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Gold and silver outlook as 23 states move to reclaim precious metals as legal tender

As the international reserve currency for the better part of a century, global trust in the US dollar has been virtually limitless. At any time, in nearly…



As the international reserve currency for the better part of a century, global trust in the US dollar has been virtually limitless.

At any time, in nearly any country, its role as the ultimate safe-haven currency and the universally accepted standard of economic value has been beyond question.

How the dollar became the one to rule them all

At the turn of the twentieth century, when the dollar was coming into its own, it was blessed by limited currency competition.

The sterling of the British Empire had run its course and during the Great War, Europe’s leading powers razed each other’s economic assets to the ground.     

The US on the other hand, had plenty going for it.

It assumed the role of the global export hub with a state-of-the-art manufacturing infrastructure; the mass inflows of physical gold it received bestowed global reverence upon the Federal Reserve; the newly federalized Internal Revenue Service (IRS) enjoyed access to a deep well of taxpayers maintaining robust dollar demand; and the unmatched depth of its bond markets catapulted the greenback to new heights.

In more recent decades, a much darker element has also come to the forefront.

David Graeber, anthropologist and noted author, wrote in his ‘Debt – The first 5,000 years’,

…U.S. military predominance…No other government has ever had anything remotely like this sort of capability. In fact, a case could well be made that it is this very power that holds the entire world monetary system, organized around the dollar, together.

Global shifts

Despite the dollar’s many strengths, no fiat currency has ever truly stood the test of time.

Without exception, reserve fiat currencies have come, conquered, and then been displaced.

Inevitably, political convenience trumps economic stewardship, resulting in the decline of reserve currency status.

Most commonly, excessive issuance leads to accelerated devaluation and inflates away economic value.

Disciplinary mechanisms that maintained the dollar’s strength were disregarded when it was divorced from silver and gold in 1964 and 1971, respectively.

Yet, for over 50 years, a completely free-floating greenback has held sway over global markets.

However, this may now be changing.

In the decade since the GFC, interest rates hit rock bottom and money printing reached eye-watering levels.

This situation was exacerbated during the global pandemic.

Economic activity ground to a halt, while the seemingly unlimited monetary stimulus was coupled with targeted fiscal policies and payroll protections, which fuelled four-decade highs in inflation.

To make matters worse, the weaponization of the dollar through SWIFT and the imposition of reams of sanctions, forced several of its biggest consumers to desperately search for alternative avenues of exchange.

At the global level, de-dollarization has certainly gathered significant momentum.

The countries spearheading these efforts represent a growing share of global GDP, hold sizeable commodity reserves, are united in their desire to side-step the dollar and shield themselves from Fed policy shocks.

China-Brazil trade has switched away from the dollar; Saudi Arabia offered to trade oil in alternative currencies; and accelerated central bank purchases of bullion are paving the way for a less significant role for the greenback.

Moreover, the BRICS summit in August is expected to birth a non-dollar, non-SWIFT payment mechanism that if successful, could play a key role in the monetary landscape of the twenty-first century.

Each of these countries is concerned by the prospect of sanctions either on themselves or on key partners, raging inflation and the deep erosion in US bonds.

The significance of precious metals

Gold and silver have themselves been money for thousands of years and are the most durable forms of money.

They also do not suffer from counterparty risk, ensuring their value is relatively immune to the risks of the global financial markets.

In a bid to relieve themselves from dollar dependence, central banks have continued to buy physical gold or repatriate the yellow metal from foreign vaults at a record pace.

Mike Maloney, precious metals investor and noted author, stated in his excellent series, Hidden Secrets of Money,

…it is the ultimate money because there is nothing else even in the same league. It’s divisible. It’s permanent. It’s a store of value. It’s a unit of account. It’s got everything you want out of money, but it doesn’t go away and it can’t be increased. That is what makes gold the most beautiful money of all. What more can you ask out of a money?

By being a hedge against inflation, precious metals protect against excesses such as unbridled spending by state authorities and outsized deficits.

The trouble at home

While the dollar’s clout appears to be declining overseas, several bills have also been introduced in nearly half of US states to guard against the potential implosion of the greenback.

In a conversation with physical precious metals investor, Ronald Branstetter on his Youtube channel Ron’s Basement, Pat Holland of the Missouri Freedom Initiative, a grassroots organization, noted that state governments have three key concerns in this regard.

