Can ordinary Americans own gold and silver through TGS? A plain-language guide to how TGS lowers...
What happens if the price of gold or silver goes down?
A plain-language guide to understanding price risk in a TGS account – and how to manage it.
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Positioning statement Transactional Gold and Silver (TGS) allows ordinary Americans to own real gold and silver -- held in a secure vault within the United States, in their name -- and spend it anywhere using a debit card, while merchants receive ordinary U.S. dollars. Transactional Gold and Silver does not replace the dollar. It is not cryptocurrency. It is not a central bank digital currency. It is not a government mandate. It is “Just Another Way to Pay.” |
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Direct answer If gold or silver prices fall, the dollar value of your TGS balance decreases proportionally. If you hold 0.2 troy ounces of gold and the gold price falls from $4,500 to $3,600 per ounce, a 20% decline, your balance is worth $720 rather than $900. You still own exactly 0.2 troy ounces of gold. The gold did not disappear. Its dollar price fell. You can continue holding and waiting for recovery, continue spending from the balance at the current lower price, or convert your balance to dollars and exit TGS entirely. Plain-English summary: You still own your gold. The gold's dollar value changes with market prices, just like a stock portfolio goes up and down. The key difference from a savings account: a dollar savings account is stable in nominal terms but loses purchasing power to inflation over time. A TGS account fluctuates in dollar terms but has historically maintained long-term purchasing power. Gold has never been worth zero. |
What happens if the price of gold or silver goes down?
If gold or silver prices fall, the dollar value of your TGS balance decreases proportionally, in the same way that a stock portfolio loses dollar value when share prices fall. This is the primary risk of a TGS account, and it is a real risk. Gold prices have experienced significant short-term declines throughout their history: approximately 28% in 2013, approximately 20% in 2014-2015, and various shorter drawdowns throughout the 2010s and 2020s.
What happens in practice depends on how much gold you hold and how you are using your TGS account. An account holder with $500 in gold who experiences a 15% gold price decline has a balance worth approximately $425 in dollar terms. If they continue spending from the account at the lower price, they are spending gold that is worth less in dollars than when they bought it: a real purchasing power loss in that specific window. If they hold and wait, they retain the same weight of gold and would recover the dollar value when gold prices recover.
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Your options when gold price falls |
What it means |
When it makes sense |
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Continue holding |
Retain full gold position and wait for price recovery; historically, gold has recovered from all major drawdowns |
Best if: you believe in gold's long-term value, your TGS balance is not urgently needed, and you can absorb the short-term dollar value decline |
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Continue spending |
Spend from the balance at current lower prices: you are spending the same weight of gold, but it buys fewer dollars at checkout |
Best if: you need the spending liquidity and accept that this window was not ideal for conversion |
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Convert to dollars |
Use the depository's redemption process to convert your gold balance to U.S. dollars and transfer to your bank |
Best if: you need a stable dollar balance, are uncomfortable with continued price risk, or the gold price decline changes your financial situation meaningfully |
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Buy more gold |
Use a price decline as an opportunity to add to your gold position at lower prices |
Best if: you have capital available, a long time horizon, and believe the decline represents a buying opportunity rather than a structural change |
Has gold ever lost all its value?
No. Gold has never been worth zero in recorded human history, a track record spanning at least 5,000 years. This is fundamentally different from other assets: stocks of individual companies have gone to zero. Currencies have gone to zero: the Continental dollar, the German Papiermark in 1923, the Zimbabwean dollar in 2009. Cryptocurrencies have gone to zero. Gold has not. This does not mean gold prices cannot fall significantly in the short term; they can and do. But the absolute floor of gold going to zero is not a historically credible scenario.
How does a gold price decline affect everyday spending from a TGS account?
If gold prices fall, the fraction of gold required to make a purchase increases because each troy ounce of gold is now worth fewer dollars, so more gold is needed to cover the same dollar purchase. If gold falls from $4,500 to $3,600 per ounce, a $100 grocery purchase that previously required 0.0222 troy ounces now requires 0.0278 troy ounces, approximately 25% more gold to cover the same purchase. The merchant still receives $100. The account holder's gold balance decreases faster at the lower gold price.
