Arkansas has become the fourth state in the US to legalize gold and silver as legal tender. The “Arkansas Legal Tender Act,” signed by Governor Sarah Huckabee Sanders on April 11, allows citizens to use gold and silver coins to pay for debts. The new law also clarifies that gold and silver “specie” (meaning any kind of bullion or coin containing these materials) will not be considered property for tax purposes. Transactions made with these precious metals will not result in tax duties. The law will take effect 90 days after its approval in the April 7 legislative session.
The move by Arkansas follows similar legislation in Wyoming, Oklahoma, and Utah, and underscores a growing trend among states to develop regulations that allow their citizens to use gold and silver as legal tender. According to the Tenth Amendment Center, a federalism advocacy organization, 23 states are currently developing such regulations. Michael Marrahey, communications director for the Tenth Amendment Center, believes that this initiative is an attempt to undermine the powers of the US 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. 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 over making gold and silver legal tender goes back many years, with experts stating that this possibility is enshrined in the US 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.”
Sergio Goschenko, a cryptocurrency journalist based in Venezuela, notes that the move by Arkansas to make gold and silver legal tender underscores the growing trend of states to develop regulations that allow their citizens to use precious metals as legal tender. He notes that this trend is particularly important in countries like Venezuela, where the national currency has been devalued to the point of being nearly worthless. He points out that cryptocurrencies like Bitcoin and Ethereum are also being used as an alternative to traditional currencies in countries like Venezuela, where the government has imposed strict controls on the use of foreign currency.
While the move by Arkansas to make gold and silver legal tender is likely to be seen as a positive development by many, it remains to be seen how it will be received by the Federal Reserve and other financial institutions. Some experts believe that the move could lead to increased volatility in the financial markets, while others believe that it could provide a much-needed hedge against inflation and other economic risks. Either way, it is clear that the trend towards alternative currencies is likely to continue, as more and more people seek to protect their wealth against the uncertainties of the global economy.
