To any of you who care about metal market To any of you who care about metal market and has kept up with my weekly trading and has kept up with my weekly trading posts, you will find posts, you will find The Bullion ReportThe Bullion Report

not strange any more. Information on the not strange any more. Information on the market has been carefully analyzed, market has been carefully analyzed,

collected and shared to help traders and collected and shared to help traders and investors in investors in futures tradingfutures trading platform and platform and

other related ones. This week, we will listen other related ones. This week, we will listen to Gold Bullion Report talk about to Gold Bullion Report talk about

“Challenging the Fed”“Challenging the Fed”

Challenging the FedChallenging the Fed

That gold and silver coins are legal That gold and silver coins are legal tender in the eyes of the government tender in the eyes of the government and are now legal tender in Utah as and are now legal tender in Utah as lawmakers pass legislation to put an lawmakers pass legislation to put an exclamation point on the issue is exclamation point on the issue is redundant action? How about your redundant action? How about your thinking? Maybe it is, but to consider thinking? Maybe it is, but to consider this aspect on a deeper psychological this aspect on a deeper psychological level, the legislation is widely seen as level, the legislation is widely seen as something far greater in scope than something far greater in scope than spending American Eagles for goods or spending American Eagles for goods or services. The action in the Salt Lake services. The action in the Salt Lake state is seen as a potential challenge to state is seen as a potential challenge to the Federal Reserve, and its stance on the Federal Reserve, and its stance on inflation and monetary policies.inflation and monetary policies.

Past performance is not indicative of future results.Past performance is not indicative of future results.

***chart courtesy of Gecko Software***chart courtesy of Gecko Software

Ron Paul has frequently observed Ron Paul has frequently observed for the fact that precious metals for the fact that precious metals have been recognized throughout have been recognized throughout history as a currency satisfying history as a currency satisfying the basic needs of exchange. the basic needs of exchange. Among of the precious metals, Among of the precious metals, gold and silver were the gold and silver were the predominant metals of currency, predominant metals of currency, being portable and pretty difficult being portable and pretty difficult to counterfeit.to counterfeit.

These two metals are easily These two metals are easily recognizable, they tend to cross many recognizable, they tend to cross many national boundaries and they are not national boundaries and they are not tied to a government or other body tied to a government or other body that can manipulate them at a pen that can manipulate them at a pen stroke.stroke.With just a few conditions, the federal With just a few conditions, the federal government actually recognizes gold government actually recognizes gold and silver coins as legal tender. At this and silver coins as legal tender. At this issue, legal tender refers to the issue, legal tender refers to the potential for the coin (or currency) to potential for the coin (or currency) to be offered to settle debts and pay be offered to settle debts and pay taxes. In the history, there was one taxes. In the history, there was one stretch of time that gold bullion and stretch of time that gold bullion and coins were forbidden for non-coins were forbidden for non-numismatic purposes. numismatic purposes.

It is now permissible to privately It is now permissible to privately own them and to use them for own them and to use them for payment. Only United States coins payment. Only United States coins and and currenciescurrencies fall under this fall under this allowance. This applies to Federal allowance. This applies to Federal Reserve notes or other national Reserve notes or other national bank notes, per the United States bank notes, per the United States Coinage Act of 1965. No one is Coinage Act of 1965. No one is required to accept either form of required to accept either form of currency, but they are considered currency, but they are considered valid if offered while foreign coins valid if offered while foreign coins are not.are not.

The tricky parts of the federal The tricky parts of the federal recognition and the new Utah recognition and the new Utah legislation come in identifying the legislation come in identifying the details of silver or gold coins as details of silver or gold coins as legal tender. The caveat for many legal tender. The caveat for many of the US minted coins is that they of the US minted coins is that they are only legal tender for their face are only legal tender for their face value. How can we understand this value. How can we understand this point? You know, that means a coin point? You know, that means a coin that weighs an ounce, but only has that weighs an ounce, but only has a face value of $50 can be legally a face value of $50 can be legally tendered as…..$50. tendered as…..$50.

With the fact that gold trading With the fact that gold trading above $1,400 an ounce, the idea of above $1,400 an ounce, the idea of paying for anything with that coin paying for anything with that coin seems ludicrous. But the suggestion seems ludicrous. But the suggestion is there, the opportunity for Utah to is there, the opportunity for Utah to explore the potential of putting explore the potential of putting assets into gold/silver coins. Several assets into gold/silver coins. Several other states, in fact, proposed some other states, in fact, proposed some kind of radical push towards kind of radical push towards precious metalsprecious metals as payments, as payments, however so far, most efforts have however so far, most efforts have not been voted on.not been voted on.

Unfortunately, coins are Unfortunately, coins are considered as collectibles, so they considered as collectibles, so they are subject to capital gains tax. are subject to capital gains tax. Ron Paul made a statement in the Ron Paul made a statement in the House in 2009 and in part of that House in 2009 and in part of that statement , he lauded the removal statement , he lauded the removal of such taxation, and sales taxes of such taxation, and sales taxes on the same.on the same.

He also shared other point of view He also shared other point of view in other comments, Ron Paul has in other comments, Ron Paul has likened the levy to the idea of likened the levy to the idea of charging sales tax on the charging sales tax on the conversion of quarters into dollars conversion of quarters into dollars at a bank. In his argument this at a bank. In his argument this was especially pointed that the was especially pointed that the devaluing of the dollar resulted in devaluing of the dollar resulted in more taxes on the gold or other more taxes on the gold or other precious metals.precious metals.

That accepting gold or silver as That accepting gold or silver as legal tender is also mired in the legal tender is also mired in the issues of daily price fluctuations. issues of daily price fluctuations. But the big deal to many gold But the big deal to many gold bugs isn’t the infeasibility of bugs isn’t the infeasibility of paying for anything with the coins. paying for anything with the coins. The greater issue appears to be The greater issue appears to be the outright challenge to the the outright challenge to the current monetary policy of the current monetary policy of the Federal Reserve and recent Federal Reserve and recent comments from Ben Bernanke.comments from Ben Bernanke.

To actively seek an alternative to To actively seek an alternative to paper money, specifically Federal paper money, specifically Federal Reserve notes, is seen as a big Reserve notes, is seen as a big billboard against the current billboard against the current devaluation of the dollar with devaluation of the dollar with particularly active stimulus efforts particularly active stimulus efforts and quantitative easing programs.and quantitative easing programs.