Could Gold and Silver Coins Become Legal Tender in Your State?

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Confidence in the U.S. dollar is so low that 13 states are poised to recognize gold and silver coins as legal tender.

Arizona is the latest state set to make the move.

Monday, the Republican sponsored Arizona measure sailed through the House of Representatives 36-2. The bill moves on for another vote in the Senate, where it got its first nod Feb. 28 in a 17-11 vote.

Should it land on Gov. Jan Brewer's desk, it's good as gold.

Sen. Chester Crandall (R-AZ), the bill's sponsor, says the move "is the logical thing for the state of Arizona to do."

The bill doesn't mean residents will pay for groceries and utilities with the coins. It's more of a backup plan that provides "a lifeboat for Arizona so that we can construct Plan B" when paper currency is no longer widely accepted.

Utah led the way in 2011 when it sanctioned bullion as currency with the Legal Tender Act.

States considering similar bills include Colorado, Kansas, Idaho, Indiana, Missouri, Montana, New Hampshire, South Carolina and Virginia.

Why States Are Turning to Gold and Silver Coins

Throughout history, every single instance of money printing and substantial increases in a country's debt has always led to the destruction of paper currency and a depression among the citizens that live through it.

At least, that is what Utah lawmakers found when researching the benefit of gold and silver bullion as legal tender.

Utah's passage was spurred by the U.S. Federal Reserve's money printing, massive debt accumulation, and $220 billion annual interest due on the debt.

Worries of the U.S. dollar losing value, hyperinflation and an economic collapse all supported the move. Lawmakers argued that gold and silver bullion will continue to keep their value because they are sound currencies with no debts attached to them.

Missouri shared that sentiment when it proposed The Sound Money Act in April 2012. Its passage also was motivated by the belief that the U.S. dollar is burdened by heavy debt and losing value as that load grows.

"Today, the citizens of Missouri are one step closer to having the value of their investments, savings and currency protected from inflation and manipulation by the Federal Reserve Board and the federal government," Rick Danker, Economics Director of American Principles in Action said following the bill's approval.

"This is great news for the cause of sound money, not just in Missouri but for other states seeking to use their constitutional authority to make gold and silver coins legal tender," he added.

South Carolina lawmakers took up the discussion in March 2012.

"I'm no financial expert but I am smart enough to know that you can't keep printing money when it has no backing," Republican Rep. Mac Toole told Fox News at the time.

Lawmakers in Texas are mulling a measure to establish the Texas Bullion Depository. The facility would store about $1 billion in gold bars currently housed in a New York bank warehouse.

The University of Texas Investment Management Co., which owns the gold, took delivery of 6,643 bars of the yellow metal in 2011, worried that demand for the precious metal would outstrip supply.

The proposed depository would also accept deposits from the public. In addition, it would serve as the foundation for a payment system in the Lone Star State in the event of a "systemic dislocation in a national and international financial system."

"We are seeing a distinct movement back to a world where gold is considered money," Jim Rickards, author of "Currency Wars: The Making of the Next Global Crisis," told Bloomberg News.

Gold and Silver Coins: A Symbolic Move

The push supporting gold and silver coins sends a clear message to Washington that states are banking on alternative currencies as the country's budgetary woes mount.

"The legislation is about signaling discontent with monetary policy and about what Ben Bernanke is doing," Loren Gatch, a political teacher at the University of Central Oklahoma, explained to Bloomberg. "There is a fear that the government, or Bernanke in particular and the Federal Reserve, is pursuing a policy that will lead to the collapse of the dollar. That's what is behind it."

The Fed put up a "wall of money" in 2008 when it launched its stimulus program in the wake of the Great Recession.

The central bank has kept short-term interest rates near zero since then. It went on to engage in several rounds of aggressive bond buying. The aim: to lower long-term interest rates and goose the stagnant economy.

Yet, these easy money polices have done little except swell the Fed's balance sheet beyond $3 trillion and devalue the dollar.

Some have simply called for a return to the Gold Standard, which would stabilize the dollar by discouraging runaway fiscal spending and the liberal printing of dollars.

"People know that something is wrong with the dollar. You cannot trash your money without repercussions," said Forbes Magazine publisher and former GOP presidential candidate Steve Forbes.

What do you think – do you want to see gold and silver coins become legal tender in your state?

If you want to know how to buy physical silver so you get your hands on some insurance for paper currency, check out this special report: A Beginner's Guide to Buying Physical Silver

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Join the conversation. Click here to jump to comments…

  1. pecosdave | April 10, 2013

    Article 1 Section 10

    No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts

    Gold and silver already is legal. Our current money however is not legal.

    • Phil T Tipp | April 14, 2013

      Absolutely correct. Fiat currency is but Legal Tender, it is NOT Lawful Money.

  2. garry bell | April 10, 2013

    I believe all coins (silver/gold) must use USA mined metal. If this is true, why not replace the "dollar bill" with a coin of 99.99 copper. The "five" with a coin of nickle (99.99). This move would put real monies in our pockets and the mining (along with miners, their familys and communities) would ALL profit by the move. Imagine- having real monies to spend with worth above "IN GOD WE TRUST" (all others cash).

