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Texas considers a gold-backed digital currency

by Rachel MillsApril 12, 2023
Gold coins with 1's and 0's

Texas is reportedly considering issuing its own gold-backed digital currency. From GCN –

Legislation proposed in Texas would create a state-issued digital currency issued backed by gold, which residents could then fully redeem in cash or gold.

Identical bills introduced in the Texas House of Representatives and Texas Senate would require the state comptroller to create the currency, which would be backed by gold "so that each unit of the digital currency issued represents a particular fraction of a troy ounce of gold held in trust," according to the bills' text.

The legislation, if passed, would also require the comptroller to create a way for residents to pay for transactions using the digital currency, transfer it to others or redeem it for cash or gold.

How would that work?

A gold-backed digital currency could work by tying the value of the currency to a specific amount of gold. Essentially, the digital currency could be pegged to the price of gold and would be redeemable for physical gold at any time. The amount of gold backing the currency would be determined by the issuer of the currency and would be held in reserve to ensure that the currency is fully backed by gold.

The use of blockchain technology could enable a transparent and secure system for transactions and record-keeping. The digital currency could be issued and traded on a blockchain platform, with each transaction recorded on a distributed ledger that is accessible to all users. This could provide greater transparency and security compared to traditional currencies.

A gold-backed digital currency could provide a stable store of value that is not subject to inflation or currency fluctuations. The value of the currency could be tied to the price of gold, which has historically been a stable and valuable asset. Additionally, a gold-backed digital currency might provide a convenient and secure way for individuals to invest in gold without having to physically store the metal. If it was widely adopted, and the accounting was honest and transparent, it could drive up the demand for (and the price of) gold quite a bit!

Is it constitutional?

The US Constitution mentions gold in Article 1 section 10:

No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts

See also:

This kind of effort would undermine the Federal Reserve's monopoly on currency and is likely to meet resistance, but we will be following the issue closely!

The most fascinating thing about this is that so many people on so many levels are taking defensive postures against what the Federal Reserve has done and might still do to the dollar. It is not just BRICS nations and other central banks – its our own STATES that are nervous.

While digital gold would be an interesting development, there is no substitute for physical gold in your hands. Call us and lock in your price today.

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