Return to Tender: Why Arizona and Other States are Choosing Gold
On May 22, Arizona joined a number of states that will recognize gold as legal tender, endorsing a competing currency to the dollar. By choosing sound money, these states are saying that the Fed has done a poor job of managing the currency; they are protecting their citizens’ savings by providing an alternative to the Fed’s endless supply of dollars.
States such as Utah and Texas have led the sound money charge. Both of these states have accepted gold and silver as legal tender, and created bullion depositories within their respective borders. This assures that the Fed will not be able to confiscate their wealth in times of economic stress or dollar tension.
The laws being passed by these states recognize gold and silver as currency, and therefore it is free from taxation. When a citizen buys precious metal and it appreciates in value against the dollar, it is not viewed as a capital gain, and is not taxed.
Investment gains are always taxed in one way or another, but gold and silver are money, and imposing a tax on the exchanging of one form of money for another is unjust and unwise.
The inflation tax on fiat currency whittles away at savings and purchasing power. The dollar has lost more than 97% of its purchasing power since the Fed’s creation in 1913, while gold and silver have been a much better store of value, rising 60- and 20-fold, respectively, in their dollar-denominated price.
With an increasing number of states accepting gold as legal tender, they are signaling that the current system may be weakening, and are preparing an alternative. They have taken the path of sound money, real money, unencumbered by third parties or debt burdens assumed by others that cannot be repaid without monetary debasement or some other currency manipulation.
We should pay attention as gold is restored to a place of prominence in the world of currencies. And we should all save a portion of our wealth in a currency that is not some other parties’ debt obligation.