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The US is moving to a gold standard

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Published : April 25th, 2013
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Following the news that last week Arizona lawmakers passed a bill that will see precious metals become legal tender we thought this would be the perfect time to bring you a fourth installment of The Real Asset Report. Here we look at the moves several US states are making to move to sound money. Look out for the great infographic below.

 ‘No State Shall make any Thing but Gold and Silver Coin a Tender in Payment of Debts’ 1787 US Constitution: Article I, Section 8.

When President Nixon closed the gold window in 1971, ending Bretton Woods, it signalled the final disregard for the Founding Fathers’ US Constitution.

Whilst many have long campaigned for a return to the gold standard, including Dr Ron Paul, a former Congressman and GOP presidential candidate, moves to use gold and silver as legal tender have hit the big time since the financial crisis.

There are now 20 US states that either have successfully passed bills to allow gold and silver to be used as legal tender, or have been exploring it as an option.

Constitutional rights

The ability of states to look into using gold and silver is down to the Constitution. Whilst it bans states from printing their own paper money or issuing their own currency, it does allow states to make “gold and silver Coin a Tender in Payment of Debts.”

The first to take the step into showing the Fed just what they thought of the institution was Utah.

In 2011 Utah’s Governor signed the Utah Sound Money Act[1]. The Act allows US Mint issued gold and silver coins to be used as payment in the state of Utah in exchange for any goods and services.

The Utah Gold and Silver Depository allow individuals to deposit their bullion in exchange for a debit card for them to use when making payments.

Arizona looks set to be the second state to recognize gold and silver as legal tender. The Bill ‘SB 1439’[2] defines legal tender as a mode of paying debts and taxes.

Like the Utah Bill, any gold and silver coins issued by the US Mint will be seen as money, rather than property. Also like the Utah bill no-one is compelled to accept the coins in exchange for goods and services.

Once the state has been victorious signing a new Act regarding legal tender laws, it isn’t as easy as going out and spending your bullion. In Utah, the state government is still not prepared to take gold and silver as means of payment. Studies still need to be carried out to help determine how setting values for gold and silver coins used to pay taxes will be carried out.

In Missouri[3], gold and silver to be accepted by the state will be valued according to that day’s London PM Fix.

Protest with your wealth

In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System … the State’s governmental finances and private economy will be thrown into chaos, Republican Representative Glen Bradley[4]

The name of Utah’s Bill – the Sound Money Act – shows exactly what motivations lay behind the law. Missouri’s own Sound Money Act 2012 tells exactly the same story.

States and their citizens are becoming increasingly more concerned about the rising gold price compared to the US dollar which is being printed on a daily basis.

Using gold and silver as legal tender is a protest against such bad mismanagement of the US dollar.

In North Carolina[5], Republican Representative Glen Bradley stated in a currency bill he introduced last year, “In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System … the State’s governmental finances and private economy will be thrown into chaos,”

Like his contemporary in South Carolina, Republican Representative Mike Pitts in North Carolina argued for the use of any gold and silver coin to be used as legal tender (not just US Mint issued) as the state is facing “an economic crisis of severe magnitude.”

National drive to sound money

It’s not just at individual state levels where pushes for monetary reform are being made.

The Free Competition Currency Act, originally proposed by Rep. Ron Paul in 2011, was introduced in January 2013 by Congressman Paul C. Broun[6]. The bill seeks to repeal legal tender laws and prohibit taxes on certain coins and bullion.

The Sound Dollar/Federal Reserve Modernization Act, introduced into Congress by Mike Lee, Republican U.S. Senator from Utah, and Rep. Kevin Brady, R-Texas[7], requests the Federal Reserve to monitor major assets’ price, such as gold, and also value the dollar relative to gold.

Whilst national bills such as the Free Competition Currency Act are great for bringing about awareness, there is little chance of such bill being passed. Strangely supporters of the Free Currency Competition act are conspicuous in their support for individual states taking on monetary reform.

Really it is the actions of all of the states on an individual basis which will bring about the most change, and attention.

As each single state successfully passes a legal tender bill, it will raise the chances of other states doing the same – until it becomes a given that all states will wish to have the option of using gold and silver.

