BISMARCK, N.D. (Feb. 11, 2025) โ The North Dakota House passed a bill recognizing gold and silver as legal tender in the state while explicitly excluding central bank digital currency (CBDC). The measure would also eliminate taxes on gold and silver transactions and now moves to the Senate for further consideration.
Rep. Nathan Toman along with seven cosponsors filed House Bill 1441 (HB1441). Under the proposed law, โspecie legal tender,โ defined as โgold or silver specie issued by the United States or any other form of gold or silver specie,โ would be legal tender in North Dakota.
In effect, under the law, gold and silver would be considered a valid medium of exchange for the payment of debts in the state.
On Feb. 10, the House passed HB1441 by a 61-30 vote – with 20 republicans joining all but one democrat in voting no.
The passage of HB1441 would make North Dakota the sixth state to recognize gold and silver as legal tender, as they always should have been doing.ย Utah led the way, reestablishing constitutional money in 2011.ย Wyoming,ย Oklahoma,ย Arkansas, andย Louisianaย have since joined.
IN PRACTICE
Practically speaking, this would allow North Dakota residents to use gold or silver asย moneyย rather than as mere investment vehicles.
Passage of HB1441 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 byย usingย 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 stateโs legal tender law,ย the United Precious Metal Associationย (UPMA) in partnership withย Alpine Gold Exchangeย set up the stateโs first โgold bank.โ
The Act has also led to the creation of theย 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 โ combined with a population willing to embrace sound money โ has positioned New Hampshire as another model for others to follow.
REMOVING TAXES
HB1441 declares, โThe exchange, purchase, or sale of any type or form of specie legal tender may not give rise to any tax liability of any kind.โ
This would effectively end the capital gains tax on gold and silver specie. This would take an important 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. Thatโs 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.
โWe ought not to tax money โ and thatโs a good idea. It makes no sense to tax money,โย former U.S.ย Rep. Ron Paul said during testimonyย in support of an Arizona billย that repealed capital gains taxes on gold and silver in that state.ย โPaper is not money, itโs fraud,โย he continued.
BACKGROUND
The United States Constitution states in Article I, Section 10, โNo State shallโฆmake any Thing but gold and silver Coin a Tender in Payment of Debts.โย 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 โ 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 wouldnโt 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 Fedโs monetary malfeasance. Ultimately, it couldย create a scenarioย where people can drive out the โbadโ fiat money with โgoodโ sound money.
CBDCs
HB1441 would officially exclude central bank digital currency (CBDC) as legal tender in the state.
In effect, CBDC would not be officially recognized for the payment of debts in the state, but the law wouldn’t stop people from voluntarily using it.
While it remains unclear exactly how it would play out, excluding CBDC as legal tender could throw up roadblocks if the federal government and its central bank try to implement one, gumming up the works and making it difficult for the government to fully implement a CBDC.
Opponents of the strategyย and supporters of CBDCs generally take the position that states canโt doย anything to stop a CBDC, since โย according to their viewย โ under the supremacy clause โany federal law on this point will automatically override state law.โ
Weโve heard this song and dance on other issues before. Thatโs what they said before California legalized medical marijuana in 1996. It didnโt quite turn out that way.
โRoadblockโ is likely how this and other state-based strategies to oppose a CBDC will play out. This is part ofย James Madisonโs four-step blueprintย for how states and individuals can stop federal programs. Madison said โa refusal to cooperate with officers of the unionโ along with โthe embarrassments created by legislative devices,โ would โoppose, in any State, difficulties not to be despised.โ
But whether these roadblocks will have any impact or not requires more than just mere state legislation. As can be seen so far with issues, whether a federal program is implemented or not ultimately gets down toย the willingness of the people to participate, or not.
WHATโS NEXT
HB1441 will move to the Senate for further consideration. Once it is referred to a Senate committee, it will need to get a hearing and pass by a majority vote before moving forward in the legislative process.
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