Arizona moving toward gold and silver coins being treated as legal tender

Some time ago, Utah wrote it in to state law that gold and silver coins are legal tender in that state.  The important implications of this are that, as far as Utah - a state that charges state income tax - is concerned, gold and silver "gains" are un-taxable by the state.  The law doesn't say this explicitly but that is the de facto result.  The opportunity to collect taxes is when something is bought or sold.  When gold and silver were treated as collectibles then it was feasible to charge sales tax upon purchase and / or capital gains tax upon sale.  But now that these coins are legal tender no state level taxation is possible on these transactions.  In the same way as making change from a $1 bill into 20 nickels does not attempt to levy tax on a metals purchase (even though that is exactly what you did when buying the nickels), changing $1650 into and out of a gold coin carries no tax in Utah, no need for records, no special tracking no nada.

Following in the obvious direction away from collapsing funny money, Arizona is now well on the way to making gold and silver coins legal tender as well.  The proposed law again exempts gold and silver purchases and sales from the list of taxable events and allows taxes to be paid in gold and silver coins. The Arizona law appears to target gold and silver coins issued by the US government just like the Utah law did before it.  While these laws may sound like quaint pandering to the prepper crowd I can assure you that they carry significant impacts and as a result everyone will want the same benefits for themselves when they finally figure it out.

You see, nobody is really interested in carrying around gold and silver coins and using them to buy and sell other goods.  It is obvious that electronic representation of the coins is being targeted.  So you will in essence see the arrival of "People's Metallic Banks" where people deposit gold and silver coins and the banks keep track of the number of coins stored, not the dollar value of them.  This will include the accounting of fractional coins and the automatic conversion to and from gold and silver coins upon demand. 

Note that once transactional metals aggregation points like a metals bank are established, the notion that coins must be US minted to qualify as legal tender goes out the window.  If you have an Austrian Philharmonic gold coin, they will allow you to deposit it just as if it were US minted because in the international gold trade that the metallic banks must operate in, gold is gold.  They can, if they wish, accept unlimited gold coins of any type and then exchange them with foreigners who hold US minted coins.  The proof that there is really little chance that only US-minted gold and silver will be treated any differently from other gold and silver coins in the long run is reflected in the very similar pricing between US gold buffalos and Austrian gold philharmonics.  Both are 1oz .999 pure gold coins, both produced by trusted minting operations, both stamped with weight and purity.  The small cost delta between these coins (~1% at present) represents the small odds that the market is giving that US minted gold and silver coins might receive any special, long term benefit under the law over foreign minted gold coins.

An interesting consequence of all this will be that if you want to pay off some bill, and if the recipient banks at the metallic bank, then the funds need never get converted into dollars.  Some fractional portion of gold can just move from one account to the next.  If enough people do this they might start to wonder why they need paper money from the government who keeps stealing the value of it out the back door in order to prop up the current political and economic status quo.  Keep in mind that government's only real power comes from control of the money supply folks.  If it loses control of the money supply it loses control of everything.  Now, if the recipient does not bank at the metallic bank then the bank will convert some of the depositor's gold into dollars and pay the bill.

At a time when the only thing Bernanke knows to do is to debase the money supply in order to keep Obama and the con men in power, the metallic bank protects any depositors against inflation while giving them all of the liquidity that they desire.

Today the Utah news and the Arizona news are being treated as "interesting but kind of silly" by people who do not understand what money is or how it works.  I predict that another couple of states, perhaps North Carolina and Virginia will follow suit and then the big kahuna -Texas- will join the crowd.  That is when the movement to re-monify gold will start to get noticed.  Each state that adopts these laws is putting a knife into the backs of the con men running fellow states who do not treat gold and silver a legal tender.  Businesses (and thus jobs) and then people will be attracted to states where government can no longer force them to deal only in fraudulent paper money.  Alternatively, people will open accounts in out of state metallic banks.  Once one state has legal tender laws it becomes effectively impossible for any state to not have them or all banking will be done using out of state banks with no tracking of metals-dollars transactions.

This is going to turn into a big deal and then into a big stink at the federal level because if too many people protect themselves from the ravages of inflation, the suckers who are remaining take a double load of it.  If you don't immediately understand that, consider it like this:  In Florida where condos are rampant, the monthly rip off condo fee is fixed for the entire building.  Then the per unit cost is simple division of that cost by the number of paying tenants.  Now, when some if not most of the tenants moved out or got foreclosed on during the bust, those units were not paying the monthly rip off condo fee.  So instead of ratcheting down the fees to reflect less service for less paying customers, the condo associations simply increased the monthly bills of the suckers that remained in order to make up for the shortfall.  Many of these systemically captured souls ended up paying more in condo fees per month than in rent.

The US government is no different than the condo association.  Its monthly rip off fees (called taxes) are, in significant part, extracted via the sneaky tax known as inflation.  Right now very few of us have taken the pains of storing our wealth in gold and silver.  And even with that, our monthly spending cash has to stay in dollars because the conversion between dollars and gold is expensive and time consuming.  But when the metallic banks come these concerns will evaporate and hoards of people will keep all of their money in gold and silver backed accounts.  As this happens, those who are too stupid to figure it out are still holding dollars each month.  And all during this time, Bernanke has to keep on printing at the same rate as before.  But instead of all that fraudulent printing being absorbed by the entire population, the debasement is placed on the shoulders of the sheeple that store their money in dollars.  Each day while they are at work, and each night while they are sleeping, the Bernanke printing presses eat away at their wealth as would termites take over a wooden house.

And so now you get it.  The metallic banks will speed the public understanding of the true inflationary aspects of fiat currency.  Those whose savings are metals based will go to sleep with x gold coins on account worth say $100,000.  When they awake they will still have x gold coins but those same gold coins will convert to $100,500.  Even at this slow rate, those who are not in the gold bank will quickly fall behind economically to those that are.

The movement toward the re-monification of gold is very significant.  Mock it at your own peril.  I predicted that it would happen years ago not because I had a gut feeling but because the evidence showed that it was the only thing that the people would eventually accept as money after the global debt Ponzi had gone bust.  Well, we are seeing a slo-mo collapse of the debt Ponzi right now.  Nothing is fixed and with every kick of the can down the economic street the problem actually gets bigger and the eventual collapse becomes more extreme. 

Keep your eye on the state by state legalization of gold and silver as legal tender.  It's a very significant next step in the collapse of the Global Debt Ponzi that was started in 1913 with the creation of the Federal Reserve Bank.