A bill signed into law on April 11 has made gold and silver legal tender in the U.S. state of Arkansas, allowing citizens to use gold and silver coins to pay debts. The bill also clarifies that gold and silver “specie” (coins) will not be considered property for tax purposes, and transactions made with these precious metals will not result in tax duties.
Arkansas Embraces Gold and Silver as Legal Tender
The state of Arkansas has moved to make gold and silver function as legal tender in its territories. The “Arkansas Legal Tender Act,” signed by Arkansas Governor Sarah Huckabee Sanders on April 11, explicitly mentions that gold and silver “specie” (meaning any kind of bullion or coin containing these materials) can be used to pay for debts.
The act also specifies that “specie or legal tender shall not be characterized as personal property for taxation or regulatory purposes,” and that “the purchase, sale, or exchange of any type or form of specie shall not give rise to any tax liability.”
The law, which will enter into validity 90 days after its approval in the April 7 legislative session, makes Arkansas the fourth state to designate previously approved gold and silver coins as legal tender, behind Wyoming, Oklahoma, and Utah.
More States Moving to Approve U.S. Dollar Alternatives
23 states are currently developing regulations that will also allow their citizens to use gold and silver as legal tender, according to the Tenth Amendment Center, a federalism advocacy organization. Michael Marrahey, communications director for the Tenth Amendment Center, believes this is an initiative to undermine the powers of the U.S. Federal Reserve, noting that states are “nullifying the Fed on a state-by-state level.”
The theory behind this idea is that in a multicurrency environment, the better currency will be the one that prevails. In this sense, constitutional tender expert professor William Greene explains:
Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes).
The debate of making gold and silver legal tender comes from way back, with experts stating this possibility is enshrined in the U.S. Constitution, which states that “no state shall … make anything but gold and silver coin a tender in payment of debts.” Market analysts like Peter Schiff have predicted that a bull market for gold is coming, saying “it will be spectacular.”
What do you think about Arkansas making gold and silver legal tender? Tell us in the comments section below.
Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.
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