Entrepreneur concocts easy way to spend gold and silver in Utah
Last March the Utah state legislature passed a law making gold and silver coins legal tender. In the wake of that decision, a Salt Lake City entrepreneur is proposing a system by which consumers can use those precious metals for everyday purchases.
Franco plans new depository
Craig Franco, CEO of Pacific Rarities, is planning to open the Utah Gold and Silver Depository as early as June 1. His company will allow consumers to deposit their and gold and silver currency and draw on it for purchases, just like using a debit card.
A way to spend precious metals
“With the state of Utah monetizing gold and silver,” Franco said, “the question then became, how do we provide a common vehicle for commerce to transact?”
According to the new Utah law, the sale of gold and silver coins will be exempt from state taxes, which makes the idea very attractive to many. However, the state can’t force businesses to accept them in place of paper currency, hence the market niche Franco is attempting to seize.
A wait-and-see attitude
“Because we’re dealing with something so forward thinking, I expect a wait-and-see attitude,” Franco said. “Once the depository is executed and transactions can occur, then I think people will move into the marketplace.”
Legislators attempt to send message
The bill was proposed by Republican state Rep. Brad Galvez. He intended the bill to be largely symbolic, serving as a protest against Federal Reserve monetary policy. While he says “We’re too far down the road to go back to the gold standard,” Galvez maintains that Americans are losing faith in the dollar and that “this will move us toward an alternative currency.”
Economist Ralph Danker, who helped draft the Utah legislation, said, “making gold and silver coins legal tender sends a strong signal to Congress and the Federal Reserve that their monetary policy is failing. The dollar should be backed by gold and silver, so we have hard money.”
Other states consider following suit
Many other states are now considering bills similar to Utah’s. Earlier this month, a Minnesota Republican lawmaker proposed a bill to set up a special committee exploring the option. Virginia, North Carolina, Idaho and several other states are contemplating similar bills.
The gold standard abandoned
The idea of gold-backed money was set aside during World War I because of the nation’s need to pay for the war effort. During the depression, President Fraklin D. Roosevelt took steps to prohibit gold and silver currency as a measure to prevent hoarding. In 1971, President Nixon abandoned the gold standard altogether.
Critics call new law extreme and backward
Commentators have criticized the Utah bill as libertarian and extreme. Political columnist Dana Milbank said it was a bizarre formula concocted by “tea party chemists.”
“What backs currency is confidence in a government’s ability to pay debt, its government system and its economy,” said Carlos Sanchez, of N.Y’s CPM Group. “We’d be going backward in financial development.”