Sound Money and Legislative Efforts: A Comprehensive Guide
The resurgence of sound money principles in American legislative efforts marks a pivotal shift toward restoring constitutional monetary frameworks and economic stability. Driven by organizations like the Sound Money Defense League, over 30 states have enacted policies since 2014 to eliminate taxation on gold and silver, reaffirm constitutional currency mandates, and promote financial sovereignty. Landmark achievements include Wyoming's $10 million gold reserve, Idaho's $240 million tax cut, and Alabama's elimination of capital gains taxes on precious metals. Concurrently, federal initiatives, such as proposed gold audits and remonetization bills, aim to address systemic monetary dysfunction and inflation risks. This report examines the constitutional, economic, and legislative dimensions of sound money and legislative efforts, offering a detailed analysis of state and federal progress, challenges, and future directions.
What is Sound Money and Why Does It Matter?
The Constitutional Foundation of Sound Money
Article 1, Section 10 of the U.S. Constitution explicitly mandates that "no State shall make any Thing but gold and silver Coin a Tender in Payment of Debts," establishing precious metals as the nation's constitutional money. This provision was operationalized through the Coinage Act of 1792, which defined the dollar as 371.25 grains of silver and 24.75 grains of gold, creating a bimetallic standard.
Until 1933, gold circulated freely, and silver remained integral to U.S. currency until the Coinage Act of 1965 eliminated its use in dimes and quarters. Pre-1933 gold coins, such as the $20 Double Eagle, and constitutional silver, including the Morgan dollar, symbolize this monetary heritage, underscoring the legal and historical precedence for sound money.
The Economic Importance of Sound Money
Sound money acts as a restraint on government overreach by limiting unchecked fiat currency expansion, which has eroded the dollar's purchasing power by over 96% since the Federal Reserve's inception in 1913. Central banks, including the Dutch Central Bank, recognize gold as an "anchor of trust" due to its stability amid inflationary pressures.
Unlike fiat systems, gold and silver preserve long-term value, offering individuals gold's role as a hedge against currency devaluation. For example, the annual inflation rate under fiat regimes averages 3.8%, compared to 0.1% during the classical gold standard (1879–1913).
The Sound Money Defense League: Leading the Legislative Fight
Origins and Mission
Founded in 2014, the Sound Money Defense League emerged from collaborations between policy advocates and entities like the Mises Institute, a hub for Austrian economics. Executive Director JP Cortez, influenced by Ron Paul's monetary policies, spearheads efforts to remove fiscal barriers to gold and silver adoption, including sales and capital gains taxes.
The organization's mission aligns with constitutional mandates, aiming to restore "honest money" as a check on government growth.
Legislative Accomplishments
Since 2014, the League has driven 30+ legislative victories, including seven states in 2024 alone. Key milestones include Alabama's 2024 capital gains tax repeal and Kentucky's override of Governor Andy Beshear's veto, enabling retroactive tax exemptions.
In 2025, legislative momentum continues with Tennessee's proposed $65 million gold reserve and Iowa's capital gains tax reforms. Understanding the current gold market analysis is crucial for evaluating these legislative developments.
How Are States Embracing Sound Money?
Wyoming's Gold Reserve Initiative
Wyoming's Senate File 96 (2025) allocates $10 million to a physical gold reserve, enhancing state financial sovereignty. This initiative mirrors trends among central banks, which purchased 1,136 metric tons of gold in 2023—a 152% increase from 2022.
Idaho's Comprehensive Sound Money Reforms
Idaho's 2024 legislation eliminated capital gains taxes on precious metals, coupled with a $240 million tax cut—the largest in state history. By reaffirming gold and silver as legal tender, Idaho aligns with constitutional principles, reducing transactional friction for investors.
Kentucky's Legislative Battle
After Governor Beshear vetoed a 2024 sales tax exemption, Kentucky lawmakers passed a retroactive bill penalizing wrongful taxation, prompting lawsuits against the state. This conflict highlights the political divide over sound money's role in economic policy.
Alabama's Multi-Year Progress
Alabama eliminated capital gains tax on gold and silver in 2024, building on their 2018 removal of sales tax on precious metals. Governor Kay Ivey's reaffirmation of gold and silver as legal tender completed the state's transition to a fully sound money-friendly jurisdiction, eliminating all state-level friction for precious metals transactions.
What States Are Leading the Sound Money Movement?
The Sound Money Index Explained
The Sound Money Index ranks states based on taxation, proactive policies, and gold/silver recognition. Utah, Wyoming, and South Dakota top the 2024 rankings due to zero taxation and state-level bullion depositories.
Conversely, New Mexico and Vermont lag, imposing 6-7% sales taxes on precious metals. The sound money movement gains momentum across more states each year, with more jurisdictions considering legislation.
Top-Ranked Sound Money States
Utah pioneered the modern Legal Tender Act in 2011, establishing a foundation for other states to follow. Wyoming's recent gold reserve initiative has strengthened its position near the top of the rankings, while South Dakota's tax-friendly environment creates an attractive jurisdiction for precious metals owners.