For many this is less of a move to an alternate currency, and instead a protest move to show the Fed that they are concerned with their currency management.

Rather than being allowed to spend in gold and silver, it is the removal of state capital gains taxes – which means gold and silver are now seen as currencies – which is the big step here. One must remember that federal capital gains tax must still be paid on those coins held in the depository, hence why this is likely to be a protest move.

Fed retaliation?

We are not prepared to rule out that an enlarged role for gold may emerge at some future date. If reasonable price stability and confidence in our currency are not restored in the years ahead, we believe that those who advocate an immediate return to gold will grow in numbers and political influence.  1982 Gold Commission Report

How will the Fed react to these moves from the 11 states? Quite possibly in the same way they did back in 1982. The Gold Commission presented President Reagan (who had requested the commission be organised) with their final report, “Role of Gold in the Domestic and International Monetary Systems”.

Their recommendation[8] was that ‘no change was necessary at the moment’ but they stated in their concluding remarks “The majority of us at this time favor essentially no change in the present role of gold. Yet, we are not prepared to rule out that an enlarged role for gold may emerge at some future date. If reasonable price stability and confidence in our currency are not restored in the years ahead, we believe that those who advocate an immediate return to gold will grow in numbers and political influence. If there is success in restoring price stability and confidence in our currency, tighter linkage of our monetary system to gold may well become supererogatory.

“The minority of us who regard gold as the only real money the world has ever known have placed our views on record: the only way price stability can be restored here (indeed, in the world) is by making the dollar (and other national currencies) convertible into gold. Linking money to gold domestically and internationally will solve the problem of inflation, high interest rates, and budget deficits.”

They recommended no change unless “…reasonable price stability and confidence in our currency are not restored in the years ahead.” The rest, as they say, is history.

The Fed reacted to the reports’ release with almost defensive behaviour which suggested they felt threatened by the Commission’s existence. The spring following the report’s release, a clear relationship between gold price rising and Fed tightening, and gold price falling and Fed loosening; it appears as though the Fed followed a gold price rule for a while. People at the Fed had begun to adhere to the market price of gold, and manage the dollar accordingly.

The report and suggestion that the central bank may have their ‘discretionary’ power taken from them, was enough to set them on the right path, for around the next two decades.

Perhaps these moves may be enough to set them back on the right path. Although something tells me not just yet.

24hGold - The US is moving to ...

The United Gold States of America – where are they now?

Utah – signed into law the Sound Money Act in 2011. In 2012 a law was passed which makes it easier to pay taxes and do business using gold and silver.

Arizona –Set to be the second state to recognize gold and silver as legal tender.  Bill ‘SB 1439’ defines legal tender as a mode of paying debts and taxes. Any gold and silver coins issued by the US Mint will be seen as money, rather than property.

Missouri – passed the Sound Money Act in 2012. Like Utah, citizens are encouraged to deposit gold and silver coins into the state depository and then use a debit card in order to use the bullion as a medium of exchange. The debit cards debits from the value of the precious metal content as opposed to the face value of the coin. Directs the state to accept the gold and silver coins issued by the U.S. government for payment of debts. (Remains to be passed).

South Carolina  –April 2012 – Bill advancing which calls for a currency system that would allow people to use any kind of silver or gold coin – i.e. Silver Eagle or a South African Krugerrand – based on weight and fineness.  In this instance, lawmakers are going one step further than other states and are looking to replace the US dollar with gold and silver coins.

Georgia  – introduced the “Constitutional Tender Act” in 2011, which will require Georgians to pay their state taxes in gold and silver, as well as banks in Georgia to offer accounts denominated in gold and silver coins. The bill remains to be passed.

Kansas  – House Bill No. 2379 states gold and silver bullion coins issued by the federal government would be legal tender in Kansas. Sales of such coins would be exempt from sales tax. The bill remains to be passed.

North Carolina – Rep Glen Bradley introduced a bill that would establish a legislative commission to study his plan for a state currency. He is also drafting a second bill that would require state government to accept gold and silver coins as payment for taxes and fees. The bill remains to be passed.