  3. fallingman | April 10, 2013

    I don't care what the government…state or Federal…says we can use as money. I'll use whatever I and the person I'm trading with find mutually agreeable. And so will others. Try to stop us when you're in the middle of a colossal meltdown in the clownbuck.

    They should just be glad we're resourceful enough to keep commerce alive and goods flowing…meeting our needs without their stinkin' "help."

    They screwed up the currency, now we'll use real money, whether it's officially sanctioned or not.

  4. H. Craig Bradley | April 13, 2013

    A DEFACTO BREAK-UP OF THE UNION

    Personally, if I were "King of the World" or at least in charge of states like California and Oregon, I would establish something akin to the Gold Depository that Texas is creating as a back-up payment system. If the international payment system and U.S. Banking system shut down or failed to operate, then other means of processing payments would become necessary. Right now, we have no systemic alternative to the FED and U.S. BANKS, other than local bartering.

    It would be a rough transition, but some advanced planning is wise so a "Plan B" is ready to go- if needed. You sure don't want to wait for the next financial crisis to decide what to do, as it would be a bit late by then. Large states with diverse economies like Texas or California would have the best shot at such financial alternatives.

    I foresee groups of states developing such "gold depositories" to achieve their own economies of scale. They could then share any new gold or silver-based currency system that might emerge as U.S. dollar alternatives. Trading would be intra-regional at first, as it might take a while longer to establish payment systems acceptable to the global marketplace (foreign trading partners). Eventually, FX trading in such regional currencies would become necessary to conduct foreign transactions. A possible side-effect would be limited inter-regional mobility of people and capital, at least at first. We would become very provincial once again.

  5. Coin Monger | April 14, 2013

    I love gold and silver coinage. As stated above, it is already legal tender. I really doubt however that the US will ever return to a gold standard. Electronic currency is so well entrenched now, that some form of electronic "money" will become the normal way to conduct business. I can't envision what that will look like yet, so I'll keep buying gold and silver because they will always be valuable.

  6. Keith worried | April 16, 2013

    Oh look. Crazy town arrived, and her name is Jan Brewer. Some of you coo coo's probably think paper money isn't going to be around much longer. Well, snap out of it, you happen to live in America, not North Korea. Stop looking like such idiots.

    • Edward Hesson | April 23, 2013

      P. T. Barnum was right. There is a fool born every minute. Oh look. Idiot town has arrived and his name is Keith.

  7. Matthew | April 17, 2013

    I believe other states will definitely follow Arizona. The lawmakers in Minnesota and North Carolina too have debated similar laws in recent times http://bit.ly/10JfNmX

  8. nohomehere | April 17, 2013

    No! gold will be only for use in the short term, as the new way of buying and selling will be in credits transfered bank to bank , as that will become the only legal way . all other ways of exchange will be banned as an effort to satisfy questions of creditors of our sovereign debt , like , is the weather the whole country is appyling its full resourses to pay and not hiding funds or wealth , which will be subject to confiscation like gold was in past and in cyprus ! as in after Bankruptcy ! With the new money transfer laws going into effect , you will want to obey , or else come under direct scrutiny of all kinds of security inspectors, you will need to relinquish all your privacy to continue to function as a regular us citizen . Don't worry about
    Gold! Worry about freedom! and privacy! The things that will be worth their weight in Gold in the not to distant days approaching!

    • Dana Richards | April 24, 2013

      Dana Since when is worrying about freedom and privacy new in this country ? After they passed the Patriot Act and introduced its new and improved version (remember, the old one was just dusted off the shelf from the Clinton days after Waco and the Oklahoma tragedies), I figured that it was almost too late to worry about anything except becoming one of the "haves". So far, that isn't working out real well for me either…

  9. Vickram | April 18, 2013

    It is high time every country in the world look at the possibility of going back to the gold standard. Gold & silver used as currency centuries ago. Now we have paper currency & plastic currency (credit card) & bitcoins (virtual currency). Bitcoins – virtual, started by unknown persons, given to unknown persons and used as an unknown currency. It's prices rocketed up & then crashed to half earlier this month. It is the latest bubble (like the dotcom bubble). It has left many nervous. It's not a coin as the term suggests. If anyone offers bitcoins, just say 'thanks but no thanks'.
    Moral of the story – Be old fashioned when it comes to money – buy gold & silver.

  10. Rob Greene (@RGRundeRGRound) | April 24, 2013

    An online friend of mine at a precious metals website and BBS stated that the USD could be backed in COPPER. 10 grams to a "dollar" which would make Copper around $45.50 a pound. This would cover all the derivative debts also, and have every bit of USD backed in metals. I did not do the math or research any of this, but it seems to be on the proper order of magnitude that a complete Gold backing would, of around 50 to 60 Thousand Dollars a Troy Ounce. Imagine, a Copper Dollar!

  11. buy gold and silver coins | July 16, 2013

    Yeah ,its true that gold as some form of currency could be on the come back. The Utah house has passed the first step in recognising gold and silver as legal tender. Thanks for nice post.

  12. nathan | October 20, 2013

    bitcoin is the solution

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