States that have removed both sales and capital gains taxes consistently rank higher, with some establishing state-owned bullion depositories to secure their investments. These top-performing states demonstrate how sound money policies can complement existing fiscal frameworks rather than disrupt them.
Lowest-Ranked Sound Money States
New Mexico, Maine, and Vermont sit at the bottom of the Sound Money Index, characterized by high taxation levels on precious metals transactions. These states continue to impose both sales taxes on purchases and capital gains taxes on eventual sales, creating significant friction for citizens wishing to preserve wealth through sound money.
Many of these lower-ranked states are now reconsidering their positions, with pending legislation aimed at improving their sound money standings in coming years.
What Legislative Efforts Are Currently Underway?
Pending State Legislation (2025)
Tennessee is considering a substantial $65 million investment in physical gold for its state treasury, potentially establishing the largest state-owned gold reserve in modern history. Meanwhile, Iowa legislators are evaluating the elimination of state capital gains tax on precious metals, and Alaska is working toward removing local sales taxes on gold and silver.
These initiatives represent a growing trend of state-level financial sovereignty, with multiple other states advancing similar legislation aimed at reducing or eliminating tax barriers to sound money adoption. The gold market outlook 2025 suggests these efforts may gain further traction.
Federal Legislative Initiatives
At the federal level, Congressman Alex Mooney has introduced legislation to remonetize gold, while Senator Mike Lee has proposed more dramatic reforms targeting the Federal Reserve system itself. Efforts to audit America's gold reserves are gaining momentum across political lines, with support from both traditional fiscal conservatives and newer populist movements.
Upcoming comprehensive gold audit legislation would require a full inventory of gold stored in American vaults, complete assay verification of metal content, thorough accounting of all transactions, and investigation of potential leases or encumbrances that might affect the nation's gold holdings.
Why Is Auditing America's Gold Reserves Important?
Current Audit Inadequacies
The existing Treasury Department audits of America's gold reserves have been criticized as superficial, typically verifying only the integrity of vault seals rather than conducting thorough examinations of the actual metal content. No comprehensive audit following modern assay standards has been conducted for decades, raising legitimate concerns about the status of these critically important national assets.
Questionable accounting practices and lack of transparency have fueled speculation about whether America's gold reserves are fully intact and unencumbered by international agreements or financial arrangements.
Proposed Gold Audit Requirements
A proper gold audit would require a full inventory of all gold stored in American vaults, including Fort Knox, West Point, and the Federal Reserve Bank of New York. Complete assay verification would authenticate both the purity and authenticity of the metal, while a detailed accounting would document all historical transactions involving these reserves.
Proponents advocate for regular ongoing audits conducted at least every five years to maintain transparency and public confidence in the national gold holdings.
How Does Sound Money Benefit Americans?
Protection Against Inflation
Gold and silver have historically maintained their purchasing power despite monetary debasement, providing individuals with a reliable hedge against currency devaluation. As fiat currencies consistently lose value through inflation, precious metals offer a stable alternative that preserves wealth across generations.
This protection allows individuals to effectively "be their own central bank," maintaining financial security independent of government monetary policies that typically favor debt expansion over currency stability. Understanding the strategic role of cash alongside precious metals creates a balanced approach to wealth preservation.
Addressing Monetary Dysfunction
America is experiencing what many observers call a "monetary renaissance," with growing public awareness of longstanding issues in the financial system. As more citizens question the causes of declining purchasing power, sound money provides a constitutional framework for addressing these concerns.
The sound money and legislative efforts counter shifting government narratives about inflation causes by emphasizing the fundamental relationship between money creation and price increases, restoring fact-based discourse to monetary policy discussions.
Creating Financial Sovereignty
By removing barriers to personal financial choice, sound money legislation enables individuals to adopt their own version of a "gold standard" without government interference. This aligns with the global trend of central banks increasing their precious metals holdings, which reached record levels in recent years.
Financial sovereignty through sound money provides protection against potential currency crises, offering individuals an established safe haven during periods of monetary instability or banking system stress. For those looking to diversify, a comprehensive mining stocks guide can complement physical metals holdings.
FAQs About Sound Money
What is the legal status of gold and silver as money in the United States?
The U.S. Constitution explicitly recognizes gold and silver as money in Article 1, Section 10. While federal legal tender laws mandate acceptance of Federal Reserve Notes, states are increasingly reaffirming the legal tender status of gold and silver through legislation.
How many states have eliminated taxes on precious metals?
As of 2025, more than 30 states have enacted some form of tax relief on precious metals, with many completely eliminating both sales and capital gains taxes on gold and silver.
How can I support sound money initiatives in my state?
Contact the Sound Money Defense League to learn about pending legislation in your state. You can also reach out to your state representatives to advocate for removing taxes on precious metals and supporting sound money policies.
Is there evidence that central banks are increasing their gold holdings?
Yes, central banks worldwide have been significantly increasing their gold reserves in recent years, with record purchases reported in 2022 and 2023, indicating growing institutional concern about currency stability.
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