For more than three decades, Ron Paul has advocated for returning the U.S. economy to the gold standard. Now the idea is starting to take hold. In March 2011, Utah became the first state to change the legal status of gold and silver from assets to currency, meaning their exchange can no longer be taxed. And they can, in theory, be used to buy stuff.
As of press time, the Missouri senate was nearing a vote on a bill of its own, and the movement is gaining steam in South Carolina. In total, 13 states have introduced gold and silver legislation in the past year. Since it's unlikely people will begin toting gold bars to the pharmacy, the most-discussed model for purchasing goods with metals is with a debit card issued by gold and silver depositories.
By being linked to the fixed value of the metals, the gold-standard model could prevent devaluation of personal wealth due to the printing of more paper money by the Fed. But the arrangement also risks torpedoing another institution: the recycled-gold industry, which saw more than $20 billion worth of the metal transacted globally in Q1 of 2012. And is our cash-for-gold culture really ready for that?
This far-flung capital of Nevada's Gold Belt is booming — very, very reluctantly.
With the price of gold in the stratosphere, the mine-chiseled corner of northeastern Nevada is scrambling to fill thousands of jobs, while newcomers to the barren region beg for somewhere to sleep. The motels: sold out. The apartments: good luck. The RV parks: get in line.
Nevada churns out more gold than all but four nations. The Elko area's 7.4% jobless rate is about half that of the once-thriving Las Vegas region.
But you'll find little of the gold-rush euphoria here that has long defined the American West. These days, Elko knows better.
Nevada is stippled with so many mining camp ruins — more than 100 in Elko County alone, locals say — that "ghost-towning" is a weekend pastime. Only a decade ago, tanking gold prices saddled the region with abandoned homes and shredded dreams.
Now the Elko city government is mostly socking away cash and putting off hiring, even for a police force strained by a transient population. Even among workers who feel blessed to cash paychecks, there is a sense of unease. Why buy a home here if the gold rush could vanish tomorrow?
That feeling is palpable at the Iron Horse RV Resort, where Ron and Judy Fletcher have been parked in Lot 70 for more than a year, ever since Ron's company told him: Move to Elko. Now.
Ron, 67, sells pump seals to mines. So the Fletchers squeezed their lives into an RV and motored from Spokane, Wash., to this mountain-ringed swath of cattle, alfalfa and cowboy poetry enthusiasts.
"This is where the work is," Judy, 61, said inside their 38-foot trailer, their black poodle-Chihuahua mix, Izzy, sprawled on her lap. "As much as we don't want to be here, we want to be employed."
A city born as a transportation hub in the 1860s and possibly named by a railroad official with a fondness for elk, Elko has survived a roller-coaster history. Its fortunes are tied to the seesaw industries of mining, ranching and tourism, though gold is clearly king.
On June 2, hours after he presided over a ceremonial signing of Utah’s Legal Tender Act of 2011, Republican Gov. Gary Herbert was called by an out-of-state newsman for his comments on the day’s events. Herbert sent word to the reporter that he is proud that Utah has emerged as “a leader in sound money policy.”
This was an understatement. Ever since the Utah House passed the bill by a 47-to-26 vote following a half-hour debate on March 4—and well before the Legal Tender Act became law on May 10—Utah’s drive to define U.S.-minted gold and silver coins as official in-state currency has attracted attention in the national and international media—including respectful front-page coverage in the New York Times on Memorial Day, three days before Gov. Herbert’s ceremonial signing.
More important, at least a dozen other states have seen the introduction of similar legislation. South Carolina’s legal tender bill has 10 sponsors in the state house, including the Republican majority leader, Kenny Bingham. Its lead sponsor in the state senate is David Thomas, chairman of the banking and insurance committee. At its annual convention in mid-May, the South Carolina Republican Party passed a resolution endorsing the bill.
In Iowa, Kent Sorenson, a young, politically gifted conservative leader who ousted seemingly entrenched Democratic incumbents in races for the state house (2008) and state senate (2010), introduced a legal tender bill as soon as he learned what Utah was doing. Sorenson supports returning the United States to a gold-backed dollar. The sponsor in the Iowa House is Kim Pearson, another articulate newcomer.
So what is the nature of what Herbert described as Utah’s sound-money leadership? Is the Legal Tender Act of 2011 a pro-gold protest against the weak dollar/stagflation economy on offer from the Obama administration and the Federal Reserve under Chairman Ben Bernanke?
Or quite apart from any national political impact, will it have a favorable effect on the economy of Utah, or, for that matter, other states looking to enact similar laws?
The answer, at least potentially, is both of the above. Washington-based reporters covering the Fed say that that body, though so far offering no public comment, has cast a jaundiced eye on the Utah legislation as well as the spread of the hard-money movement to other states. The fact that two of the movement’s most active states, South Carolina and Iowa, happen to be two of the first three states to vote in the contest for the Republican presidential nomination could also prove significant.