First, inflation continues to ravage household budgets and threatens access to essentials such as fuel and food.

Secondly, in July this year, the US government is expected to roll out its Central Bank Digital Currency (CBDC).

Given the programmable nature of this instrument, Robert E. Wright, a Senior Research Fellow at the American Institute for Economic Research warns against excessive centralization of control over purchasing decisions of ordinary citizens.

Wright adds that CBDCs may not qualify as money under the Constitution.

Thirdly, with bonds bleeding over the past two years, an increasing number of states have found their pension funds in dire straits.

Although bond yields have been declining post the SVB crisis, at the time of writing, 10-year yields are up by 64.81 bps in the past 12 months, and approximately 2.7% higher since April 2020.

In this environment, states are being forced to liquidate ever larger amounts of their holdings to cover obligations, while liabilities continue to mount at an alarming rate.

As a result, pension funds are seeing material losses in capital, a decline in income on the sale of bonds, increased credit risks and higher chances of regulatory intervention.

In 2022, according to Equable, an organization dedicated to retirement security, only 7 states and Washington DC had a funding ratio of 1.0 or over for their public pension schemes.

Source: Equable (2022)

To boot, the sudden fragility of the banks and the risk of systemic escalation is driving greater urgency among the states to hedge their exposure to the dollar.

More concerningly, with dollar demand slowing globally, and if the BRICS+ are successful in their endeavour, the excess currency that has been circulating overseas is likely to make its way back to the USA.

Interested readers can access articles at the highlighted links discussing the views of well-known analysts such as Peter Schiff and Andy Schectman who expect that the influx of such a volume of currency could spark a resurgence in inflation.

What are states doing to protect themselves?

With the alarming rise in the risk of dollar-denominated debt and the potential return of much higher inflation, individual states are now taking steps to shield themselves against a future featuring a dwindling dollar.

The truth is that fiat currencies depend on the credibility of the issuer, and their robustness is a function of place and time.

Once this credibility inevitability begins to decline, the currency loses its lustre.

Unlike fiat currencies, the value of gold and silver has never been extinguished, and in times of turmoil, such as during currency transitions, they tend to preserve their value far more effectively than other financial instruments.

Today, grassroots organizations and sitting politicians are drawing upon Constitutional expert Professor William Greene’s 2010 boilerplate draft of the ‘Constitutional Tender Act’, to launch a movement to reclaim the right to recognize physical gold and silver as legal tender.

Writing for the Sound Money Defense League, Stefan Gleason, President of Money Metals Exchange, bucketed state legislative efforts into three key categories.

The first step towards mainstreaming recognition as legal tender is to eliminate sales tax from precious metals, which is now the case in 42 states.

This is crucial because it eliminates needless transaction costs and unnecessary frictions which can hamper freedom of exchange.

Moreover, sales or capital gains tax implies that gold or silver is a commodity and not money.

Secondly, states are looking to establish depositories or precious metals reserves to act as a hedge against runaway inflation and to boost pension funds.

Thirdly, newly introduced bills are arguing for the removal of income tax on the sale of gold or silver.

The legitimacy of such efforts would flow from Section 10 of the U.S. Constitution which notes,  

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

This may sound like a radical idea, but as mentioned earlier, dollars were backed by silver and gold till not very long ago, and states are focusing on simply reinstating this recognition.

In a widespread movement, local grassroots organizations and state lawmakers have introduced bills to initiate this process in at least 23 states, with legislators of at least 10 states introducing their version of the bill in 2023 alone, including Montana, Missouri, Kansas, Oregon, Kentucky and Wisconsin.

A case study of Missouri’s SB-100

Holland is one of the leading figures advocating for the SB-100, or Missouri’s bill, which was introduced by Sen. William Eigel (R) to give citizens the right to use gold and silver as legal tender.

In his opinion, the foremost concern for state legislators is the pressure placed on public pensions that are threatened by unfunded liabilities.

The bill is currently assigned to the executive session of the House’s Special Committee on Governmental Accountability and will be discussed on the 12th of April.

Interestingly, Missouri is home to two regional Federal Reserve Banks, i.e. St. Louis and Kansas City.

The key pillars of the bill are listed below.

