NASHVILLE, Tenn. (Mar. 3, 2025) – A bill filed in the Tennessee Senate would officially recognize gold and silver as legal tender in the state and establish a bullion depository. Passage into law would set the stage for the people themselves to undermine the Federal Reserve monopoly by introducing competition into the monetary system.
Sen. Steve Southerland filed Senate Bill 985 (SB985). Under the proposed law, “gold and silver coinage must be accepted as legal tender, at their spot price, and must be receivable in payment of all debts, public or private, hereafter contracted in this state.”
The proposed law would also authorize any person or entity in the state to “sell gold or silver coins if each coin is labeled in a clear and intelligible manner with the weight and purity of the coin.”
Gold and silver accepted as payment by the state would be held in the state’s gold reserves “until all other funds in the reserve for revenue fluctuations have been expended.” Tennessee authorized state gold reserves in 2023.
The passage of SB985 would make Tennessee 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 Tennessee residents to use gold or silver as money rather than as mere investment vehicles.
Passage of SB985 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.
BULLION DEPOSITORY AND BANKING SYSTEM
Provisions in SB985 would authorize the creation of a state bullion depository to “serve as the custodian, guardian, and administrator of certain bullion and specie that may be deposited with the depository by this state, a political subdivision, or another instrumentality of this state, or by a private individual, party, or other entity.” The depository would also facilitate “transactions and investments as authorized by rules adopted” by the commissioner of financial institutions.”
The legislation does not include details about how the depository would run. This would be established by rules promulgated by the treasurer.
The bill would also require the state treasurer to “establish a state reserve banking system to support state-chartered banks.” It remains unclear what this state banking system would look like in practice, but it could set the stage for a state banking system that is 100 percent backed by gold and silver.
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
SB985 was referred to the Senate Commerce and Labor Committee where it must get a hearing and pass by a majority vote before moving forward in the legislative process.