Virginia  – Bill calls for creation of a 10-member commission that would determine the “need, means and schedule for establishing a metallic-based monetary unit.” Republican Del. Robert Marshall wants to spend $20,000 on a study that could call for the state to return to a gold standard. In February 2013 the State House voted in agreement, the bill will now go to the Senate.

Idaho – Bill number 578 the bill states gold and silver are to be used as legal tender and recognised as money. Passed April 2012 .

Maine – Proposed law to make gold and silver legal tender, “An Act to make gold and silver coins and bars legal tender”. (Remains to be passed)

New Hampshire – Proposed law to make gold and silver legal tender in January 2011

Washington – Proposed law to make gold and silver legal tender in January 2012

Vermont – Proposed law to make gold and silver legal tender in January 2013

Minnesota – Proposed law to make gold and silver legal tender in May 2011

Tennessee – Proposed law to make gold and silver legal tender in February 2011

Iowa – Proposed law to make gold and silver legal tender cited in the news but cannot confirm.

Oklahoma – Proposed law to make gold and silver legal tender cited in the news but cannot confirm.

Bills which didn’t get anywhere[9]

South Dakota – Rejected House Bill 1100 (January 2013) which would have made U.S. Government-minted gold and silver coins legal tender. These would have been used to pay state taxes at their market value.

Indiana – Senate Bill 99, which recognises U.S. issued gold and silver coins as legal tender, appears to be buried in the Indiana State Senate Committee on Tax and Fiscal Policy.

Montana  – Proposed law to make gold and silver legal tender rejected by 20 Republicans and 32 Democrats in March 2011.

Colorado – Senate Bill 12-137 rejected by Senate Democrats in March 2012.


[1] Utah Sound Money (2013) http://utahsoundmoney.org/

[3] Missouri, House of Representatives, Bill tracking, http://www.house.mo.gov/billtracking/bills121...mit/HB1637C.htm

[4] CNN Money (2012), “States seek currencies made of silver and gold”, target="_blank" http://money.cnn.com/2012/02/03/pf/states_...ncies/index.htm

target="_blank"

[5] Wealth Wire (2012) “South Carolina Approves Gold and Silver as MoneyR target="_blank"21; http://www.wealthwire.com/news/metals/2967

target="_blank"

[6] Coinnews.net (2013), “Ron Paul’s Free Competition in Currency Act ReintroducedR target="_blank"21; http://www.coinnews.net/2013/01/07/ron-...t-reintroduced/

[7] Mineweb (2012) “Missouri lawmakers debate U.S. gold, silver coins use as legal tender& target="_blank"#8221; http://www.mineweb.com/mineweb/conte...5&sn=Detail

target="_blank"

[8] Road to Roota (2007) “Gold Standard Implementation Upda target="_blank"te” http://www.roadtoroota.com/public/117.cfm

target="_blank"

[9] Mineweb (2013) “Navigating gold, silver legal tender isn’t for the faint of hea target="_blank"rt” http://www.mineweb.com/mineweb/co...1&sn=Detail and Comparegoldandsilverprices.org (2013) “Gold & Silver Legal Tender Legislation Status by target="_blank"State” http://www.comparegoldandsilve...tatus-by-state/

Data and Statistics for these countries : Georgia | All
Gold and Silver Prices for these countries : Georgia | All
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Jan Skoyles is Head of Research at The Real Asset Company, a platform for secure and efficient gold investment. Jan first became interested in precious metals and sound money when she met Ned Naylor-Leyland whilst working alongside him in the summer of 2010. Jan then went on to write her undergraduate dissertation on the use of precious metals in the monetary system. After graduating from Aston University Jan joined The Real Asset Co research desk. Her work and views are now featured on a range of sites including Kitco, GATA and The Telegraph. She has appeared on news channels including Russia Today to discuss the gold price and gold investing. You can keep up with Jan's commentary by subscribing to our RSS feed Gold Investment News.
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Totally off topic Samking73 but I'll bite.

I understand that the second amendment gives citizens "the right to bear arms". This was enacted at a time when people needed a gun (not a machine gun!!) to defend against hostile others and wildlife and it would have been a tough existence. I don't see too many New Yorkers walking around with rifles in the street these days.