  1. The state should recognize gold and silver as money, both of which can be used for the purchase or repayment of debt.
  2. Precious metals shall be valued by the state at spot plus a market premium.
  3. All taxes should be eliminated on the sale of precious metals.
  4. The treasury must be willing to accept payment of state taxes in gold and silver.
  5. The treasury must maintain a minimum of 1% of operational reserves in precious metals in a special reserve or depository.
  6. Following Roosevelt’s confiscation of gold during the Great Depression, the bill also prohibits any state agency from seizing physical gold holdings.
  7. Lastly, the bill seeks to prevent the imposition of digital currency as a compulsory form of transaction. The supporters of the bill prefer to maintain optionality for the consumer.

In light of the erosion of the dollar, controversial Fed policies and higher-for-longer inflation, Holland remarked,

 …this is literally a defence mechanism that is afforded to us by the US Constitution.

To maximize chances of passage, the bill steers clear of challenging the dollar or commenting on the domain of the Federal Reserve.

The bill also allows for maximum flexibility on part of the treasury.

For instance, authorities would have a wide variety of models to choose from when establishing infrastructure and mechanisms to implement the bill (if it passes), including the use of standard gold and silver coinage, widespread rollout of digital meters to assess weight, acceptance of increasingly popular goldbacks, or partnering with private bullion banks and third parties that can offer accounts denominated in gold and silver.

If successful, the bill would eventually offer an avenue for sound money transactions to preserve purchasing power of individuals and businesses in the event of severe budgetary imbalances, excessive money printing at the Federal level or unbridled spending by state authorities.

Crucially, the acceptance of precious metals by the state government, coupled with advances in technology such as gold-backed credit and debit cards could mainstream the exchange of metal ownership as a basis for transactions.

States with active legislative processes

US states are wary of the possibility of the loss of the dollar’s reserve currency status and the effect this may have on pension systems.

The rout in treasuries, risk-free instruments that form the bedrock of the global economic system, and the prospect of higher inflation have fuelled urgency across legislatures.

In a rare show of unity, several legislators have independently filed such bills to at least start the process of recognition of precious metals as legal tender.

In some cases, these have been met with virtually no opposition, such as in Tennessee where the House voted 98-0 in favour.  

As of April 3rd 2023, the following states have pending bills that are on the pathway to recognizing gold and silver as legal tender.

WisconsinTennesseeIowaMississippiWest Virginia
MinnesotaVermontAlaskaSouth CarolinaIdaho
ArkansasMaineNew JerseyArizonaTexas
Source: Ron’s Basement; Tenth Amendment Center

According to the Tenth Amendment Center, Utah Legal Tender Act (2011) and Wyoming Legal Tender Act (2018) already recognize gold and silver as legal tender.

Legislators from Wyoming attempted to amend and strengthen the existing act but this failed in the House in March 2023.

Oklahoma also eliminated the tax on sales of precious metals in 2014, categorizing it as legal tender.

In 2023, the state moved to mandate the establishment of a state-backed gold depository in the offices of the treasury via SB816, introduced by Sen. Nathan Dahm (R).

A new source of demand

For gold investors, provisions that would mandate minimum precious metals holdings in the state treasury could significantly boost demand for physical metals.

For instance, Ron’s Basement estimates that Missouri alone would need to purchase $9 million worth of bullion to meet the 1% criteria laid out in the bill.

With drives to establish state-backed precious metal depositories throughout the country, this could spur fresh momentum in the bull market for gold and silver.  

For states, this could also bring in revenues by providing state-protected vault services and allocated accounts for a fee, particularly to wealthy individuals.

However, as always, the devil is in the details.

If these bills were to become law and drive genuine demand, they would have to be passed with an emphasis on physical holdings, and restrict dilution into paper gold.

Interested readers can find more information on the dynamics between physical gold, physical silver and their paper variants in the highlighted links.  

Secondly, it is unclear if the mandated quantum of gold would be readily available, and severe shortages may end up forcing precious metals back towards investment status, rather than as tools for purchase as intended by these bills.

One thing is certain. The dollar is beginning to see challenges both abroad and at home.

The post Gold and silver outlook as 23 states move to reclaim precious metals as legal tender appeared first on Invezz.

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Von Der Leyen Speech Suggests Russia Dropped Nuke On Hiroshima 

Von Der Leyen Speech Suggests Russia Dropped Nuke On Hiroshima 

Von der Leyen just said what?…

This past Wednesday, President of the European…



Von Der Leyen Speech Suggests Russia Dropped Nuke On Hiroshima 

Von der Leyen just said what?...

