23 U.S. States Move to Recognize Gold and Silver as Legal Tenders

With the “Arkansas Legal Tender Act,” 23 U.S. states have now moved to recognize gold and silver as legal tender. Sarah Huckabee Sanders, Arkansas’ governor, signed the act on April 11, specifically mentioning that all forms of gold and silver bullion may be used to pay off debts. The act includes further details that “legal tender shall not be characterized as personal property for taxation or regulatory purposes,” and “the purchase, sale, or exchange of any type or form of specie shall not give rise to any tax liability.”

The law will go into effect in 90 days, making Arkansas the fourth state to enact policies that allow residents to use previously approved silver and gold coins as legal tender. Other states include Wyoming, Oklahoma, and Utah.

Beyond these four areas, 23 U.S. states are currently developing bills and regulations to allow citizens to use silver and gold as legal tender. A communications director for the Tenth Amendment Center, Michael Marrahey, believes this movement shows state-level attempts to undermine the U.S. Federal Reserve’s power, “nullifying the Fed on a state-by-state level.”

The debate for silver and gold legal tender arises from the concept of a multi-currency environment. “Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes),” professor William Greene explains.

The debate over whether the federal government should allow such movements always comes back to the U.S. Constitution, which states that “no state shall … make anything but gold and silver coin a tender in payment of debts.”

But why are so many states trying to move away from the U.S. dollar?

The U.S. dollar has been a virtually limitless currency across the globe for nearly a century. By the end of 2022, the U.S. dollar made up over half of all the world’s reserves (58.36%, to be exact). The next most prominent currency, the euro, rang in at just 20.47%.

“No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together,” anthropologist David Graeber explained in his novel, “Debt – The First 5000 Years.”

So what changed? Despite the U.S. dollar’s global strength, all currencies rise and fall with the test of time. Political and economic pressures devalue currencies until inflation runs so rampant that nations must seek other options, further devaluing the already-plummeting tender.

The primary trend pushing the U.S. dollar down now is de-dollarization. As the U.S. dollar loses value with extreme inflation rates, nations are actively moving away from the currency by stockpiling with gold and prioritizing local tenders. Nations like Brazil and China have nearly moved away from the U.S. dollar entirely, while oil-centric countries have begun using their assets (oil) to trade rather than U.S. dollars.

The next natural question becomes, what’s the better option? Nations need a secure, reliable currency that can hold its value over time so it doesn’t fall subject to the same inflation curses as the U.S. dollar. That’s where precious metals come in.

Gold and silver carry the longest history of trading as currency. For centuries, people around the globe relied on precious metals to store value and trade goods. Gold and silver offer unique benefits over traditional fiat money because they’re intrinsically rare, do not carry counterparty risks, and cannot just be printed over and over.

“It’s divisible. It’s permanent. It’s a store of value. It’s a unit of account. It’s got everything you want out of money, but it doesn’t go away, and it can’t be increased. That is what makes gold the most beautiful money of all. What more can you ask out of a money?” Mike Maloney, precious metals investor, stated in his series, “Hidden Secrets of Money.”

As inflation continues soaring on the homefront and risks of dollar-denominated debt only become more clear, U.S. states are now trying to protect themselves from the reality of the dwindling U.S. dollar. As the U.S. dollar loses more value and credibility, precious metals show the highest performance levels in months. Gold and silver perform best in poor economic periods because they do not fall subject to inflation, market risks, unemployment figures, or other volatile factors.

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