On Friday, March 25th, Gov. Gary Herbert signed HB 317, the “Utah Legal Tender Act,” into law.
The law recognizes gold and silver coins issued by the federal government as legal currency in the state. The coins do not replace the current paper currency, but may be used and accepted voluntarily as an alternative.
The law exempts the sale of gold and silver coins from the state capital gains tax, since you would simply be exchanging one form of legal tender currency for another. It also calls for a committee to study alternative currencies for the State and a means for Utahans to pay their taxes with gold and silver coins.
Gold and silver coins issued by the federal government are already legal tender, of course, and can be used to purchase items and pay debts owed. However, they could only be used at the face value of the coins — which is ridiculously lower than the value of the precious metal content of the coins. If you were to use them at the actual value of the coins, you would face a capital gains tax on the “profit” you gained over the face value.
If nothing else, this law recognizes the inanity of imposing a tax on exchanging one form of legal tender currency for another. By removing that tax and officially recognizing the legal tender status of the gold and silver coins within the State of Utah, the way is now open for good and services to be priced in both Federal Reserve Notes denominations and Gold & Silver Coins denominations; likewise, banks should now be free to offer their customers accounts denominated in legal tender gold & silver coins, so that consumers will be able to make purchases based on those accounts, using their debit cards, checks, ATM cards, etc. Banks should also easily convert FRNs to Gold & Silver Coins and vice-versa, since they will now be treated as simple currency exchanges.
So… what bank will be the first to jump on board here? Because once that happens, the floodgates will open, and billions of dollars in new banking accounts will pour into Utah banks, from people who want to use sound money that keeps its value, rather than nearly-worthless pieces of paper whose purchasing power continues to plummet.
And you know who’ll be one of the first in line!