Monday, May 23, 2011

Gold, Silver to be Legal Tender in Utah

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An interesting development in Utah as gold and silver are going to be acceptable forms of legal tender.  Somewhere Ron Paul has to be smiling.  That said, retailers are not required to accept gold or silver so I am not sure how much of an effect this will have.

Via AP:

  • Utah legislators want to see the dollar regain its former glory, back to the days when one could literally bank on it being "as good as gold." To make that point, they've turned it around, and made gold as good as cash. Utah became the first state in the country this month to legalize gold and silver coins as currency. The law also will exempt the sale of the coins from state capital gains taxes.
  • The idea was spawned by Republican state Rep. Brad Galvez, who sponsored the bill largely to serve as a protest against Federal Reserve monetary policy. Galvez says Americans are losing faith in the dollar. If you're mad about government debt, ditch the cash. Spend your gold and silver, he says.
  • His idea isn't to return to the gold standard, when the dollar was backed by gold instead of government goodwill. Instead, he just wanted to create options for consumers.  "We're too far down the road to go back to the gold standard," Galvez said. "This will move us toward an alternative currency."
  • Earlier this month, Minnesota took a step closer to joining Utah in making gold and silver legal tender. A Republican lawmaker there introduced a bill that sets up a special committee to explore the option. North Carolina, Idaho and at least nine other states also have similar bills drafted.
  • ........the legislation doesn't require merchants to accept the coins, either at face value — $50 for a 1-ounce gold coin — or market value, currently almost $1,500 per ounce. And no one expects people will be walking around town with pockets full of gold and silver.
  • Matt Zeman, market strategist for Kingsview Financial in Chicago, expects more people will start investing in gold as America's growing debt and bankruptcies in other countries continue to decrease the value of government-backed money. "You've seen gold replacing these currencies as safety instruments," Zeman said. "If I don't feel good about the dollar or other currencies, I'm putting my money in precious metals."
  • The U.S. and many other countries largely abandoned gold-backed money during World War I because they needed to print more cash to pay for the war. Later, during the Great Depression, President Franklin D. Roosevelt took steps that essentially prohibited gold and silver as legal currency to prevent hoarding. In 1971, President Nixon formally abandoned the gold standard.
  • Fifteen years later, the U.S. Mint began producing the gold and silver American Eagle coins, primarily aimed at investment portfolios and allowing people to trade them at market value but with capital gains taxes on profits. Utah is now allowing the coins to be used as legal tender while levying no taxes.

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