The second amendment does not give citizens the right to machine gun down large groups of young children or to shoot up schools. To my understanding this was not a problem from the past but it just keeps repeating. Clearly the second needs a much needed overhaul to gives citizens "the right to not be shot up" if you get my point.

The real disgrace is that people in the gun business together with the gun lobby and their bought senators spew out a continual vomit of why even mild changes to protect citizens should not be considered. The only reason for their position is to protect their business interests....money! and this should be a matter of national shame. If this were a level playing field there would be a referendum with say 20 choices for the population to choose from. But then you wouldn't want to give the citizens any rights would you!

As for showing up at your door with your weapon if the government comes to take your gold I suggest you don't try that one lest they take you (in a body bad) as well as your gold. That would be bad trading day.

Lets stay on gold Sam. That is something I might respect your opinion for and something we clearly have in common.
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I'll probably get a load of down arrows for this but you seem to need some direction as far as the Newton School shooting goes. You will want to look into what really happened, look at the inconsistencies such as the story that the killer used the “machine gun” to kill the kids yet this gun was found in the trunk of the killers car (there's news video footage of the police searching and finding it in the trunk, it never made it to the school yet was used to kill kids) and only three hand guns were found in the school. You may also want to look into how one little girl who was shot in the school and for whom they held a service was later photographed hugging the president when he visited the school after the shooting. Please do explain how that could be. There are so many inconsistencies and outright lies around the whole incident that anyone who still believes this was an actual event will also believe that foreign terrorists planned and flew an aircraft into the Pentagon (where's the wreckage?). You'll want to look at news helicopter coverage and pay close attention to how many ambulances, or for that matter any other kind of first responder vehicles, are right at the school, instead of being parked way down the drive behind dozens of other vehicles, where so many were shot (let me give you a hint, there are NONE and why would they not bring the ambulances right up to where the victims were?) and see if you can spot any children being led away from the school. Look into the backgrounds of the supposed parents and other people who were the news videos, is there some odd coincidence that they are part of the actors guild? It's also interesting that one of the alphabet soup departments of homeland security was doing training in the same town the same day only a mile away from the school on guess what kind of a scenario? Look at the video news reporters have of the kids who were in the school and very carefully listen to how they explain what happened, their story is very different from what the police and alphabet soup departments told everyone.

Notable as well is that right before this incident there was a major push going on to bring in gun control legislation. Coincidence? Is it also any coincidence that the US government has purchased enough hollow point bullets to kill every person in the US 50 times over? Hollow point bullets? Not even allowed in combat but allowed in police officer weapons to "restrain" a rowdy population.

Just remember that you brought this up here and we're just responding. On owning gold and silver we agree. A really good question is how will you be able to retain possession of your PM's when the broke bankers tell their slaves in government that they need it? Answering the door guns blazing might have worked in the 1800's but these days a far more subtle approach would be wiser. If they don't know you have it and if they suspect you have it but can’t find it they can't take it. It's been suggested here and many other places that only you and one other person know where it's stashed. What you put in safety deposit boxes, and anything else you put in a bank, does not belong to you, it now belongs to the alphabet soup crowd. Be creative, be wise and allow everyone else to think your just another poor shmuck with nothing and fly under the radar.
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You wont get a 'down arrow' from me. In fact we are pretty much in agreement. I don't know what happened at SH School but if anyone believes it happen like the official story, I have some property Id like to sell them. And you're correct, Ranbotrader is the one who brought it up originally and then claims I'M OT when I reply. If you start monkeying with the Constitution as this person proposes, where will it stop. And one more thing; I live in the rural country, it takes about twenty five minutes for the police to show up at my house. I don't carry "machine guns" down the street but I feel I have the Constitutional right to have whatever gun I need to protect my family, my home and my valuables.

I'm done ranting now.
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The 2nd Amendment wasn't placed in the Constitution "to defend against hostile others and wildlife ...". It was placed there to defend citizens against their own government. Also, there's a reason why it's the 2nd Amendment (and not the 5th, or 7th, or 9th, or 22nd). The Founding Fathers felt that only the right of free speech (the 1st Amendment) was more important than the right to use firearms to defend life, family, and property.