A world monetary system has emerged that has no historical precedent: a system in which every major currency in the world is " on an irredeemable paper money standard. And further, "The ultimate consequences of this development are shrouded in uncertainty."
In my everyday conversations people always ask me, "are we going back to the gold standard? Is that what you want?"
I have to laugh and respond by saying, "yes, back to the gold standard of the 1800's and on your way out today, please turn in your car keys and pick up your horse & buggy."
We can't go back in time. We can't wake up one day and pretend that the cell phone was not invented or the Internet doesn't exist. Once the blind man gets his sight, there is no going back to the darkness.
As both Lewis E. Lehrman and Ron Paul say, we should be "going forward to a new gold standard".
The move from legal tender paper to voluntary use of gold and silver has already been occurring on a state by state basis in the U.S.
By giving people the option to use sound money over paper currency, slowly but surely, the state legislatures are offering real protection from ongoing paper money inflation.
So what is happening today with my money? When will I be able to buy groceries and conveniently pay with gold?
Well, that day will be here sooner than you think. The technology is already in commercial use right now.
In just the past few years over a dozen states have proposed legislation to permit the use of gold and silver in a variety of consumer and state financial transactions. The great State of Utah, has already passed laws recognizing gold and silver U.S. minted coins as legal tender within the state. On a voluntary basis, this new law allows people in Utah to use gold U.S. coins in any type of payment.
Of course a $50 face value gold eagle today has a real world worth of about $1600 U.S. Dollars, and no one is contemplating an exchange of these coins at their face value. While the Utah law does not offer a standard measure for the daily spot valuation for U.S. gold and silver coins, anyone possessing them generally knows the daily spot price. (Please don't send me an email saying that you would never use a $50 face value gold coin because it is worth so much more. (that's another ignorant point often brought up!)
Please move forward with us to a new gold standard. Welcome to the digital gold currency world of online payments. The idea of using gold and silver in everyday commerce at spot prices has already been perfected by the genius creators of digital gold currency. Over a decade ago, companies like e-gold and GoldMoney came online with robust payment systems 100% backed by real gold bullion. Anyone with a computer connection, could then and still can today, very easily send payments backed by gold to anyone else with a computer or mobile device. All of these payments are possible today....right now.
Using Digital Gold Currency:
--Bob from Michigan, can instantly send Alice in Los Angeles a $5,983.18 payment that is 100% backed by real gold bullion.
All of these payments are now possible using digital technology and physical gold.
No more should we ever hear, "how will a shop keeper make change with gold, by chipping off a tiny piece of my gold coin?" Yes, that comment is truly brilliant.
As the last rays of a basketball-sized sun bathe the main square of this gritty industrial town in yellow, local Tea Party members are busily preparing for a reading of the Declaration of Independence, setting up the microphones and passing out literature as the sound system blares “We’re Not Gonna Take It” by Twisted Sister.
Like many in the small crowd gathered under the trees, Clinton Gray is one of the converted.
A slightly built man with wire-rim glasses and an intense gaze, Mr. Gray is a long-time Republican who believes that the United States has departed from the vision of the Founding Fathers and been ruined by years of corruption and mismanagement at the highest levels. Unemployment, skyrocketing debt and inflation have brought the country to its knees.
According to Mr. Gray, it may already be too late to avert disaster.
“I can’t say what source I’ve heard this from but if the dollar collapsed and [society slipped into chaos], in six months you would have approximately 50-million people die of starvation,” he says cryptically. “With paper money, it’s going to be worth nothing.”
Once upon a time such views would have been considered extreme even here in the U.S. heartland, where strong currents of religion and libertarianism come together,but as the United States stares into the face of fiscal disaster — President Barack Obama and key members of Congress are meeting this weekend in a last-ditch effort to raise the U.S. Treasury’s borrowing authority in order to stave off a debt default — such views are becoming more common.
Like many Americans, Mr. Gray doesn’t trust the U.S. government or its handling of the monetary system, and whether or not the system goes into meltdown, he believes the country will return to the gold standard. He is not alone.
Once the domain of crackpots and wingnuts, a growing number of Americans believe returning to the gold standard, or bringing gold coins back into circulation, is the only way to restore sanity to a fiscal system that is out of control.
In Utah, a law went into effect in May making gold and silver coins legal tender and exempting the exchange of coins from income or sales tax liability. At least 15 U.S. states including Iowa, South Carolina and New Hampshire are considering bills that would legalize gold as currency or are lobbying the federal government to reform the Federal Reserve System to consider alternative forms of currency.
The rising interest in gold may not be surprising considering the fiscal nightmare facing the United States and news on Friday of an unemployment rate that hit 9.2%. If Mr. Obama and Congress cannot come to a deal to cut the deficit a raise the borrowing authority by Aug. 2, the U.S. could actually default on its debt.