
the dollar isn't worth what it used to be.

On the other hand, today, a brand new, top of the line Ford Mustang has a price tag of about $80,000    With gold at just under $1700 per ounce that 50 ounces of gold can still buy the car.  Great analogy, huh?

Coin money is heavy and cumbersome.  I don't know which would be easier to counterfeit, but it is NOT easy to counterfeit US Paper Money.  There are many security devices in each bill to thwart such an attempt.  There have been talks about eliminating the penny, which would make sense, afterall, what does a penny buy these days, what is the use in it?  There has been no talk, that I am aware of, to eliminate paper money and use only coin.

Joe Hylas

---------- FOLLOW-UP ----------

QUESTION: I worry about counterfeiting. I think the Chinese actually make very good counterfeit driver's IDs that use higher technology than the legit IDs. lol. It seems to me that holograms, and various other forms of protection applied to ID cards must go beyond what paper money can use to be protected from counterfeiting?

Also what is your opinion of all those "buy gold" commercials they always have on fox news? Almost sounds like they are betting against the U.S. dollar when there is a democrat in office. lol. What if everyone invested in gold instead of stocks, bonds, and more standard investments?

Many of the BUY GOLD commercials are by legitimate companies, some are not.  Not every company is competitive in their prices either.  If looking for gold, people should always do their due diligence, not all companies are created the same.
Owning gold is not betting against democrats, it's just smart.  Gold maintains it's purchasing power, it is portable and liquid worldwide.  It is really the only true worldwide currency.  Not everyone will own gold, some people just don't understand the importance of owning it, and won't take the time to find out.

As for the counterfeiting issue, when was the last time you looked at US Paper Money? There are numerous anti-counterfeiting measures built into every bill. visit the website for the Bureau of Printing and Engraving.  There you will see what I mean.

Joe Hylas
Omega Precious Metals

Coin and Paper Money Collecting

All Answers

Answers by Expert:

Ask Experts


Joe Hylas


Numismatic professional with over 30 years experience can answer your questions about US coins, their values, how best to sell them and where to buy them. Interested in starting a collection? Find out which areas are undervalued and how to acquire those coins at the best price.


Ex-Head Precious Metals trader for Deak-Perera International with 42 offices worldwide. Industry experience since 1978. Has worked co-operatively with US Mint, Royal Canadian Mint, Austrian Mint, Chamber of Mines of South Africa, World Gold Council and Platinum Guild International. Professioanl numismatist specializing in US Coins. Always buying collections, will travel if size of collection warrants. Website: www.AllCoins.US

PCGS, NGC, Rotary

Physician's Money Digest

Bachelor's Degree in Business Administration

Awards and Honors
Paul Harris Fellow

©2016 All rights reserved.