Critics of gold frequently point out that it’s not used directly as a medium of exchange much, if at all anymore.
That’s one of the main traits of money, along with store of value and unit of account.
But today, Texas just announced that it will now allow Texans to use gold and silver to engage in commerce.
Newsweek reports:
“The decision by Texas lawmakers to recognize gold and silver as functional money marks a significant experiment in alternative currency in the United States. For decades, the U.S. has operated on fiat currency, and while federal law already recognizes U.S. gold and silver coins as legal tender, their actual commercial use has been rare and logistically challenging.”
The irony of calling gold an “alternative currency” is pretty rich, considering that gold has a 5,000 year history as money, while the US dollar has only been a wholly unbacked fiat currency since 1971. The Lindy Effect observes that the future existence of technology and phenomena will last about as long as they’ve already existed. Paper money systems rarely last longer than a century. Far from being an “alternative,” gold has outlasted dozens of paper currencies.
Texans will be able to use digital payment systems like credit/debit cards to spend gold and silver holdings held in state vaults. Another big critique of gold is that it’s inconvenient – but as Texas is proving, it’s not very difficult to tether precious metals to existing digital technology. All you really need is sufficient auditing for the vaults, and to allow people to access their metals if they choose.
It’s not commonly known, but the Constitution actually ONLY allows states to use gold and silver as legal tender.
Article 1, Section 10 of the Constitution says that no American state can "make any Thing but gold and silver Coin a Tender in Payment of Debts."
There are already 10 other states that have similar laws recognizing gold as legal tender.
Most of these states have made gold legal tender since 2013.
Texas is one of the largest states in the union – only California has more people.
This move from Texas is huge – and could force other states to legalize gold and silver as money – which can only be bullish for these precious metals. Think about it this way: all else being equal, you would probably prefer to live somewhere with legal gold money. It doesn’t cost Texas (or any other state) very much money to legalize gold as money…
Trump’s “Big Beautiful Bill” passed the Senate.
That means the US is on track for $60 trillion in debt by 2035 – by the government’s own calculation. Gold is already up more than 50% since 2024. What do you think will happen as purchasing power continues to disappear?
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People are fleeing high-cost, high regulation, low freedom areas like California and New York for these kinds of reasons.
And it’s not just the US that’s getting in on this trend.
As I mentioned recently, the BRICS nations are meeting this week to discuss the potential for issuing a partially gold backed currency of their own.
People are waking up to gold… and even though the bull market in the metal seems stalled, our gold stocks are well undervalued at $2,000 gold, let alone $3,000+ gold.
The future is looking bright.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio