INDIANAPOLIS, Ind. (Feb. 5, 2025) – Yesterday, an Indiana House committee passed a bill that would officially recognize gold and silver as legal tender in both physical and electronic forms and exempt both metals from state sales taxes. 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. Shane Lindauer and three cosponsors filed House Bill 1614 (HB1614). Under the proposed law, “specie legal tender” would be recognized as legal tender for the payment of both private and public debts, including taxes and state government fees.
Specie legal tender is defined in the bill as gold and silver bullion in the form of coins issued by the U.S. or “any other specie that a United States court, in a final non-appealable judgment, determines to be within state authority to make or designate as legal tender under Article 1, Section 10 of the Constitution of the United States.”
100% gold and silver backed transactional “Electronic currency,” – also defined as legal tender under the measure – is defined as “a representation of actual precious metal, specie or bullion.”
On Feb. 4, the House Committee on Financial Institutions passed HB1614 by a 12-1 vote.
The passage of HB1614 would make Indiana 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, Oklahoma, Arkansas, and Louisiana have since joined.
IN PRACTICE
Practically speaking, this would allow Indiana residents to use gold or silver as money rather than as mere investment vehicles.
Passage of HB1614 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.
GOLD CONTRACT CLAUSE
Beyond the provisions to make gold and silver legal tender, HB1614 includes language recognizing gold or silver contract clauses.
“Except as otherwise specifically provided by law or contract, a person may not compel any other person to tender specie; or accept specie.”
In practice, including language acknowledging gold contract clauses means if parties voluntarily agree to be paid, or to pay, in gold and silver coin or bullion, Indiana courts could not substitute any other thing, e.g. Federal Reserve Notes, as payment.
The principle behind a gold clause contract is simple. It requires that payment must be made in a specific amount of gold or its paper equivalent. For example, a mortgage might stipulate that repayment must be in the form of 30 ounces of gold. Gold clauses protect the parties to a contract from currency debasement, and incentivize the use of sound money.
REMOVING TAXES
HB1614 would explicitly exempt transactions involving specie legal tender from the state sales tax.
“The exchange of one type or form of legal tender for another type or form of legal tender is exempt from the state gross retail tax.”
Under the current law, only bullion permitted in IRAs or other investment accounts is exempt from the sales tax.
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
HB1614 moves to the House Ways and Means Committee for further consideration under House Rule 126.3, which empowers the House Speaker to recommit any bill with an annual fiscal impact in excess of $50,000 to that committee. It must get a hearing and pass by a majority vote before moving forward in the legislative process.
