Understanding America’s Constitutional Money Movement: The Sound Money Defense League

Understanding America's Constitutional Money Movement: The Sound Money Defense League

The Sound Money Defense League has emerged as a powerful voice in America's monetary reform landscape, advocating for the restoration of gold and silver as constitutional money. Since its founding in 2014, this public policy organization has made significant strides in advancing sound money principles across the United States through state legislation, public education, and advocacy work.

Origins and Foundation

The Sound Money Defense League was established in 2014 as a project of Money Metals Exchange, a national bullion dealer and depository. The organization developed during a period of growing concern about currency debasement, inflation, and questions about the long-term stability of the U.S. dollar.

Drawing from Austrian economic principles and constitutional monetary theory, the League positioned itself as a non-partisan advocate for monetary reform. Its founders, including Executive Director JP Cortez who studied at the Mises Institute, recognized money's outsized impact on societies and economies, motivating them to address the legal and regulatory barriers preventing Americans from effectively using precious metals as money.

The organization identified that significant friction—primarily in the form of taxes and regulations—stood in the way of individuals buying, selling, and using gold and silver. These barriers effectively prevented the constitutional mandate for sound money from being realized in modern America.

What Constitutional Principles Guide the Sound Money Movement?

The Constitutional Foundation for Gold and Silver

The Sound Money Defense League's work is fundamentally rooted in Article 1, Section 10 of the U.S. Constitution, which explicitly states that "no state shall make anything but gold and silver a tender in payment of debts." This constitutional provision reflects the Founding Fathers' deep skepticism toward paper money systems following their experiences with currency devaluation during the Revolutionary War period.

As noted by JP Cortez, "The framers of the constitution coming out of the constitutional convention loudly spoke about the perils of paper money, about how dangerous it is, about how it gives government the power to steal from its people." This historical context provides the legal foundation for the League's advocacy work.

Historical Context of Sound Money

America's monetary history provides essential context for understanding the League's mission. The nation's founders deliberately established a monetary system based on precious metals after witnessing the economic destruction caused by Continental Currency inflation during the Revolutionary War.

Early American leaders viewed gold and silver as essential safeguards against government overreach and currency manipulation. The gradual movement away from this system—culminating in the 1971 decision to completely sever the dollar's link to gold—represents what the League considers a significant departure from constitutional monetary principles.

This shift from sound money to what Cortez calls a "PhD standard" has, according to the League, resulted in precisely what Austrian economists predicted: "exploding deficits, exploding debt, inflation pinching the poorest among us."

How Does the Sound Money Defense League Advance Its Mission?

State-Level Legislative Initiatives

The organization's primary strategy involves working at the state level to pass legislation supporting sound money principles. These efforts include:

1. Eliminating sales taxes on precious metals – Advocating for the removal of state sales taxes on gold and silver purchases, which the League argues creates an unfair tax burden on those seeking to preserve wealth

2. Removing capital gains taxes – Working to exempt precious metals from state capital gains taxes, which they view as double taxation on inflation

3. Reaffirming legal tender status – Supporting legislation that formally recognizes gold and silver as legal tender within states

4. Establishing state gold reserves – Advocating for states to hold physical gold as part of their reserve assets

The League has made remarkable progress, with 44 states now exempting precious metals purchases from sales tax, according to the organization.

The Sound Money Index

One of the League's most influential tools is its annual Sound Money Index that ranks all 50 states based on their policies related to gold and silver. This comprehensive scorecard evaluates states on multiple criteria:

• Sales tax policies on precious metals
• Capital gains tax treatment
• Recognition of gold and silver as constitutional money
• Establishment of physical gold reserves
• Dealer regulations and requirements
• Investment of state funds in precious metals

According to Cortez, "40% of the index comes from taxes" because "taxes are the single greatest impediment to people using gold and silver today as money."

This index serves as both an educational tool and a competitive mechanism encouraging states to improve their sound money policies, with rankings often motivating legislative changes.

What Legislative Victories Has the League Achieved?

