Our parents and grandparents play a crucial role in shaping our values and beliefs. Through their actions and conversations, we learn what to value and how to navigate the world around us. For centuries, precious metals such as gold and silver were an integral part of this intergenerational education. Our ancestors used these metals as a reliable store of value and a means of exchange in trade. However, in the last 50 years, the significance of holding precious metals has gradually diminished in the American consciousness. Despite this shift, the enduring legacy of our forebears’ appreciation for these timeless assets still holds valuable lessons for us today. Recent changes to the economy combined with seismic shifts in the geopolitical landscape are once again causing Americans to revisit the precious metals lesson lost to their forebears.
In recent years, there has been a growing sense of uncertainty and unease amongst Americans, fueled by a range of economic and political factors. Considering high inflation, layoffs, and soaring borrowing costs, coupled with record-high credit card debt, it is easy to understand why many Americans are now feeling increasingly insecure about the economy. Meanwhile, Washington’s leaders have been accused of pursuing monetary and fiscal policies that are widely viewed as irresponsible and divisive, exacerbating an already polarized political environment. Adding to the sense of unease is the fact that the global geopolitical landscape is rapidly shifting, with many nations seemingly pushing back against American world dominance. In this context, it’s understandable that many Americans are growing uneasy and turning to silver and gold, prompting a growing number of states to consider legislation allowing citizens to use these precious metals as legal tender, as is their constitutional right.
Utah was the first state to recognize gold and silver as legal tender in 2011. However, in recent years, a growing number of states are considering similar legislation. While legislation is inherently dynamic, it is worth noting that currently, legal tender legislation is being considered in no fewer than 15 states. These bills vary in their details, but they all acknowledge gold and silver as legal tender. Some states are even taking additional steps to facilitate the use of precious metals as a currency. For example, most states are eliminating state capital gains taxes on precious metals. Additionally, some states are setting up precious metal depositories to make it easier for individuals and businesses to transact in gold and silver. One bill in Missouri, SB100, goes even further by forbidding precious metal seizures and prohibiting the state from requiring the use of central bank digital currencies (CBDCs). Furthermore, the Missouri bill requires that not less than one percent of the funds held in the Budget Reserve Fund be in gold and silver. These legislative efforts demonstrate a growing interest in using gold and silver as a currency and a store of value.
Before any state considers enacting legal tender legislation related to precious metals, it is crucial to first address the issue of sales tax on these assets. Currently, 42 states have eliminated sales tax on precious metals, but this number is also increasing as more states propose legislation to remove this tax.
Wisconsin is one of the latest states to consider legislation that would eliminate sales tax on precious metals, with Senate Bill 33 currently under review. This bill proposes an exemption for “precious metals bullion,” defined as coins, bars, rounds, and sheets containing at least 35% of gold, silver, copper, platinum, or palladium. Should this bill pass, it would align Wisconsin with other states that have already removed sales tax on precious metals, enabling individuals to invest in these assets more affordably.
Did you know that owning gold was actually illegal in the United States from 1933 to 1973, with severe penalties such as hefty fines or even 10 years of imprisonment? President Richard Nixon took the United States off the gold standard in 1971, which essentially removed gold and silver from the monetary base, leading to a decline in interest among Americans. However, it’s essential to recognize that the concept of using precious metals like silver and gold as legal tender is not a new one, as many states are now seeking to reclaim this right for their citizens. This sentiment is in line with the beliefs of the Founding Fathers, who considered silver and gold to be crucial elements of a stable monetary system. In fact, the Constitution expressly prohibits states from making anything other than gold and silver coin legal tender for the payment of debts, as outlined in Article 1, Section 10, Clause 1.
The current trend of states introducing legal tender legislation could have a significant impact on the gold and silver markets. While only a small fraction of the US population invests in precious metals, Americans hold a considerable amount of wealth, meaning even a slight increase in demand could provide substantial support to the silver and gold markets. This surge in demand could potentially attract new investors to the precious metals markets, driving prices up. As this is a fluid situation, it will be interesting to observe how everything plays out. However, one thing is for sure: James Madison, often referred to as the “Father” of the Constitution, would be pleased with the developments.