Tuesday, August 7, 2012

More States Support Move to Metals as Dollar Weakens

Investing in silver and gold has become more attractive since the US dollar just doesn't have the clout it once did.

Fears over where the dollar is headed – especially with continued money printing from the central bank – has pushed safety-seekers into investing in silver and gold. Demand has also pushed gold and silver prices to new highs.

The idea of using gold and silver as an alternative currency has spread as the metals have grown more valuable. In fact, worries that the US dollar is on the cusp of a collapse have lawmakers from more than a dozen states (up from just three in the past few years) seeking approval from their state governments to either issue their own alternative currency or use gold and silver as a currency for settlement of state-related transactions.

Rep. Glen Bradley, R-N.C., who introduced a currency bill in 2011, told CNN Money, "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."

Fourteen States & Counting

While the US Constitution bans states from printing their own paper money or issuing their own currency, it does permit states to make "gold and silver Coin a Tender in Payment of Debts."

The first state to introduce its own alternative currency was Utah. Gov. Gary Herbert signed a bill into law in March that recognized gold and silver coins issued by the US Mint as an acceptable form of payment.

Under the law, the coins, which include the hugely popular American Gold and Silver Eagles, are treated the same as the US dollar for tax purposes, eliminating capital gains taxes. The new law allows the coins to be exchanged at their market value, based on weight and fineness.

Rich Danker, a project director at the Washington, D.C.-based conservative public policy American Principles Project, explained to CNN Money, "A Utah citizen, for example, could contract to sell his car for 10-one ounce gold coins (roughly $17,000), or an independent contractor could arrange to be compensated in gold coins."

These other states have similar policies:


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