Posted 21st August 2023

What is a Gold Certificate?

gold certificate

A gold certificate is a piece of paper that proves that you own a certain amount of gold.

Gold certificates give you exposure to having gold but you don’t incur the costs and drawbacks of storing the gold yourselves.

However, there are still costs to buying and selling the gold bars and bullion you own evidenced on a gold certificate.

400 years ago

The Origin of Gold Certificates

Gold certificates date back over 400 years but still have a role in the gold investment market today.

Originally, goldsmiths in London and Amsterdam started issuing certificates to their customers. You gave them your gold for safekeeping and, in return, they handed you a certificate. 

This was your proof of ownership, which confirmed that you owned the precious metal you deposited there.

These certificates quickly became popular – although it took a while – because earlier certificates were susceptible to theft, fraud, or loss. Over time, the goldsmiths ironed out the problems and the certificates ended up becoming a common means of exchange.

It was not long before these certificates were being used as currencies in their own right. This was helped by the fact that many countries adopted or operated a de facto gold standard by the 18th Century.

Countries, including the United States, became regular and enthusiastic issuers of these certificates.

The 1928 20 Dollar Gold Certificate

The US began its gold certificate journey in 1865. Like in London and Amsterdam, they were initially used as simple certificates of deposit.

They confirmed that the certificate holder owned a specific quantity of gold. Each certificate gave the holder a claim on their gold equivalent to the dollar face value of the note. Back then, the price of an ounce of gold was $20.67.

The certificates became popular with merchants and banks who started using them in gold wholesale markets.

Between 1865 and 1934 the Treasury issued nine series of notes, most of which were for large amounts of money. People and companies began to use gold certificates in general commerce.

By 1907, the Treasury introduced a $10 certificate and later in 1919, they were official US money. 

1928 saw the birth of small-sized gold certificates, where the $20 certificate quickly became a hit – equivalent to an ounce of gold.

However, 1933 brought change. The US stopped using gold as money and declared owning gold or gold certificates to be illegal. Citizens, under the force of law, had to hand their gold and gold certificates over to the government and exchange them for dollars.

In 1933, citizens had to redeem them at face value in US dollars rather than the dollar value of the gold. By 1934, the value of gold had risen to $35 a troy ounce. This higher price meant that the previous holders of this gold lost a lot of money.

The country stopped using the gold standard for a while. At the time, America was struggling to cope with the Great Depression and various banking crises.

It was not until 1964 that the US lifted the ban on holding gold certificates.

Modern Gold Certificates

Today, there are two kinds of gold certificates representing the two major types of ownership:

  • Allocated gold refers to a specific piece of gold
  • Unallocated gold refers to any gold the bank owns

With an allocated certificate, the bank can’t touch your gold – you have full ownership of it. Even if the bank fails, your gold is safe but allocated gold certificates can be expensive.

The fees on allocated gold held on your behalf are higher because of storage, insurance, and administration costs.

Today, most gold certificates are digital and unallocated.

gold certificate countries issuance

Where can you find Gold Certificates?

Banks in countries like Germany, Switzerland, France, and Vietnam issue golden certificates.

Banks issue these certificates with their prospectus. Each prospectus sets out the benefits and risks to the owner of the certificate. It also sets out what obligations the issuer has to follow. They often contain restrictions on subscriber eligibility. 

Investment companies in both the US and Australia operate pooled (unallocated) programs. You can invest in them directly and via brokers. Some mints also issue gold Certificates.

If you’re interested in historic gold certificates, many are now collector’s items of varying rarity and value.


This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.