JUNEAU, Alaska (Jan 14, 2025) – A bill filed in the Alaska House would officially recognize gold and silver as legal tender and repeal local sales taxes on both. Passage into law would set the stage for the people themselves to undermine the Federal Reserve monopoly by introducing competition into the monetary system.

Rep. Kevin McCabe filled House Bill 1 (HB1). Under the proposed law “specie,” defined as “gold or silver valued primarily based on its metal content and in the form of coin or bullion,” would be recognized as legal tender. In effect, gold and silver would be considered a valid medium of exchange for the payment of debts in the state.

Specie legal tender would include coins or bullion:

  • Recognized by the U.S. government as legal tender
  • Recognized by a foreign government as legal tender
  • Recognized by a court of competent jurisdiction, by final and unappealable order, to be within state authority to designate as legal tender.

By allowing the court to designate additional specie to be used as legal tender, Alaska could free its citizens from potential supply constraints imposed by the use of only United States-minted gold and silver coins. More importantly, the people of the state of Alaska 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.

The passage of HB1 would make Alaska the sixth state to recognize gold and silver as legal tender, as they always should have been doing. Utah led the way, reestablishing constitutional money in 2011. Wyoming, OklahomaArkansas, and Louisiana have since joined.

IN PRACTICE

Practically speaking, this would allow Alaska residents to use gold or silver in both physical and electronic forms as money rather than as mere investment vehicles.

Passage of HB1 would represent a big first step against the fiat-based Federal Reserve system by creating a foundation to pull the rug out from under it on the state and local levels. In essence, it would set the stage for the people themselves to undermine the Federal Reserve monopoly by introducing competition into the monetary system.

The next step would be for people to start taking advantage of the status of gold and silver as money by using both as such instead of Federal Reserve notes.

The effect has been most dramatic in Utah where the Specie Legal Tender Act opened the door for the development of a robust gold and silver economy in the state. With some legal hurdles cleared away by the state’s legal tender law, the United Precious Metal Association (UPMA) in partnership with Alpine Gold Exchange set up the state’s first “gold bank.”

The Act has also led to the creation of the Goldback, a local, voluntary medium of exchange. Goldbacks are notes made from fractions of an ounce of physical gold. The company created a process that turns pure gold into a spendable physical form for small transactions.

New Hampshire also boasts a thriving gold and silver economy. While the state does not officially recognize bullion as legal tender, this has not deterred thousands of residents from using it in private transactions. Because there are no state tax barriers on precious metals, a favorable tax climate – combined with a population willing to embrace sound money – has positioned New Hampshire as another model for others to follow.

REMOVING TAXES

HB1 would exempt the exchange of specie from a sales or use tax. Alaska does not have a state income or sales tax, but local jurisdictions can levy sales taxes.

Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.

Imagine if you asked a grocery clerk to break a $5 bill and he charged you a 35-cent tax. Silly, right? After all, you were only exchanging one form of money for another. But that’s essentially what a sales tax on gold and silver bullion does. By eliminating this tax on the exchange of gold and silver, Alaska would treat gold and silver specie more like money. This would support gold and silver as legal tender and break down the Fed’s monopoly on money.

“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support of an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.

BACKGROUND

The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Currently, all debts and taxes in most states are either paid with Federal Reserve Notes (dollars) which were authorized as legal tender by Congress, or with coins issued by the U.S. Treasury – very few of which have gold or silver in them.

The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat paper currency. Without the backing of gold or silver, the central bank can easily create money out of thin air.
This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.

State bills that facilitate and encourage the use of sound money create a playing field where people can push back against the Fed’s monetary malfeasance. Ultimately, it could create a scenario where people can drive out the “bad” fiat money with “good” sound money.

WHAT’S NEXT

HB1 will be referred to a committee when the legislative session begins on Jan. 21.

Mike Maharrey