Recent State-Level Successes

The Sound Money Defense League has experienced significant legislative momentum in recent years. Some notable achievements include:

• Wyoming's Gold Reserve and Legal Tender Act – Legislation establishing a $10 million physical gold reserve and reaffirming gold and silver as legal tender

• Utah's Gold Holdings – A $180 million appropriation for physical gold stored within the state

• Alabama's Tax Reform – Elimination of capital gains taxes on precious metals

• Sales Tax Exemptions – Contributing to the expansion of sales tax exemptions for precious metals to 44 states nationwide

The 2025 Legislative Landscape

According to the organization, 2025 has been their most successful legislative year to date, with more than 30 states introducing and considering pro-gold and silver legislation. Over a dozen states have signed such legislation into law, demonstrating growing mainstream interest in sound money principles.

Cortez highlights the significance of this shift: "Nearly 75% of the states in this country are actively thinking about how they can reimplement gold and silver. This used to be a niche thing and it's not anymore."

What Federal Initiatives Does the League Support?

Gold Reserve Transparency Act

At the federal level, the Sound Money Defense League supports the Gold Reserve Transparency Act, introduced by Congressman Thomas Massie of Kentucky. This legislation calls for a comprehensive audit of America's gold reserves—something the organization argues has not been properly conducted in decades.

The bill would require:

1. A full physical inventory of U.S. gold reserves
2. Assay testing to verify purity and quality
3. A complete accounting of any encumbrances, leases, or swaps involving the gold
4. Public disclosure of the audit findings

Cortez notes that current "audits" are merely "a schedule of the seals, not an actual audit. They're not going in, opening the box, and confirming that the gold is in fact there. They're looking at the lock on the door and saying, 'That lock is still there. We're good.'"

Challenging Depository Location Requirements

Another federal initiative involves reforming outdated rules that restrict approved gold depositories to within 150 miles of New York City. The League argues this geographic concentration creates unnecessary security risks and limits market development in other regions of the country.

Cortez describes this rule as "antiquated," dating back to "horseback" travel era, noting that this concentration creates "a national security issue" by forcing "the majority of the global reserve asset that is the greatest money of all time to exist only in a tiny corner of the country."

Why Are States Increasingly Interested in Gold and Silver?

Economic Uncertainty and Inflation Concerns

Several factors are driving increased state interest in sound money policies:

• Persistent inflation eroding purchasing power of dollar-denominated assets
• Growing federal deficits and debt raising concerns about long-term fiscal stability
• Geopolitical tensions leading to questions about the dollar's future as the global reserve currency
• Central bank gold buying worldwide signaling a shift in monetary attitudes

These concerns are validated by market performance, with gold prices reaching all-time highs and approaching $3,700 per ounce and silver up approximately 45% year-to-date at the time of Cortez's statements.

State Financial Resilience

States are increasingly viewing gold and silver as tools for financial resilience. By diversifying state holdings beyond dollar-denominated assets, states aim to protect taxpayer funds against inflation and potential financial system disruptions.

The League points to examples like Wyoming and Utah as models for other states considering similar protective measures for their balance sheets, contrasting them with states like Ohio that own "paper gold" (ETFs) rather than physical metal.

What Obstacles Do Sound Money Advocates Face?

Tax and Regulatory Barriers

Despite progress, significant obstacles remain for those seeking to use gold and silver as money:

1. Remaining sales taxes in six states that still tax precious metals purchases
2. Capital gains taxation at both federal and most state levels
3. Dealer harassment laws requiring extensive customer data collection and reporting
4. Lack of payment systems designed to facilitate gold and silver transactions

Some states have what Cortez calls "dealer harassment laws" that require precious metals dealers to collect invasive personal information, including "name, phone, email, height, weight, hair color, glasses, tattoos, scars" and upload this information daily to police databases.

Education Gaps

The League identifies education as a critical challenge, noting that many elected officials have never seriously considered fundamental questions about money's nature and purpose. With nearly 8,000 elected state officials across the United States, most have limited understanding of monetary history or constitutional provisions regarding money.

Political challenges also exist, as evidenced by the example Cortez provides of Kentucky's governor vetoing a sales tax elimination bill, despite the state attorney general ruling the governor lacked constitutional authority to veto revenue bills.

How Does the Sound Money Defense League Engage Citizens?