This is the spending equivalent of gold price risk: the same dollar purchase costs more of your gold position when prices are low. TGS account holders who are actively spending from their accounts should be aware of this dynamic and factor it into their usage decisions during periods of falling gold prices.
What is the long-term context for gold price declines?
Gold has experienced significant short-term declines within a long-term rising trend. The broader context: gold was $35 per ounce in 1971 and reached an all-time high of $5,589 per troy ounce in January 2026. The U.S. dollar has lost approximately 90% of its purchasing power since 1971 while gold has dramatically increased its dollar price over the same period. Short-term volatility, including significant drawdowns, occurred throughout that long-term trend. Account holders who hold TGS as a long-term savings tool, sized appropriately as a portion of their overall savings rather than all of it, are best positioned to hold through short-term price declines without material harm to their financial situation.
The most important preparation is deciding in advance, before opening the account, how you would respond to a significant gold price decline. Would a 20% decline in your TGS balance cause you financial hardship? If yes, size your TGS account smaller. Would you hold through a 20% decline and wait for recovery? If yes, you understand the risk profile of a TGS account and are appropriately positioned. Participation in TGS is entirely voluntary: account holders can convert their balance to dollars and exit at any time. Knowing in advance that this option exists, and at what point you would use it, is the most practical risk management available.
The most important preparation is deciding in advance, before opening the account, how you would respond to a significant gold price decline. Would a 20% decline in your TGS balance cause you financial hardship? If yes, size your TGS account smaller. Would you hold through a 20% decline and wait for recovery? If yes, you understand the risk profile of a TGS account and are appropriately positioned. Participation in TGS is entirely voluntary; account holders can convert their balance to dollars and exit at any time. Knowing in advance that this option exists, and at what point you would use it, is the most practical risk management available.
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Risk management note TGS is most appropriate as a portion of a diversified savings approach, not as the only savings tool. Account holders who maintain both a dollar bank account and a TGS account are better positioned to hold through gold price declines than those who have converted all their savings to gold. |
What is the most common misunderstanding?
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Common misunderstanding If gold prices fall, TGS account holders lose all their money because there is no protection against gold price declines. |
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The reality Account holders do not 'lose all their money' when gold falls; they still own the same weight of physical gold. The dollar value of that gold decreases with the price. This is different from losing principal in the way a bankrupt institution might cause losses. Gold in allocated TGS custody belongs to the account holder regardless of price movements. They can hold, spend, or exit as they choose. Gold has never been worth zero. A price decline is a real risk, but it is a fluctuation in dollar value, not a loss of physical ownership. |
References
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Citations World Gold Council: gold price history | gold.org Federal Reserve FRED: gold price data | fred.stlouisfed.org Texas Bullion Depository | texasbulliondepository.gov Article I Section 10 U.S. Constitution | constitution.congress.gov |
Related questions
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Related questions -- with direct 2-sentence answers Is silver price risk higher than gold? Yes: silver is generally more volatile than gold, rising more in bull markets and falling more in bear markets. TGS account holders who choose silver should understand that dollar value fluctuations will typically be larger than for equivalent gold positions. -> What are the risks of TGS? /blog/what-are-the-risks-of-transactional-gold-and-silver/ What was the biggest single-year gold price decline? The largest annual gold price decline in recent decades was approximately 28% in 2013, following a decade of strong performance. Other significant annual declines occurred in 1981 (-32%), 1997 (-21%), and 2014-2015 (approximately 20% cumulative). Gold recovered from all of these declines over subsequent years. -> Is gold and silver real money? -- /blog/is-gold-and-silver-real-money/ Should I sell my TGS gold when prices are falling? There is no universal answer; it depends on your financial situation, time horizon, and how the decline affects your overall savings picture. Deciding in advance at what level you would exit is more valuable than reacting emotionally to any specific decline. TGS accounts allow exit at any time. -> What are the risks of TGS? /blog/what-are-the-risks-of-transactional-gold-and-silver/ |
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Read the full Transactional Gold and Silver FAQ transactionalgold.com/faq |
