Louisiana’s Historic Opportunity to Become First in Nation with Gold-Backed Currency

By Woody Jenkins, Editor, Central City News – Baton Rouge

 Senate Bill 485 by Sen. Valarie Hodges (R-Livingston) and Rep. Raymond Crews (R-Benton) offers Louisianians an historic opportunity: 

•To safely own and store gold and thereby protect themselves from the ravages of inflation.

•To buy and sell gold very inexpensively.

•To protect Louisiana citizens from paying the capital gains tax if they ultimately sell their gold.

•To allow citizens to access their gold 24 hours a day anywhere in the world and make everyday purchas-

es via a gold-backed debit card.

Legalizing Gold Currency in Louisiana.  The legislation, which is endorsed by State Treasurer John Fleming, M.D., utilizes Art. I, Section 10 of the United States Constitution, which allows the states to issue currency backed by gold or silver.  The Constitution provides that such currency will be legal tender, which means it will be accepted for payment of all debts, public and private.

If given permission by the legislature, Treasurer Fleming intends to issue Louisiana gold-backed currency, making our state the first to take advantage of this extraordinary reservation of powers by the states found in Art. I, Section 10.

Safe Storage of Gold. For at least the past 5,000 years, man has treasured gold and tried to hoard it as a means to protect and preserve his earnings.  But throughout the ages, it has been impossible for the ordinary citizen to safely keep gold.

That problem has now been solved.  A few years ago, the State of Texas authorized construction of the Texas Bullion Depository near Austin.  For a small annual fee, anyone may store his precious metals in the depository.  The depository is under the auspices of the State Comptroller of Texas, who inspects it regularly. 

The gold on deposit at the Texas Bullion Depository is fully insured by Lloyd’s of London.  The gold there is the property of the person who deposited it.  It does not belong to the State of Texas, and it cannot be lent out.

SB 485 will allow the State Treasurer of Louisiana to contract with the State of Texas to store gold at their depository.

Legal Tender Makes Capital Gains Tax-Free.  Because gold-backed currency issued by the State of Louisiana will be “legal tender” many believe it will not be subject to the capital gains tax.  I cannot give tax advice. Ask your attorney or CPA for his opinion.  Generally speaking, the price of gold doesn’t fluctuate.  Rather, currency fluctuates as government increases the money supply.

Since gold is a commodity, if you buy an ounce of gold today for $2,200 and sell it in five years for $10,000, you will pay a capital gains tax on your gain of $7,800.  For most people, their capital gains tax will be 15 percent, or in this case $1,170.  So even though your gold is simply keeping up with inflation, you would pay $1,170 in capital gains tax.

However, according to many, if you are holding Louisiana gold-backed currency,  the same situation should result in no capital gains tax at all because legal tender is not subject to capital gains taxes.

Accessing Your Gold 24 Hours a Day. Under the provisions of SB 485, a person would open an account with the Louisiana Department of Treasury by downloading an app such as Glint from the app store.  You can transfer dollars from your bank account to your Glint account very much as you do with Venmo or a similar service.  Once you have cash in your Glint account, you simply transfer your dollars to gold.  The fee is one-half of one percent.  When you transfer gold to dollars, you again pay one-half of one percent.

Selling gold on the market can be expensive, and you may only get 70 percent of the market price. But the price of buying and selling gold through the Louisiana Treasury is projected to be only one-half of one percent.

With a Glint or similar account, you will be issued a gold-backed debit card, so that you can access your gold 24 hours a day from anywhere in the world.  If you want to receive your gold, you will be able to pick it up or have it shipped to you from the Texas Bullion Depository.  If it you want dollars, you can access your dollars through your debit card.  For a fee of one half of one percent, you gold will be sold for dollars and can be spent like any other funds.  Glint also gives you the option to transfer your gold on deposit to Euros or other currency.

When you transfer gold to your Glint or other account that contracts with the Louisiana Treasury, your gold remains yours. Your gold is always there.  Under SB 485, your gold is automatically deposited to the gold depository and not the state treasury.  Moreover, your gold can never lent out or used by anyone else.  It remains your gold, and does not belong to the State of Louisiana or the State of Texas.

Like any commodity, gold goes up and down against the dollar.  However, gold has a long history of going up relative to the dollar over time. But there are no guarantees.

A deposit of gold through a Glint or other account under contract with the Louisiana State Treasury should not be looked on as an investment.  It is not.  It is not working to produce goods or services.  Rather, it should be viewed as a potential hedge against inflation — a way to preserve and protect some of your earnings from the ravages of inflation.

We know that spending by the federal government is soaring.  Deficits are out of sight.  So chances are the federal government will continue to increase the money supply.  If is does so, gold could be a way to preserve part of your wealth.

If SB 486 passes, anyone will be able to open a gold account from $100 up and store some of their wealth in this precious metal.