Grassroots Mobilization

The organization emphasizes grassroots engagement as essential to legislative success. Their approach includes:

1. Email alert systems that notify supporters about relevant legislation in their states
2. Pre-drafted messages making it simple for citizens to contact legislators
3. Committee hearing testimony bringing expert perspectives to legislative discussions
4. Educational resources helping citizens understand monetary policy issues

Cortez emphasizes that grassroots pressure is "a crucial ingredient of all of the policy projects that have passed over the last 12 years," noting that "there is no tool as powerful as a legislator walking into Capitol Hill or walking into their state legislative building and seeing 10-15 emails in their inbox about an issue."

Educational Initiatives

Beyond direct advocacy, the League supports educational efforts including:

• Scholarship programs for students writing about sound money topics
• Research fellowships for advanced studies in monetary policy
• The Sound Money Review – A journal highlighting historical and contemporary writings on gold standards and sound money principles

These initiatives aim to build intellectual foundations for the sound money movement while engaging the next generation of potential advocates.

What Are the Broader Economic Arguments for Sound Money?

Protection Against Inflation

Advocates argue that gold and silver provide essential protection against the erosion of purchasing power caused by inflation. Unlike fiat currencies that can be created without limit, precious metals have natural scarcity that preserves their value over time.

Cortez frames the current monetary situation metaphorically as "the perfect storm," comparing it to the 2000 film where multiple weather systems converged to create unprecedented conditions. In this case, economic factors have aligned to demonstrate gold's continued role as "the cornerstone of the global economy."

Financial System Stability

The Sound Money Defense League contends that a monetary system anchored to precious metals would impose discipline on government spending and debt accumulation, potentially preventing fiscal crises and promoting long-term economic stability.

Cortez argues that the current fiat system enables "bloated and growing bureaucracies to wars of choice all over the world" through unlimited printing power, contrasting with the natural constraints imposed by a gold standard.

Individual Financial Sovereignty

A core philosophical argument for sound money centers on individual financial sovereignty—the ability to hold wealth in a form that is not dependent on government or banking system promises. This aspect has particular appeal during periods of financial uncertainty or institutional distrust.

In Cortez's words, "We're on a sinking Titanic and the government has locked up all the remaining lifeboats. So, we have to unlock those to unlock the power of gold and silver as money."

What Does the Future Hold for the Sound Money Movement?

Growing Mainstream Interest

The dramatic rise in gold record highs and silver market squeeze in recent years has brought increased attention to sound money principles. What was once considered a niche perspective has gained broader acceptance as concerns about inflation, government debt, and financial system stability have grown.

This growing interest is reflected in the significant legislative progress at the state level, with the League reporting 2025 as its most successful year to date.

Technological Innovation

While the League focuses primarily on physical gold and silver, the principles of sound money are also influencing innovation in payment systems and digital assets. The removal of regulatory barriers could potentially unleash new technologies that combine the stability of precious metals with the convenience of modern payment systems.

International Developments

Global de-dollarization trends and central bank gold accumulation suggest a potential shift in the international monetary landscape. The Sound Money Defense League views these developments as validation of their long-standing concerns about fiat currency systems.

Cortez notes that Asian countries are "building out this infrastructure in ways that are unseen here in the United States" and have "so much ownership there on an individual level unlike anything that exists in the western side of the world."

Conclusion: The Path Forward for Sound Money in America

The Sound Money Defense League represents a growing movement to restore constitutional monetary principles in the United States. Through state-level legislation, federal initiatives, and public education, the organization works to remove barriers to using gold and silver as money while promoting their role in preserving wealth and financial stability.

As economic uncertainties persist and precious metals prices reach record highs, the League's advocacy for sound money principles continues to gain traction across the political spectrum. Their state-by-state approach has yielded significant results, with 44 states now exempting precious metals from sales tax and multiple states establishing physical gold reserves.

For those interested in supporting the sound money movement, the League offers multiple engagement pathways through their website, Sound Money Defense League, including email alerts about state-specific legislation, educational resources, and scholarship opportunities for students interested in sound money topics.

Whether their vision of a monetary system anchored to gold and silver will ultimately prevail remains to be seen, but their impact on state legislation and public discourse about money's nature and purpose is already significant. With the current gold market outlook remaining strong, many investors are exploring various gold investment strategies to protect their wealth in these uncertain economic times.

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