There’s good news for currency purists in Utah. If a shopper is so inclined, she could use gold and silver coins to make purchases. Technically, that has always been the case, but now there is a law on the books that makes it clear. There is a slight problem with this idea, however. The legal value of a coin is the face value, the amount that is listed on the coin through the minting process. The commercial value is not based on the coin’s intrinsic value. In other words, you may have paid $1,000 or more for an ounce of gold in coin form, but to a retailer, it’s only worth $50.
The true purpose of this law is to establish silver and gold coins or bullion as currency rather than an investment. With this in place, investors won’t owe state taxes for investment gains or sales taxes when they sell, but they will still owe federal taxes. Bullion is generally held for investment rather than transactional purposes, so until now, the capital gains tax would apply when gold and silver are exchanged for cash or other investments.
The secondary purpose of this law is to flaunt the state’s power in the face of the Federal Reserve. The Federal Reserve has effected the move away from using gold and silver as currency. Some influential people throughout the country are calling for abolishment of the Federal Reserve system and a return to a gold-based currency, but it’s unlikely such a drastic shift will take place.
Don’t start breaking your bullion out the vault for use at the grocery store, but with prices at historically high levels, it might be a good time to consider selling. This isn’t investment advice, though.
Updated October 9, 2016 and originally published March 30, 2011.