Worried that the U.S. dollar may not be good as gold, some Colorado lawmakers are pushing a bill to legalize gold and silver coins as usable currency.
The bill would not lead to folks carrying gold nuggets in their purses and would have little practical effect.
Each coin actually contained more gold than its United States government counterpart, with an intrinsic value slightly higher than its face value. This feature made the new coins immediately popular in a region where there was a shortage of coins but an abundance of gold dust and gold nuggets. See an excellent source site with images on Colorado gold coinage of the Territorial period.
Rather the policy proposal from a small group of conservative lawmakers reflects anxieties about the nation's financial stability, the domestic consequences of the European debt crisis and chronic deficit spending in Washington.
"There are lots of concerns about the U.S. monetary system," said the bill's sponsor, Republican Sen. Kent Lambert of Colorado Springs. "Individuals and states ought to be increasing their gold reserves. There's no way to maintain the value of anything if countries start a race to the bottom by inflating their currency to get out of debt."
Republican presidential candidate Ron Paul is among those who believe the nation should return to the gold standard, in which paper currency is guaranteed by precious metal.
"I am not a Ron Paul kind of guy," Lambert said. "But that's something I think is very legitimate that he brought up."
Utah legalized gold and silver as a currency option last year. And lawmakers in more than a dozen other states have proposed similar legislation on gold currency, said Rich Danker of the American Principles Project. The Washington-based conservative think tank favors a return to the gold standard.
"These bills offer a sound monetary alternative to the U.S. dollar, and they allow people to store their wealth in coins that will not decrease in value," Danker said.
But the proposal pending in the Colorado Senate faces long odds.
Currently, people who want to spend gold and silver coins must convert them to paper dollars first. Minted U.S. gold and silver coins retain their face value, even if the value of the coins' precious metals rises. So a $20 gold coin minted in the 1800s is still legally worth $20, even though its real value may be thousands of dollars in today's market. Gold was trading at above $1,700 an ounce Friday.
The U.S. largely abandoned gold-backed money during World War I in order to pay for the war. President Franklin D. Roosevelt basically banned gold and silver as legal currency to prevent hoarding during the Great Depression. And in 1971, President Richard Nixon formally abandoned the gold standard.
Gold and silver coins manufactured by the U.S. Mint are mostly used for investment portfolios. People can trade them but with capital gains taxes on profits.
Lambert said his bill is designed to provide consumers alternatives in case the dollar falls precipitously. It wouldn't require merchants to accept nuggets of gold and silver as payment.
The bill cleared a Senate committee with bipartisan support and awaits a vote in the full chamber.
"It's something I'd never even heard of before," said Sen. Cheri Jahn, a Democrat who voted to forward the bill. "It's definitely an idea that deserves more discussion from the full body."
Lambert has been talking about gold for a while. Two years ago he proposed building a vault to fill with gold under the Colorado Capitol, an idea that was hastily rejected. But he said Colorado should be especially keen on gold legal currency. The state has a rich mining history, and its gold and silver caches helped finance construction of the state Capitol in the 19th century.
Colorado no longer keeps reserves of gold nor silver, though gold and silver bullion are kept at the U.S. Mint in Denver, a short walk from the Capitol.
But some Democrats aren't convinced that Colorado needs to make gold and silver legal currency. Sen. Michael Johnston said that people worried about currency devaluation are free to stockpile gold and silver now. He doesn't take seriously the fear that converting gold or silver to dollars would one day be impossible.
"The liquidity rate of gold is not in question," Johnston said.
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Online:
Read Senate Bill 137: http://goo.gl/YqM6K
Source @HeraldExtra
The bill would not lead to folks carrying gold nuggets in their purses and would have little practical effect.
Rather the policy proposal from a small group of conservative lawmakers reflects anxieties about the nation's financial stability, the domestic consequences of the European debt crisis and chronic deficit spending in Washington.
"There are lots of concerns about the U.S. monetary system," said the bill's sponsor, Republican Sen. Kent Lambert of Colorado Springs. "Individuals and states ought to be increasing their gold reserves. There's no way to maintain the value of anything if countries start a race to the bottom by inflating their currency to get out of debt."
Republican presidential candidate Ron Paul is among those who believe the nation should return to the gold standard, in which paper currency is guaranteed by precious metal.
"I am not a Ron Paul kind of guy," Lambert said. "But that's something I think is very legitimate that he brought up."
Utah legalized gold and silver as a currency option last year. And lawmakers in more than a dozen other states have proposed similar legislation on gold currency, said Rich Danker of the American Principles Project. The Washington-based conservative think tank favors a return to the gold standard.
"These bills offer a sound monetary alternative to the U.S. dollar, and they allow people to store their wealth in coins that will not decrease in value," Danker said.
But the proposal pending in the Colorado Senate faces long odds.
Currently, people who want to spend gold and silver coins must convert them to paper dollars first. Minted U.S. gold and silver coins retain their face value, even if the value of the coins' precious metals rises. So a $20 gold coin minted in the 1800s is still legally worth $20, even though its real value may be thousands of dollars in today's market. Gold was trading at above $1,700 an ounce Friday.
The U.S. largely abandoned gold-backed money during World War I in order to pay for the war. President Franklin D. Roosevelt basically banned gold and silver as legal currency to prevent hoarding during the Great Depression. And in 1971, President Richard Nixon formally abandoned the gold standard.
Gold and silver coins manufactured by the U.S. Mint are mostly used for investment portfolios. People can trade them but with capital gains taxes on profits.
Lambert said his bill is designed to provide consumers alternatives in case the dollar falls precipitously. It wouldn't require merchants to accept nuggets of gold and silver as payment.
The bill cleared a Senate committee with bipartisan support and awaits a vote in the full chamber.
"It's something I'd never even heard of before," said Sen. Cheri Jahn, a Democrat who voted to forward the bill. "It's definitely an idea that deserves more discussion from the full body."
Lambert has been talking about gold for a while. Two years ago he proposed building a vault to fill with gold under the Colorado Capitol, an idea that was hastily rejected. But he said Colorado should be especially keen on gold legal currency. The state has a rich mining history, and its gold and silver caches helped finance construction of the state Capitol in the 19th century.
Colorado no longer keeps reserves of gold nor silver, though gold and silver bullion are kept at the U.S. Mint in Denver, a short walk from the Capitol.
But some Democrats aren't convinced that Colorado needs to make gold and silver legal currency. Sen. Michael Johnston said that people worried about currency devaluation are free to stockpile gold and silver now. He doesn't take seriously the fear that converting gold or silver to dollars would one day be impossible.
"The liquidity rate of gold is not in question," Johnston said.
___
Online:
Read Senate Bill 137: http://goo.gl/YqM6K
Source @HeraldExtra
