Utah legislators want to see the dollar regain its former glory, back to the days when one could literally bank on it being "as good as gold."To make that point, they've turned it around, and made gold as good as cash. Utah became the first state in the country this month to legalize gold and silver coins as currency. The law also will exempt the sale of the coins from state capital gains taxes.
Craig Franco hopes to cash in on it with his Utah Gold and Silver Depository. The idea is simple: Store your gold and silver coins in a vault, and Franco issues a debit-like card to make purchases backed by your holdings. He plans to open for business June 1, likely the first of its kind in the U.S.
"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."
The idea was spawned by Republican state Rep. Brad Galvez, who sponsored the bill largely to serve as a protest against Federal Reserve monetary policy. Galvez says Americans are losing faith in the dollar. If you're mad about government debt, ditch the cash. Spend your gold and silver, he says.
His idea isn't to return to the gold standard, when the dollar was backed by gold instead of government goodwill. Instead, he just wanted to create options for consumers. "We're too far down the road to go back to the gold standard," Galvez said. "This will move us toward an alternative currency."
Legislators in almost a dozen states are considering similar laws. Opponents warn a policy shift nationwide could increase the prospect of inflation and destabilize international markets by removing the government's flexibility to quickly adjust currency prices. In addition, some investment advisers are urging clients to think carefully before investing in gold.