Nevada legalizes bonds in gold and silver

In the U.S. state of Nevada, it has recently been allowed Loans in gold and silver. These so-called gold bonds and silver bonds are quoted in a certain weight of precious metal and can be redeemed in precious metal. In doing so, Nevada follows in the footsteps of other U.S. states such as Utah, Texas, Oklahoma, Arizona and Wyoming, which in recent years legalized the use of precious metals as an alternative means of payment.

It is no coincidence that the gold bonds are launched in Nevada because there are many gold mines operating in this state and many people work in this sector. The legalization of gold and silver as legal tender gives the mines the opportunity to pay debt obligations in the precious metal that they extract from the ground themselves. Also, thanks to the new legislation, gold miners are now allowed to pay their taxes in the form of gold or silver.

Regional and local governments will also be allowed to issue bonds denominated in gold, although it remains to be seen whether they will do so. As long as expenses and income are predominantly denominated in dollars, it is easier to continue to use the dollar as a means of payment.

Gold bonds

Issuing these types of bonds in gold and silver was common at the time of the gold standard, because the value of the dollar at the time was pegged to a certain amount of precious metal. After all, a $20 banknote was worth as much as an American one in those days. Double Eagle Gold Coin from $20. Also, at that time, interest was often calculated as a certain amount of precious metal.

With the ban on the private possession of gold in 1934 and the abandonment of the gold standard in 1971, the precious metal lost its function as legal tender. Since then, that function has been taken over by the (unbacked) dollar, much to the dismay of a group of Americans who believe that the precious metal should still be accepted as money.

In the United States, individual states have a relatively large amount of freedom to introduce bills on these kinds of subjects. As a result, since the outbreak of the credit crisis, laws have already been passed in a handful of states to legalize gold and silver as a means of payment. For more information on these new bonds, please refer to This article by Keith Werner on Monetary Metals.

This contribution was made from Geotrendlines