No matter how much central banks and politicians would like us to forget, the long track record of gold and silver as honest money in unmatched by any fiat currency.
Let me emphasize: any fiat currency ever. In all of human history!
Several U.S. states have recognized this fact. Slowly but surely, more and more states have passed laws or amended their state constitutions to official recognize gold and silver coins as legal tender. Mind you, government-issued bullion coins are already U.S. legal tender—but these changes ensure they are treated as legitimate money under the law.
Thanks to recently passed legislation that went into effect on January 1st, Virginia has now joined this group that also includes Arizona, Tennessee, Utah, and several other states. The potential impact of the new law was reported by Activist Post.
The biggest change is that the law removes any sales tax on gold and silver coins (and even platinum coins) provided that at least $1,000 (in combined value) is purchased at a time. A similar law has long been on the books in Florida, but the spending threshold for the sales tax exemption is only $500.
The split in the vote by the Virginia General Assembly reveals how widespread and common-sense the support from constituents was. The assembly passed the measure by a unanimous 99-0 vote. It then cleared the state Senate by a margin of 38-1. In other words, it was a no-brainer.
Virginia's voters agreed: Money should not be taxed. Further, this also reinforces the notion that gold and silver are the ideal form of sound money.
One common thread that runs through this movement is the liberty-centered idea that the Federal Reserve, the unelected central bank of the U.S., should not have a monopoly over money. Since the Fed was created in 1913, Congress has abdicated its constitutional duty to manage the creation of money. It's one thing for a sovereign government to issue federal banknotes that can be used to pay taxes; it's another thing entirely for that government to outlaw all other forms of money that might compete with today's Federal Reserve Notes, which are endlessly printed out of thin air.
Moreover, when gold and silver coins are treated as true monetary instruments, it makes it more difficult for financial firms to manipulate precious metal prices. It wouldn't make manipulation impossible—currency pairs are subject to manipulation in the forex markets—but it becomes harder to do so when more gold and silver is in the hands of private citizens and small businesses.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.
Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.