PHOENIX, Ariz. (Jan. 27, 2025) – Today, an Arizona Senate committee has approved a bill to create a 100% backed gold and silver currency recognized as legal tender, supported by a bullion depository.
Senate Bill 1096 (SB1096) was introduced by Senators Jake Hoffman and Rachel Jones. The legislation would establish the Arizona Bullion Depository to serve as safe storage for precious metals and facilitate the issuance of state-minted gold and silver coins, along with a specie-backed transactional currency.
On Jan. 27, the Senate Finance Committee passed the measure by a vote of 4-3.
The depository provisions are based on a similar law that was passed in Texas and signed into law by Gov. Abbott in 2015.
The bullion depository would serve as the “custodian, guardian and administrator of certain bullion and specie that may be transferred to or otherwise acquired by this state or an agency, a political subdivision or another instrumentality of this state.”
The proposed law specifies that the state treasurer “may deposit a portion of state monies in the depository in the form of bullion, and that bullion deposit is considered part of this state’s financial reserves.”
Private individuals and businesses would also be able to deposit bullion into the depository.
TRANSACTIONAL CURRENCY BACKED BY GOLD OR SILVER
Under SB1096 the Director of the Arizona Department of Insurance and Financial Institutions would be required to issue specie and establish a transactional currency “as the director determines to be practicable.”
Specie is defined as “a precious metal that is limited to gold and silver and that is stamped into coins of uniform shape, size, design, content and purity that are suitable for or customarily used as currency, as a medium of exchange or as the medium for purchase, sale, storage, transfer or delivery of precious metals in retail or wholesale transactions.”
A transactional currency is defined as “a representation of actual precious metals, specie and bullion held in a depository account by a depository account holder that may be transferred by electronic instruction and that reflects the exact unit of physical precious metals, specie or bullion in the pooled depository account in its fractional troy ounce measurement.”
The depository would manage the transfer of the digital transactional currency between parties and ensure it is backed 100 percent by physical gold or silver held there.
LEGAL TENDER DESIGNATION
Under SB1096, both gold and silver-backed transactional currency and physical specie minted by the state would be recognized as legal tender within Arizona. This means individuals, businesses, and even the state itself could use these forms of currency to settle debts, pay taxes, or conduct transactions just as they would with U.S. dollars – offering a tangible alternative to fiat currency. The legislation specifies:
“A person or this state that holds the transactional currency may use that transactional currency as legal tender to pay a debt or may assign the transactional currency to another person or this state.”
By officially designating these currencies as legal tender, SB1096 would establish a framework for a sound monetary system independent of the Federal Reserve’s fiat currency. This critical step would position Arizona at the forefront of promoting sound money practices and reducing reliance on inflationary monetary policies.
IMPACT
The passage of this legislation would create a sound money alternative to U.S. dollars in both physical and electronic form.
Using gold and silver-backed transactional currency, any person or entity would be able to do business using a debit card that seamlessly converts gold and silver to fiat currency in the background. Private individuals and businesses would be able to purchase goods and services using assets held in the Arizona Gold Depository in the same way they use dollars held in a bank today.
Gold and silver-backed transactional currency would give people a way to shield themselves from the rapid loss of purchasing power inherent in the fiat dollar.
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 laws 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
SB1096 will now move to the Senate Rules committee, where it will need to be approved by a majority vote before moving forward in the legislative process.
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