You've been manipulated by a liberally-biased media who have sensationalized Newtown to push their agenda. Truth be told, many thousands of children die each year in tragic auto collisions, in home accidents, or from terrible diseases like cancer. I don't see anyone in the liberal media, or any anti-gun politicians shedding a tear over these children.

Gun ownership has been integral to America and our way of life since inception, and will remain that way. You're free to try an alternate system where gun ownership is outlawed, for example North Korea, Cuba, or even Mexico .... let us know how that works out.
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Sorry for the late reply.

Observations:

1. Were school children massacred or were they not?
2. Other countries do not have guns by the tens of millions so what is the song and dance act about defending yourself from the government? Seriously, if the government took up arms against citizens then your two bit pea shooter would be useless.
3. " I don't see anyone in the liberal media, or any anti-gun politicians shedding a tear over these children." A statement made by a morally devoid person. You are sick sir. And then comparing to death from disease says to me that you are a gun lobby representative because a decent caring person anywhere in the world would not offer such a comment.

God help America. No wonder there are so many natural disasters and calamities. Clearly God does not approve.
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LOL, and how many millions were massacred by Hitler, Stalin, Pol Pot, and a handful of other tyrants? I wonder what percentage of those millions wished they had a firearm to have a chance, just a chance, to escape being shot in the head?

The great thing about America is that you have the freedom to believe whatever you want. If you believe this government "cares" about you, then you are naïve. If you believe the police will be there for you when you really need help, you are gravely mistaken. When the SHTF, my family and I will be protected by Smith & Wesson, Colt, and Ruger. You ... not so much.

"For a people who are free, and who mean to remain so, a well-organized and armed militia is their best security." Thomas Jefferson

""No free man shall ever be debarred the use of arms. The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government" - Thomas Jefferson

"The very atmosphere of firearms anywhere and everywhere restrains evil interference - they deserve a place of honor with all that's good" - George Washington

"Among the many misdeeds of the British rule in India, history will look upon the act of depriving a whole nation of arms, as the blackest."
- Mahatma Gandhi

"The best we can hope for concerning the people at large is that they be properly armed." -Alexander Hamilton

Only criminals, tyrants, and liberals want to remove firearms from law-abiding citizens.
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Given that you can't even get gun laws changed in the US, even with the (latest) massacre of children, what hope do you have of getting a gold standard through....unless it benefits the well to do. If that is true then it will happen.

Personally I find it hard to believe that the money printers of the world are not having the value of their currencies slashed. Maybe the traders are holding up the indefensible and will happen in time though.

The whole gold standard argument is yet to play out but be aware that a number of nations have laws which will permit their governments to show up on your doorstep, demand your gold and give you (worthless) fiat currency. This worries me but I guess we all need to wait for the fat lady to sing.
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Those gun laws that you are wanting changed just might make it a little less intimidating for the govt to come and confiscate your gold and silver. Think about it, the second amendment isn't in the Constitution to allow hunting. And, with that, we already have enough stomping on The U.S. Constitution. I think Article 1 Section 10 would fill as a good example here.
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I'm sure the Constitution was not written in a time where crazies roamed the streets and massacred innocent people. And I am dead sure that the forefathers did not envisage how society has changed.

I am sure that modifying the Constitution from time to time is not bad provided that cthe corrupt political system is not permitted to hijack changes for its own sake and that of the wealthy people who control the political system. A referendum might be the way forward which keeps change in the hands of the people.

The fact that massacres happen again and again should say something to you. Perhaps if your family is gunned down in the street then you will realise that something has to be done. Until then fell some empathy
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The "Old Relics Gold and Silver live". Long live precious metals!
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@Woody, this may be off topic but I love your avatar of Paladin.
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Paladin always paid his debt with Precious Metals!
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LOL, and how many millions were massacred by Hitler, Stalin, Pol Pot, and a handful of other tyrants? I wonder what percentage of those millions wished they had a firearm to have a chance, just a chance, to escape being shot in the head? The great thin  Read more
PeterGuillam - 10/2/2013 at 3:23 PM GMT
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