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The Sound Money Promotion Act

mckinley hobart sound money buttonOver the last 100 years, Americans have completely lost control of their Constitutional money; to the point where they must pay a tax to essentially make change. Imagine breaking a twenty dollar bill and only getting a ten and a five back, with the other five going to the government. This is the potential problem one encounters when attempting to spend gold or silver money. It’s no accident. The laws are specifically set up to force everyone to use fiat currencies.

In order to restore sound money to the market, there are a couple of laws that need to be changed. One is the repeal of legal tender laws, but perhaps more importantly, is an end to the taxation of gold and silver.  This is precisely what the Sound Money Promotion Act does. Senators Jim DeMint [R-SC], Rand Paul [R-KY], and Mike Lee [R-UT] are the sponsors.

The objective of the current system is to force everyone to store their wealth in dollars, where it can be surreptitiously taxed via inflation. To paraphrase Keynes, not one man in a million will recognize the nature of this game. This enables the government to run enormous deficits and provides a bailout mechanism for the banks whereby their losses and can added to the public debt.

In order to spend gold or silver money, one must first convert them to dollars. If you were coginzant enough not to store your wealth in a depreciating currency, then you are legally required to pay a penalty for that. When you convert gold to dollars, you are not paying a tax on the “gains” in gold, but rather the losses in the dollar that you would have suffered through its debasement. Think about that for a second. It’s a critical point of understanding.

Currently we are all trapped in a global currency war in which every country believes it can solve its problems by debasing its currency the fastest. A difficult game to win for sure, and one that tends to destroy middle classes in the process. More and more people are waking up to this reality every day. They are opting out of paper money as a store of wealth and choosing gold and silver.

I’ve consistently noticed an interesting reaction as people begin to save in precious metals. They start to enjoy the process of saving and accumulating real money. I predict that even after the fiat currency crisis passes, that many will not want to part with their real money. That they will want to continue to store their wealth in gold and silver. And ultimately, the thought will occur to many, “why can’t I just spend my money directly? Why must I first convert it to paper and suffer the losses”?

Right now, most people still don’t know what sound money means, or why it’s so important. As a result, the current version of the Sound Money Protection Act will likely go nowhere. But a critical lesson, as to why gold and silver have been money for thousands of years, will soon be taught again. Perhaps then enough people will understand, and we will have our Constitutional money returned to us.

7 Responses to “The Sound Money Promotion Act”

  1. Bill Haynes

    The Free Competition in Currency Act is of major importance to gold/silver investors as it would eliminate capital gains taxes on the two metals. Presently, both are taxed at the same rate as “collectibles.”

    Not surprisingly, Senator Rand Paul’s father, Ron Paul, introduced H.R. 4248 The Free Competition in Currency Act it 2009, but it did not become law. However, with the problems that have surfaced since 2009, the Senate version may be given serious consideration, and rightfully so.

  2. Tom Hurley

    My collection of one-ounce American gold coins is already money. Each of them says on the back 50 dollars. Why should I have to pay to convert dollars into dollars?

    • Bill Haynes

      American Gold Eagles are legal tender coins. However, the 1-oz coins are only $50 face value. With gold north of $1800, it certainly would not be prudent to use them as legal tender at $50 each.

      • Robert

        I would not mind it one bit if the IRS returned my over-payment in those $50.00 coins.

    • Bill Haynes

      It is my understanding that profits on the sales of gold and silver are taxable at the “collectibles tax rate,” which is 28%. Check with you tax accountant for verification.

  3. bejamin burnankle

    The US Dollar is not a paper investment; it is similar to stocks except that it is backed by the full faith of the American military. The banking lobby who fought for real estate finance deregulation is sitting on trillions in profits. Now this same industry under public pressure for responsibility and accountability will lobby for sustainable interest rates. As interest rates increase money will poor out of gold to buy treasury securities. The banking industry will then profit as never before by lending the money on their books at high rates. The only reason to not believe in the dollar is if you want to bet against the house with the prediction that it will fail. I’ll play the metals but my long money is on the house. America is still too strong to fail.


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