Gold bugs win in Utah
Salt Lake City, UTAH:The falling dollar has a lot of people worried. These days, Utahns may less worried than most. HB 0317 went into effect on May 10, 2011. The state has become the first member of the Union to legalize gold and silver as currency, though some nine other states have similar bills drafted.
Freshman Representative Brad J Galvez, a Republican hatched the ides as a pointed comment on the Federal Reserves Monetary Policy. He attracted 19 co-sponsors in the House and the bill received Governor Herbert's signature on March 25, 2011. Judging by the attention the bill has gotten, he has made his point.
No businesses are legally required to accept gold or silver. If they do so, they can either accept the coins at their face value or at the current market value. For gold, the spot bid closed at $1,517.20 an ounce in New York at the end of the May 23rd trading day. Silver was at $35.07 an ounce on the same market. Both metals were just slightly lower on the international spot markets. Galvez does not, however, expect to see his constituents walking around with pockets full of precious coins.
In fact, the state will open the Utah Gold and Silver Depository on June 1, 2011, where Utahns can deposit gold in return for a debit card that draws on the funds.
40 years after America officially abandoned the gold standard under Richard Nixon, returning to it is a favorite cause of states rights activists. Galvez hopes his bill goes in a different direction. “We're too far down the road to go back to the gold standard," he commented. "This will move us toward an alternative currency”.
Shortly after the U.S. left the gold standard, the U.S. Mint began selling gold coins aimed at collectors and investors; they had set face values and were taxed under capital gains rates. Utah's new law means her citizens using gold and silver won't be paying capital gains on them. What taxes they do owe, they'll be able to pay in gold, if they wish.
While it will be intriguing to watch what happens in Utah and what other states do, the signal should resonate somewhere in Washington, DC. A currency not backed by a tangible, previous item instead relies on citizens' faith in the government's ability to pay debts and maintain the stability of that currency.
Several other states handled similar legislation during the 2011 sessions, including: