MONTGOMERY, Ala. (March 19, 2025) – Today, an Alabama House committee advanced a bill to recognize gold and silver as legal tender. If enacted, it would set the stage for the people to undermine the Federal Reserve monopoly by introducing competition into the monetary system.
On March 19, the House Committee on Financial Services unanimously advanced the Alabama Legal Tender Act, Senate Bill 130 (SB130) sponsored by Sen. Tim Melson. The Senate previously approved the measure by a 31-0 vote.
Under the proposed law, “any refined gold or silver bullion, specie, or coin that has been stamped, marked, or imprinted with its weight and purity” would be recognized as legal tender in the state.
The passage of SB130 would make Alabama 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.
On March 4, the Senate passed SB130 by a 31-0 vote.
GOLD CONTRACT CLAUSE
Beyond the provisions to make gold and silver legal tender, SB130 includes language recognizing gold or silver contract clauses.
“No person shall be required to offer or accept any recognized legal tender … except as specifically provided for by contract or otherwise required by law.”
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, Alabama 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.
IN PRACTICE
Passage of SB130 would represent another 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.
Alabama recently repealed both its sales tax and capital gains tax on gold and silver. The passage of SB130 would take another step, further opening the door for residents to use gold or silver as money rather than as mere investment vehicles.
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.
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
SB130 will move to the full House for further consideration.
- Florida House Subcommittee Passes Bill to Recognize Gold and Silver Legal Tender - March 21, 2025
- Alabama House Committee Unanimously Passes Bill to Recognize Gold and Silver as Legal Tender - March 19, 2025
- Arkansas House Passes Bill to Prohibit Credit Card Codes to Track Firearms Purchases - March 19, 2025