In the world of commodities, the “spot price” is God. Whether it’s crude oil, wheat, or gold, sophisticated investors are obsessed with buying as close to the raw material price as possible. But in Episode 18 of Y’all Street, Jeremy Cordon, founder of Goldback, challenges this obsession with a simple, blue-collar analogy that explains the economics of manufacturing.
He calls it the Toothpick Theory.
The Problem with “Spot”
When Tarek Saab pressed Cordon on the high premiums of Goldbacks (which can trade significantly higher than the spot price of gold), Cordon didn’t flinch. He pointed out a fundamental misunderstanding of what a Goldback is. It isn’t an investment bar sitting in a vault; it is a manufactured utility product.
“If you don’t understand why things have a premium when you divide them into smaller and smaller units,” Cordon explained, “then you might not understand why a toothpick would have a higher wood weight cost than a 2×4.”
You cannot buy a toothpick for the spot price of lumber. The cost to mill, shape, and package that tiny sliver of wood exceeds the value of the wood itself. Yet the consumer willingly pays for it because a 2×4 is useless for removing spinach from their teeth.
“I didn’t want to make a Liberty Dollar. I didn’t want to get in trouble. I didn’t want to break any rules… doing alternative currency is kind of boundary pushing that way in its nature.”
— Jeremy Cordon
Solving the “10-Ounce Bar” Problem
This analogy strikes at the heart of the Goldback’s value proposition. For 5,000 years, gold has been money. But in a modern economy, gold faces liquidity problems.
- The Asset: A 1-ounce Gold Eagle coin.
- The Transaction: A $30 haircut.
You cannot pay for the haircut with coin unless you have a metal file and a scale. By using vacuum deposition technology to sputter gold into durable polymer notes, Cordon created the “toothpick”—a fractional unit of gold small enough to facilitate trade.
The premium paid by the consumer isn’t just for the gold; it’s for the utility of the gold. It transforms the metal from a store of value (a bunker) into a medium of exchange (ammo).
The Pivot from Digital to Atoms
Cordon didn’t arrive at this manufacturing insight immediately. His early ventures were in the “Gold Crypto” space—aimed at digitizing gold ownership on the blockchain. He failed.
Why? Because the market for sound money is inherently distrustful of counterparty risk.
“If you don’t hold it, you don’t own it,” Cordon realized. “Jeremy, you have a beautiful idea on how to split gold into 1,000 pieces [digitally]. It’s not that I don’t trust you; I don’t trust the government.”
This realization—that the customer wanted atoms, not bits—forced Cordon to abandon the low-margin world of software for the high-complexity world of physical manufacturing. It was a pivot that moved him from a failing tech startup to a company with $200 million in circulation.
The Bottom Line
Goldback proves that even in a digital world, tangibility has a premium. Whether it’s a toothpick or a gold note, the market will pay for the ability to hold, use, and physically own an asset—no matter what the “spot price” says.
Curious about the legal framework behind alternative currencies? Listen to the full interview with Jeremy Cordon on Y’all Street.
