BISMARCK, N.D. (Feb 19, 2025) – On Monday, the North Dakota House passed a bill that would require the state to invest funds in precious metals, potentially strengthening its financial stability, insulating against inflation, and reducing reliance on the Federal Reserve’s fiat currency system.
Rep. Daniel Johnston filed House Bill 1183 (HB1183). Under the proposed law, the state treasurer would be required to invest at least 1 percent of all funds deposited in the state treasury in gold and silver.
“Gold and silver investments by the state treasurer under this section must be held directly by the state treasurer as bullion or coins in a secure facility or on behalf of the state through a qualified custodian, exchange traded product, or other investment instrument.”
HB1183 also includes provisions that would require the treasurer to conduct a study of “the costs and benefits of investing state funds in gold and silver.”
After failing to garner a constitutional majority in the first vote in the full House on Feb. 14, HB1183 was brought up for reconsideration on Feb. 17 and passed by a 54-35 vote.
IMPACT
Holding funds in gold and silver would protect the state’s cash reserves from the ravages of inflation caused by the rapidly depreciating value of Federal Reserve notes. Since 2020, the purchasing power of the dollar has dropped by nearly 20 percent. In that same period, the price of both gold and silver skyrocketed, reflecting the devaluation of the dollar.
Adding physical gold and silver in reserve could also create a pathway for North Dakota to maintain financial independence should the U.S. dollar collapse, a very real possibility as the world moves away from the greenback as its reserve currency. The state would not enjoy this benefit if it opted to invest in “paper gold” through exchange-traded products since it would not have access to physical metal.
Central banks around the world have been buying gold to limit their dependence on the U.S. dollar. According to the World Gold Council (WGC), central banks’ net gold purchases totaled 1,037 tons in 2023. It was the second straight year central banks around the world added more than 1,000 tons to their total reserves. According to the WGC, there are two main drivers behind central bank gold buying — its performance during times of crisis and its role as a long-term store of value.
It’s hardly surprising then that in a year scarred by geopolitical uncertainty and rampant inflation, central banks opted to continue adding gold to their coffers and at an accelerated pace.”
These factors are as relevant to Wyoming as they are to any country.
Tennessee authorized gold and silver reserves in 2023 and Utah did the same during the last legislative session.
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.
Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state-by-state level is what will get us there.
WHAT’S NEXT
HB1183 will now move to the Senate. It was referred to the Senate Industry and Business Committee where it must get a hearing and pass by a majority vote before moving forward in the legislative process.
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