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China’s National People’s Congress isn’t the only legislative body in the world making moves in support of “real money” (i.e., gold and silver). Within just the past couple of years, many US states have passed important laws that are pro gold and silver, helping gold investors.
Precious metals investors living in these states are seeing their investing costs go down and enjoying more favorable tax treatment of their investments in gold and silver.
We’re also seeing gold and silver coins and bullion being returned to the status of legal tender in several states. This effectively reverses the actions taken by President Franklin D. Roosevelt nearly 100 years ago, when he moved to rob the American people of all their privately held gold and silver, taking the first key steps toward abandoning the gold standard and establishing today’s fiat currency system.
In this article, we’ll look at some of the recent monetary legislation in various US states that is saying “yes” to gold and silver - and in one very significant case, saying a big, fat “NO” to the Federal Reserve.
Louisiana Declares Gold and Silver as Legal Tender
Just five months into the year 2024, there have already been half a dozen new state laws passed that are “pro sound money” (for “sound money”, read “REAL money” – that is, gold and silver). One of the most significant of these laws is Senate Bill 232 in Louisiana, a bill sponsored by Sen. Mark Abraham and just signed into law by Louisiana’s Governor, Jeff Landry, on May 28th.
It should be no surprise that both Abraham and Landry are conservative Republicans. Nearly all of the pro sound money legislation is originating in “red” states. The acceptance or rejection of gold and silver is one of the major dividing lines between conservatives and liberals, between red and blue states.
The Louisiana law reaffirms the status of gold and silver as “legal tender”, stating that, “any gold or silver coin, specie, or bullion issued by any state or the U.S. government as legal tender shall be recognized as legal tender in this state”. An important part of this law is the clause that approves as legal tender any gold or silver coins or bullion “issued by any state” (emphasis added) – not only coins or bullion so designated by the federal government. This part of the law is significant because of the fact that several states are approving as legal tender privately issued gold and silver coins or bullion.
This is a good point at which to quote Article 1, Section 10 of the US Constitution - “No state shall…coin Money; emit Bills of Credit; [or] make any Thing but gold and silver Coin a Tender in Payment of Debts…”.
The Louisiana law is one more piece of legislation that supports the use of real money and that implies increasing rejection of the fiat currency Federal Reserve Notes, which have done nothing but steadily lose purchasing power ever since their introduction a century ago, and especially since the abandonment of the gold standard in 1971.
2024 legislation in Kentucky highlights the fact that pro sound money policies are a battleground between liberals and conservatives. Kentucky is the home of former Senator Rand Paul and current Senator Rand Paul Jr., both of whom are fiscal conservatives and longtime advocates of returning to the gold standard. They’re also longtime critics of the Federal Reserve and its reckless money printing. However, Kentucky’s governor, Andy Beshear, is a liberal progressive.
House Bill 8 in Kentucky eliminated sales taxes on purchases of gold, silver, platinum, and palladium. The bill enjoyed strong, widespread grassroots support, including backing by the Sound Money Defense League. The SMDL is a non-profit organization whose stated mission is to promote sound money policies, end endless money printing by the Federal Reserve, and reestablish gold and silver as the country’s Constitutionally-recognized money.
After the state legislature passed the bill, Governor Beshear attempted to line-item veto the sales tax exemption, but was stopped by the state Attorney General’s office, which pointed out that the Governor only has line-item veto power on appropriations bills (House Bill 8 is a revenue bill, not a spending bill).
Many states have followed suit on eliminating sales tax on gold and silver, as there are strong logical and policy arguments against levying such a tax. The supporting arguments for getting rid of sales taxes on precious metals include the following:
The bill’s sponsor, House Representative Steven Doan, made the following statement supporting removing the sales tax as good sound money policy: “Sound money is the bedrock of economic stability, ensuring the preservation of wealth and purchasing power over time…sound money fosters confidence in transactions, encourages savings, and facilitates long-term investment, ultimately driving sustainable economic growth. As enshrined in the Constitution, sound money protects against the corrosive effects of inflation, safeguarding the financial well-being of individuals, families, and enterprises alike.”
Other states that have recently eliminated sales taxes charged on buying gold and silver include Tennessee, Wisconsin, Arkansas, and Mississippi.
Nebraska is now one of a dozen states that have eliminated the income tax – specifically, capital gains taxes – on gold and silver investments. And while doing so, it also stuck a thumb in the eye of the Federal Reserve Bank, saying “no” to any Fed-issued cryptocurrency.
With bill LB 1317, sponsored by Republican State Senator Ben Hansen, Nebraska abolished the state’s capital gains tax on precious metals.
Upon passage of the bill, which was quickly signed into law by fellow Republican, Governor Jim Pillen, Senator Hansen stated, “Gold and silver are the only forms of currency mentioned in our Constitution, and with that comes the people's ability to use it as such without penalty from the government. Saving, and using, gold and silver is our right, and one of the only checks and balances to our federal government's unending devaluation of our paper currency.” The Senator further noted that while taxpayers may technically realize “gains” upon selling physical gold or silver, rather than being a real increase in value, the gains are often merely nominal, more of a reflection of the US dollar’s ongoing devaluation as it continues to lose purchasing power.