This past Wednesday, President of the European Commission Ursula von der Leyen delivered a speech before the 2023 Atlantic Council Awards in New York, where she sounded the alarm over the specter of nuclear war centered on the Russia-Ukraine conflict. But while invoking remembrance of the some 78,000 civilians killed instantly by the atomic bomb dropped on Hiroshima at the end of WWII, she said her warning comes "especially at a time when Russia threatens to use nuclear weapons once again". She  actually framed the atomic atrocity in a way that made it sound like the Russians did it. Watch:

There was not one single acknowledgement in Von der Leyen's speech that it was in fact the United States which incinerated and maimed hundreds of thousands when it dropped no less that two atomic bombs on Japanese cities.

Here were her precise words, according to an Atlantic Council transcript...

You, dear Prime Minister, showed me the meaning of this proverb during the G7 summit in Japan last year. You brought us to your hometown of Hiroshima, the place where you have your roots and which has deeply shaped your life and leadership. Many of your relatives lost their life when the atomic bomb razed Hiroshima to the ground. You have grown up with the stories of the survivors. And you wanted us to listen to the same stories, to face the past, and learn something about the future.

It was a sobering start to the G7, and one that I will not forget, especially at a time when Russia threatens to use nuclear weapons once again. It is heinous. It is dangerous. And in the shadow of Hiroshima, it is unforgivable

The above video of that segment of the speech gives a better idea of the subtle way she closely associated in her rhetoric the words "once again" with the phrase "shadow of Hiroshima" while focusing on what Russia is doing, to make it sound like it was Moscow behind the past atrocities.

Via dpa

Russian media not only picked up on the woefully misleading comments, but the Kremlin issued a formal rebuke of Von der Leyen's speech as well:

In response to von der Leynen's remarks, Russian Foreign Ministry spokeswoman Maria Zakharova accused the European Commission president of making "no mention whatsoever of the US and its executioners who dropped the bombs on populated Japanese cities."

Zakharova responded on social media, arguing that von der Leyen's assertions on Moscow's supposed intentions to employ nuclear weapons "is despicable and dangerous" and "lies."

Some Russian embassies in various parts of the globe also highlighted the speech on social media, denouncing the "empire of lies" and those Western leaders issuing 'shameful' propaganda and historical revisionism.

Tyler Durden Sun, 09/24/2023 - 13:15

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Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Via Middle East Eye,

Saudi Arabia has sentenced a secondary schoolgirl…



Saudi Arabia Sentences Schoolgirl To 18 Years In Prison Over Tweets

Via Middle East Eye,

Saudi Arabia has sentenced a secondary schoolgirl to 18 years in jail and a travel ban for posting tweets in support of political prisoners, according to a rights group.

On Friday, ALQST rights group, which documents human rights abuses in Saudi Arabia, revealed that the Saudi Specialised Criminal Court handed out the sentence in August to 18-year-old Manal al-Gafiri, who was only 17 at the time of her arrest.

Via Reuters

The Saudi judiciary, under the de facto rule of Crown Prince Mohammed bin Salman, has issued several extreme prison sentences over cyber activism and the use of social media for criticising the government.

They include the recent death penalty against Mohammed al-Ghamdi, a retired teacher, for comments made on Twitter and YouTube, and the 34-year sentence of Leeds University doctoral candidate Salma al-Shehab over tweets last year.

The crown prince confirmed Ghamdi's sentence during a wide-ranging interview with Fox News on Wednesday. He blamed it on "bad laws" that he cannot change

"We are not happy with that. We are ashamed of that. But [under] the jury system, you have to follow the laws, and I cannot tell a judge [to] do that and ignore the law, because... that's against the rule of law," he said.

Saudi human rights defenders and lawyers, however, disputed Mohammed bin Salman's allegations and said the crackdown on social media users is correlated with his ascent to power and the introduction of new judicial bodies that have since overseen a crackdown on his critics. 

"He is able, with one word or the stroke of a pen, in seconds, to change the laws if he wants," Taha al-Hajji, a Saudi lawyer and legal consultant with the European Saudi Organisation for Human Rights, told Middle East Eye this week.

