Trend to Allow Gold and Silver as Legal Tender?

I recently came across an intriguing article discussing how some U.S. states are exploring ways to reintroduce gold and silver as legal tender. The movement appears to be gaining traction amid concerns over inflation, national debt, and the dollar’s diminishing global dominance. While this might sound promising for those of us focused on preparedness, there’s more to consider than the headlines suggest.

The Legal Reality of State Currencies

Before we get too excited about the prospect of using gold and silver for our groceries, let’s be clear about what states can and cannot legally do regarding currency. The constitutional limitations here are important to understand.

Here’s what I’ve gathered, though feel free to correct me because I’m neither a constitutional scholar or economist…

States don’t have the authority to issue their own legal tender or currency like the federal government does. According to Article I, Section 10 of the U.S. Constitution, states are explicitly prohibited from coining money or issuing their own paper currency. However, they do have some limited room to recognize and facilitate alternative forms of payment.

What states can do legally is recognize gold and silver as legal tender. This is what Utah and Wyoming have done. They can also facilitate alternative payment systems that allow transactions in precious metals, hold these metals as reserves, and support private barter or gold-backed instruments.

But here’s the catch: states cannot issue their own currency like “Texas Bucks” or mandate acceptance of alternatives over the dollar. The U.S. dollar remains the only national legal tender for debts and taxes, so states can’t require businesses to accept gold or silver instead. Bummer!

What’s Actually Happening at Federal and State Levels

At the federal level, Representative Alex Mooney from West Virginia introduced the Gold Standard Restoration Act (H.R. 2435), which proposes to peg the U.S. dollar to a fixed weight of gold. The bill would require the U.S. Treasury to exchange paper currency for gold at a market-determined rate. The goal is to curb inflation and restore fiscal discipline.

Will this bill pass? I’m not holding my breath. Our monetary system has been untethered from gold since 1971 when President Nixon severed the dollar’s link to gold. Returning to a gold standard would require a fundamental restructuring of our entire economic system, which is something that those in power rarely have the incentive to do.

At the state level, Texas and Utah are leading the charge. Texas has established the Texas Bullion Depository and is considering legislation to allow residents to conduct transactions using gold-backed debit cards. Utah has declared gold and silver as legal tender and is working on legislation to enable the state treasurer to hold precious metals.

Private Sector Solutions

Whatever happens, the private sector is moving ahead. Companies like Goldback Inc. are producing gold-infused currency notes, each containing a fraction of an ounce of gold. These are already accepted by over 1,000 businesses, primarily in states like Utah, Nevada, and New Hampshire.

This approach makes gold more accessible for everyday transactions. Instead of trying to slice up a gold coin to buy a loaf of bread, you can use these pre-denominated notes that contain precise amounts of gold.

Despite these encouraging developments, I remain skeptical that most U.S. states will make meaningful changes until it’s far too late for the average person to take advantage of alternatives. There are several reasons for this:

First, the “political will” simply isn’t there in most states. Advocating for alternative currencies can be politically risky, as it might be perceived as challenging federal authority or undermining confidence in the dollar … and most politicians rarely want to stick their necks out for anything that might benefit “we the people.”

Second, there’s significant resistance from established financial interests. Banks and financial institutions are deeply invested in the current monetary system. They have powerful lobbying arms that work against substantial changes to the status quo. We’ve seen all throughout history that those with the money are those that matter.

Third, most state legislatures move at a glacial pace. By the time they recognize the need for alternative currency options, implement the necessary legal framework, and establish the required infrastructure, we could already be in the midst of a serious monetary crisis. But look at it this way: when we get to a point where the s*hit has obviously hit the fan, you’re finally going to get to spend those gold and silver coins. 🙂

The Global Context Matters

It’s worth noting that central banks worldwide are increasing their gold reserves. This isn’t happening by accident. These institutions are diversifying assets and hedging against inflation, no doubt in an effort to move away from the U.S. dollar’s dominance.

The BRICS nations (Brazil, Russia, India, China, and South Africa) are actively exploring alternatives to the dollar for international trade, including the possibility of a gold-backed currency. When they finally “pull the trigger” it will be those in the United States who take the bullet. But, then again, there have been times where two reserve currencies existed simultaneously, so maybe we can push off the pain for years afterward. We will see.

What Does This Mean for Preppers?

For those of us focused on preparedness, these developments have several implications:

1. Diversification is prudent. Just as you wouldn’t want to purchase only cans of beans, you shouldn’t have all your wealth in one form of currency. Although I discuss strategies to deal with economic uncertainty in my Crisis Preparedness Guide book, the basic principle is straightforward. Don’t put all your financial eggs in one basket.
2. Physical precious metals offer privacy and security. Unlike digital assets or bank accounts, physical gold and silver can’t be frozen, hacked, or easily confiscated. They don’t require electricity or internet access to function as a store of value, unlike Bitcoin. And they’re recognized by nearly everyone as real stores of value.
3. Start small but start now. You don’t need to convert your life savings into gold and silver overnight. Begin with small, regular acquisitions while they’re still readily available. Again, don’t break the bank and certainly don’t ignore the preparations that you’ll absolutely need when times get tough!

Priorities First!

I firmly believe that alternative currencies are a must for us preppers. But this doesn’t mean they should be your first priority. The preparedness hierarchy of needs is clear:

1. Secure your basics: food, water, shelter, security, and so on. No amount of gold will help if you’re hungry or thirsty. Ensure you have adequate supplies of storable food, clean water (and means to purify more), and the tools to protect yourself and your family; you know what those are. If you need help, my Sold Out Forever book is the one to read to gather gear and supplies.
2. Develop practical skills and community connections. Your knowledge and relationships will often be more valuable than any physical asset in a crisis, at least as times goes on. This is especially true as we age and physical tasks become more difficult. Get to know your neighbors, make nice with family, and ensure your friends aren’t going to be leeches and you might just make it through.
3. Only after these foundations are solid should you focus time and money on alternative currencies. This isn’t to diminish their importance. Rather, it acknowledges that their value is contingent on having your fundamental needs covered first. This is survival 101!

Again, we shouldn’t wait for government solutions. Understand these developments, take prudent steps to diversify your assets, but maintain focus on your preparedness fundamentals. Gold and silver may shine in uncertain times, but they can’t replace food, water, or practical skills.

Please consider your own situation carefully before making significant changes to your preparedness strategy or financial holdings. What works for one person may not work for another, and timing is often as important as the action itself.

The reintroduction of gold and silver as legal tender may be on the horizon, but your personal preparedness shouldn’t wait for government approval. Treat the possibility of alternative currencies as another tool in your preparedness toolkit, and that is as part of a larger survival strategy.

What do you think? Is this a likely possibility? Is it inevitable?