HELENA, Mont. (Feb. 4, 2025) – A bill filed in the Montana House would officially recognize gold and silver as legal tender and repeal state taxes on the metals. 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. Tom Millett filed House Bill 382 (HB382). Under the proposed law, “specie legal tender,” defined as “gold or silver coin that is issued by the United States” would be recognized as legal tender for payment of both public and private debts.
The legislation would also empower “a court of competent jurisdiction” to declare other gold and silver coins and bullion not issued by the U.S. as legal tender.
The bill includes provisions specifically excluding central bank digital currency (CBDC) from serving as legal tender.
The passage of HB382 would make Montana 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 Montana residents to use gold or silver as money rather than as mere investment vehicles.
Passage of HB382 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, HB382 includes language recognizing gold or silver contract clauses.
“Except as expressly provided by contract, a person may not compel any other person to tender or accept specie legal tender.”
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, Montana 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
Under HB382, “A transaction involving the exchange of one form of legal tender for another form of legal tender is not subject to individual income tax as provided in 15-30-2120 and is not subject to any sales tax, including sales taxes that may be approved on or after the effective date of this act.”
This would effectively repeal all state taxes on gold and silver specie.
The bill would also specifically repeal the state’s capital gains tax on gold and silver bullion.
Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.
Montana is already one of 45 states that do not levy sales tax on gold and silver bullion. Exempting the sale of bullion from capital gains taxes takes another step toward treating gold and silver as money instead of commodities. Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.
Imagine if the IRS sent you a bill every time the dollar strengthened against the euro. That’s effectively what capital gains taxes on gold and silver do. As the precious metals prices go up due to the devaluation of the dollar, the government levies a tax on you. It is essentially a tax on the superior performance of gold and silver as 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.
NO HELP FOR THE FEDS
HB382 includes provisions prohibiting the state from seizing “legal tender” including gold and silver coins from their rightful owners.
The legislation would also bar state and local agencies from enforcing “federal acts, laws, executive orders, administrative orders, rules, regulations, statutes, or ordinances infringing on the right of a person to keep and use specie legal tender.”
Based on James Madison’s advice for states and individuals in Federalist #46, a “refusal to cooperate with officers of the Union” represents an extremely effective method to bring down federal gun control measures because most enforcement actions rely on help, support, and leadership from state and local governments.
This provision is based on the well-established anti-commandeering doctrine. Simply put, the federal government cannot force states to help implement or enforce any federal act or regulatory program. The anti-commandeering doctrine is based primarily on five major Supreme Court cases dating back to 1842.
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
HB382 will be referred to a House committee where it must get a hearing and pass by a majority vote before moving forward in the legislative process.
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