According to Joey Shea, Saudi Arabia researcher at Human Rights Watch, Ghamdi was sentenced under a counterterrorism law passed in 2017, shortly after Mohammed bin Salman became crown prince. The law has been criticised for its broad definition of terrorism.

Similarly, two new bodies - the Presidency of State Security and the Public Prosecution Office - were established by royal decrees in the same year.

Rights groups have said that the 2017 overhaul of the kingdom's security apparatus has significantly enabled the repression of Saudi opposition voices, including those of women rights defenders and opposition activists. 

"These violations are new under MBS, and it's ridiculous that he is blaming this on the prosecution when he and senior Saudi authorities wield so much power over the prosecution services and the political apparatus more broadly," Shea said, using a common term for the prince.

Tyler Durden Sun, 09/24/2023 - 11:30

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Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Authored by Mike Shedlock via,

In a symbolic, photo-op…



Biden To Join UAW Picket Line As Strike Expands, Good Luck Getting Repairs

Authored by Mike Shedlock via,

In a symbolic, photo-op gesture to win union votes, Biden will head to Michigan for a token visit.

Biden to Walk the Picket Line

Taking Sides

CNN had some Interesting comments on Biden Talking Sides.

Jeremi Suri, a presidential historian and professor at University of Texas at Austin, said he doesn’t believe any president has ever visited a picket line during a strike.

Presidents, including Biden, have previously declined to wade into union disputes to avoid the perception of taking sides on issues where the negotiating parties are often engaged in litigation.

On September 15, the day the strike started, Biden said that the automakers “should go further to ensure record corporate profits mean record contracts for the UAW.”

Some Democratic politicians have been urging Biden to do more. California Rep. Ro Khanna on Monday told CNN’s Vanessa Yurkevich that Biden and other Democrats should join him on the picket line.

“I’d love to see the president out here,” he said, arguing the Democratic Party needs to demonstrate it’s “the party of the working class.”

UAW Announces New Strike Locations

As the strike enters a second week, UAW Announces New Strike Locations

UAW President Shawn Fain called for union members to strike at noon ET Friday at 38 General Motors and Stellantis facilities across 20 states. He said the strike call covers all of GM and Stellantis’ parts distribution facilities.

The strike call notably excludes Ford, the third member of Detroit’s Big Three, suggesting the UAW is more satisfied with the progress it has made on a new contract with that company.

General Motors plants being told to strike are in Pontiac, Belleville, Ypsilanti, Burton, Swartz Creek and Lansing, Michigan; West Chester, Ohio; Aurora, Colorado; Hudson, Wisconsin; Bolingbrook, Illinois; Reno, Nevada; Rancho Cucamonga, California; Roanoke, Texas; Martinsburg, West Virginia; Brandon, Mississippi; Charlotte, North Carolina; Memphis, Tennessee; and Lang Horne, Pennsylvania.

The Stellantis facilities going on strike are in Marysville, Center Line, Warren, Auburn Hills, Romulus and Streetsboro, Michigan; Milwaukee, Wisconsin; Plymouth, Minnesota; Commerce City, Colorado; Naperville, Illinois; Ontario, California; Beaverton, Oregon; Morrow, Georgia; Winchester, Virginia; Carrollton, Texas; Tappan, New York; and Mansfield, Massachusetts.

Contract Negotiations Are Not Close

Good Luck Getting Repairs

Party of the Working Cass, Really?

Let’s discuss the nonsensical notion that Democrats are the party of the “working class”.

Unnecessary stimulus, reckless expansion of social services, student debt cancellation, eviction moratoriums, earned income credits, immigration policy, and forcing higher prices for all, to benefit the few, are geared towards the “unworking class”.

On top of it, Biden wants to take away your gas stove, end charter schools to protect incompetent union teachers, and force you into an EV that you do not want and for which infrastructure is not in place.

All of this increases inflation across the board as do sanctions and clean energy madness.

Exploring the Working Class Idea

If you don’t work and have no income, Biden may make your healthcare cheaper. If you do work, he seeks to take your healthcare options away.

If you want to pay higher prices for cars, give up your gas stove, be forced into an EV, subsidize wind energy then pay more for electricity on top of it, you have a clear choice. If you support those efforts, by all means, please join him on the picket line for a token photo-op (not that you will be able to get within miles for the staged charade).

But if you can think at all, you understand Biden does not support the working class, he supports the unworking class.

Tyler Durden Sun, 09/24/2023 - 10:30

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