Kansas Legislators Seek to “Reaffirm” Gold and Silver as Money

One of the principal benefits of owning gold and silver about which metals advocates such as I regularly crow is the fact they’re tangible assets. This tangibility is part of the reason why precious metals cannot be debased in the way fiat currency can by central banks. Additional sums of paper money can be printed anytime the “powers that be” decide it’s a good idea. However, additional quantities of gold and silver cannot be created out of thin air – by central bankers or anyone else.

The modern fiat currency era began a few hundred years ago. Since that time, gold and silver as mediums of exchange have been increasingly marginalized to the point of complete irrelevance. Not irrelevant as valuable assets, mind you. But it can’t be denied that global adoption of fiat currencies has led to the cessation of using physical gold and silver as money.

Or has it?

As it turns out, gold and silver as sound money has been making something of a comeback in the U.S. in recent years. Most recently, legislators in Kansas are attempting to make gold and silver legal tender in that state. If the measure successfully completes its legislative journey and becomes law, it means citizens of Kansas would have the right to engage in everyday transactions using physical gold and silver.

By itself, the implications of the endeavor – particularly at this point in the process – are relatively minimal, in my opinion. However, viewed against the backdrop of a generally warmer embrace of precious metals by states in recent years, the Kansas bill potentially could add momentum to a broader trend that has seen gold and silver move further into the mainstream.   

Kansas Legal Tender Act Would Authorize Use of Non-U.S.-Minted Gold and Silver

Republican Rep. Brett Fairchild – along with three co-sponsors – introduced Kansas House Bill 2123 in January. Known as the Kansas Legal Tender Act, the legislation seeks to “reaffirm…gold and silver coin as legal tender” in the state. The bill goes on to define “legal tender” as “a recognized medium of exchange for the payment of debts and taxes.”

Money, in other words.

In a recent article about the act appearing at Natural News, independent journalist Michael Maharrey writes that “gold and silver specie would be treated as money, putting it on par with Federal Reserve notes in Kansas.”

A handful of other states already have passed similar legislation. The first state to “reaffirm” gold and silver as legal tender was Utah, back in 2011. Oklahoma did it in 2014 and Wyoming picked up the baton in 2018. What’s particularly notable about the Wyoming statute as well as the one proposed in Kansas is that each of these pieces of legislation goes a step further in underscoring sound money freedoms than even the earlier-passed Utah and Oklahoma laws.

That’s because in Wyoming – and in Kansas, if the measure succeeds – the definition of specie (coinage) legal tender includes not only U.S.-minted coins such as American Gold Eagles and American Silver Eagles but also coins not necessarily issued by the U.S. government. For clarification, here’s how the Kansas bill reads:

Specie legal tender in Kansas consists of: (a) Specie coin issued by the United States government at any time; or (b) any other specie that a court of competent jurisdiction, by final and unappealable order, rules to be within state authority to make or designate as legal tender.

Michael Maharrey suggests the eventual upshot of more liberal interpretations of just what defines specie legal tender could be profound. Here’s what he says about that in terms of the Kansas Legal Tender Act:

By allowing the court to designate additional specie to be used as legal tender, Kansas could free its citizens from potential supply constraints imposed by the use of only United States minted gold and silver coin.

More importantly, the people of the state of Kansas would be able to define what specie is considered constitutional tender, further distancing themselves from potential control of their competing currency by Washington D.C.Maharrey’s enthusiasm aside, do these legal tender efforts in Kansas and elsewhere really signal that we could be moving toward a day when it becomes common for gold and silver coins to be used to pay for the weekly groceries?

Well, we technically might be “moving toward” such a day, but I suspect we’re still a long way off from seeing the regular use of sound money in commerce. Plus, as I see it, focusing too closely on that possible eventuality might prompt retirement savers to overlook what could be the real potential benefit to them of states adopting gold and silver as sound money.

Legal Tender Push Could Be Clue to Brighter Gold and Silver Future

In my opinion, the bigger issue is the broader shift by states toward precious metals, something I referenced at the outset. Support for sound money obviously is a part of that shift, but so, too, is the campaign among some states to make gold and silver eligible assets for the investment of financial reserves.

As I detailed recently, the Idaho State House recently passed a measure that would authorize the state treasurer to buy gold and silver. In that same piece, I mentioned similar legislative drives being undertaken presently in South Carolina and Tennessee, as well as the fact that major public pensions in Ohio and Texas already have authorized investment into gold.

Any single one of these initiatives might not seem terribly significant. But looked at collectively, the affection states now appear to be demonstrating toward precious metals as both sound money and core portfolio assets could be interpreted by some metals-watchers as another clue suggesting a possibly brighter future ahead for gold and silver. 

On that note, the astute retirement saver will recognize the potential value of information and data that is perhaps less obvious but still could offer important insight about the health of the economy and the possible direction of assets. In my opinion, the legal tender movement is an example of a potential source of such insight.

Again, by themselves, sound money crusades may not indicate a future strengthening in the price of gold and/or silver. But the undertakings may be useful as indicators when considered among a growing array of factors suggesting a potentially more robust future for metals, including expectations for a continued surge in the national debt as well as the continuation of highly accommodative monetary policy and profligate government spending. In that context, the move by states to comprehensively embrace gold and silver may be one more development worth noting.