From Hansen’s statement about “our federal government's unending devaluation of our paper currency”, you might conclude that he’s no fan of the Federal Reserve – and you’d be right. The new legislation clarified the state’s definition of money, adding to the definition, “Money does not include central bank digital currency.” The law defines such a CBDC as “a digital medium of exchange, token, or monetary unit of account issued by the United States Federal Reserve System or any analogous federal agency”.
There has been increasing talk about the possibility of the Federal Reserve creating and issuing a CBDC. Nebraska’s legislation appears to be an attempt to nip that idea in the bud, essentially stating that Nebraska would not recognize any such digital currency as a legitimate form of money.
Critics of a CBDC state that a digital currency issued by the federal government’s central bank would be nothing more than a thinly-disguised attempt by the government to increase financial surveillance of US citizens, increase the power of the federal government, and restrict individual freedom.
J.P. Cortez, Executive Director of the Sound Money Defense League, testified before the state legislature and expressed his concerns about the grave risks posed by the creation of a CBDC. He said that a CBDC would give the federal government a significantly greater ability to -
- track every financial transaction of every individual citizen,
- ban certain types of purchases,
- and even completely cut off a targeted individual’s access to their money.
The federal government has shown its clear dislike of privately-issued cryptocurrencies, such as Bitcoin and Ethereum - specifically, its dislike of the anonymity and financial privacy that they give people.
Echoing Nebraska’s elimination of capital gains taxes on precious metals, U.S. Congressman Alex Mooney (R-WV) re-introduced in the House the Monetary Metals Tax Neutrality Act that would abolish federal capital gains taxes on gold and silver. Mooney also introduced House bill H.R. 3712, the Digital Dollar Pilot Prevention Act. This bill would block the Federal Reserve from even setting up a test, or “pilot”, program to explore the possibility of creating any kind of a central bank digital currency.
Legislation with anti-CBDC clauses similar to those in the Nebraska law has been introduced in the state legislatures of North Carolina, Florida, Tennessee, Indiana, and South Dakota.
I’ve written extensively on the moves by the central banks of several nations – including, notably, China, Russia, and India - to rapidly increase the percentage gold makes up of their total financial reserves. Apparently, the state of Utah has taken a page out of that book, as it recently passed legislation that enables the State Treasurer to purchase gold and silver for the state’s reserve accounts.
The purpose of House Bill 348, sponsored by Representative Ken Ivory, is to help Utah better secure its financial assets against risks such as inflation, and potentially to realize capital gains from investments in precious metals.
Before this new law was passed, Utah’s state financial reserves consisted almost wholly of investments in US Treasury securities and municipal or corporate bonds. The extremely low yields currently available on such debt securities create the risk of state reserves ending up being underfunded at some point in the future. The flexibility that has now been created for the state Treasury to diversify with investments in gold and silver helps to reduce that risk.
The current bull market in precious metals also gives the state of Utah the potential for realizing substantial investment profits, thereby shoring up its financial base.
One effort by the Sound Money Defense League has been to encourage states to hedge their reserve and pension funds with investments in gold and silver. Texas is another state, along with Utah, that has been a leader in this regard. The Texas Teacher Retirement Fund and the University of Texas now hold reserves of approximately $1 billion in physical gold. (Note: Texas is, of course, the home state of the Lone Ranger, who, you may recall, exclusively used silver bullets.)
Utah’s new law also charges the State Treasurer with the responsibility of “analyzing the role of precious metals in augmenting, stabilizing, and ensuring the economic security and prosperity of the state, the families and residents of the state, and businesses in the state.”
Utah previously passed legislation similar to Louisiana’s, officially recognizing gold and silver as legal tender. It is also one of the five states that has a Goldback note series. Goldbacks are a new form of gold bullion - currency notes that are overlaid with pure 24-karat gold.
It’s encouraging to see many states passing pro sound money laws that support investments in gold and silver. It’s especially encouraging to see states doing so when the legislation passed is genuinely in the best interests of its citizens even when it’s not in the best interest of the state government. Consider the fact that when a state passes a law eliminating sales taxes on gold and silver investments, it is voluntarily relinquishing a source of revenue.
These pro gold and silver laws that individual states are enacting help to act as a counter-balance to the Federal Reserve, which, from its creation, has been a relentless enemy of the gold standard. Therefore, I say, “Hooray – Louisiana, Kentucky, Nebraska, and Utah!” (and all other states that are passing pro sound money laws). Sound money activists, such as the Sound Money Defense League, are actively pursuing various initiatives at the state level to -
- abolish sales and capital gains taxes on gold and silver
- legitimize the use of gold and silver as alternative, real money
- urge states to set up gold depositories and hold gold reserves
I’d also like to reiterate the fact that the states passing laws that help gold investors are overwhelmingly red states – i.e., those controlled by conservatives/Republicans. Don’t hold your breath waiting for the ultimate blue state, California, to eliminate the capital gains tax on precious metals. (When’s the last time California ever did anything to reduce the tax burden on its residents?) The point being – if you want favorable tax treatment for your gold investments, then live in a red state.
Interested in learning how to buy gold and buy silver?
Call 1-800-300-(GOLD) and speak with a Precious Metals Specialist today!
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Sources:
https://www.soundmoneydefense.org/
https://www.soundmoneydefense.org/state-legal-tender-movement
https://www.moneymetals.com/uploads/content/Digital-Dollar-Pilot-Prevention-Act-text.pdf
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