From tax reform to gold reserves: states lead the charge for sound money

The U.S. dollar has been in a steep decline since the start of the year and is currently trading near multi-year lows. However, the greenback’s losses are just part of a broader long-term trend that is generating new political support for sound money policies and a system backed by tangible assets like gold or silver.

In an interview with Kitco News, Jp Cortez, executive director of the Sound Money Defense League, said that so far this year, 10 states have enacted sound money legislation, and another 20 states are currently debating similar laws.

This groundswell of political support comes as most states have removed sales taxes on the purchase of gold and silver. Vermont and New Mexico are considering legislation that would end sales taxes on gold and silver bullion. Only Maine and Hawaii still charge sales tax on physical precious metals.

Cortez said growing support for recognizing gold and silver as monetary metals is not surprising, given how the U.S. dollar’s purchasing power has eroded over the years. According to data from the St. Louis Federal Reserve, the U.S. dollar’s purchasing power has declined by nearly 27% in the last 10 years. However, the trend goes back much further, beginning in earnest in 1933.

While currency debasement is nothing new, Cortez said political sentiment has reached a tipping point as consumers struggle to cover basic costs.

He added that as government debt continues to rise, more U.S. states are turning to gold as a way of expressing their autonomy and protecting their finances from the federal government’s currency devaluation. The de-dollarization trend, he noted, is not just international—it is happening domestically.

“The United States themselves are passing legislation to de-dollarize and to reduce their exposure to the Federal Reserve note in favor of physical gold holdings,” he said.

Although most states are still in the early stages of implementing sound money policies—primarily by removing sales tax on gold and silver bullion—Cortez noted that some have passed more concrete measures, while one state completely missed the boat.

This past year, the Sound Money Defense League used Idaho as a cautionary tale for state politicians. In 2024, the state legislature passed a bill that would have allowed the Idaho State Treasurer to allocate some of the state’s funds into physical gold and silver. While the bill passed the State Senate with overwhelming support, it was vetoed by Governor Brad Little.

Since the veto, gold prices have rallied 42%, while the U.S. Dollar Index has fallen 5%.

On the other hand, Utah was one of the first states to embrace gold, passing legislation that allowed the State Treasurer to invest up to 10% of the state’s rainy day fund in gold. Cortez said the fund is now valued at $180 million.

Earlier this year, Wyoming enacted legislation allowing the state to hold $10 million worth of physical gold and silver in its investment portfolio.

“States are looking at their balance sheets and saying, ‘We have way too much exposure to dollar-denominated debt, much of which has real negative rates of return because of inflation. Maybe we need to think about assets that not only have had good returns, like gold and silver, but also carry no counterparty risk,’” he said.

While the patchwork of legislation at the state level has developed slowly, Cortez said the incremental approach has allowed voters and politicians time to adjust and recognize the value of holding monetary assets other than U.S. Treasuries and the dollar. He added that simply removing sales tax on gold and silver bullion has sparked new awareness among voters.

“Before the laws started to change, governments charged you when you bought the metal, charged you again when you sold it, and then the federal government taxed you as well. So, in some cases, gold and silver were subject to triple taxation. That kind of friction makes it impossible for individuals to re-adopt their own gold standard and return to a system of honest money,” he said. “States can remove this friction in the form of taxes, and more than anything else, that’s what will allow a true market for money to develop.”

While the Sound Money Defense League—supported by Money Metals Exchange, a U.S.-based online precious metals dealer and depository—advocates for gold and silver to be recognized as currencies, Cortez said the goal is not to create assets that compete with the U.S. dollar.

Instead, he emphasized that giving gold and silver legal currency status brings accountability to the politicians who continue deficit spending. Unlike fiat currencies, gold and silver can’t be easily debased.

“By giving people legitimate options and alternatives to the U.S. dollar, we might find that currency holders prefer money that holds its value, is politically neutral, and isn’t weaponized to fight wars around the world,” he said.

Although sound money legislation has primarily been backed by conservative politicians, Cortez noted the issue has become bipartisan, as all Americans are affected by currency depreciation.

“In New Jersey earlier this year, with its deep-blue legislature and one of the highest tax burdens in the country, more than 150 elected legislators voted unanimously—without a single ‘no’ vote—to end the sales tax on gold and silver,” he said.

As the Sound Money Defense League continues to grow grassroots support at the state level, Cortez has his sights set on a much bigger target: Washington. He said the federal government must begin enacting sound money policies to reassert the U.S. dollar’s role as the world’s reserve currency.

He added that Western economies—led by the U.S.—have been lulled into an era of deficit spending, while emerging market central banks, led by China, have quietly been stockpiling gold. These banks have purchased 1,000 tonnes of gold annually for the past three years, and it is projected they will add another 1,000 tonnes to their reserves this year.

“The toothpaste is out of the tube at this point, and confidence in the U.S. dollar as the global reserve currency is waning. But there are still steps the United States could take to restore some confidence in the dollar and ease fears in the global economy,” he said.

The most significant step Washington could take, he said, would be to assure the world that it continues to hold the largest gold stockpile.

Last month, with the help of the Sound Money Defense League, four members of Congress introduced a bill to initiate the first comprehensive audit of America’s gold reserves in decades.

The Gold Reserve Transparency Act (H.R. 3795)—sponsored by Reps. Thomas Massie (R-KY), Troy Nehls (R-TX), Addison McDowell (R-NC), and Warren Davidson (R-OH)—would mandate a full assay, inventory, and audit of all U.S. gold holdings. It also calls for complete disclosure of all transactions involving U.S. gold, including purchases, sales, loans, pledges, leases, swaps, and other encumbrances dating back 50 years.

“There’s a reason places like China, India, and Russia have been stockpiling gold at breakneck speed. This reserve asset matters,” Cortez said. “And frankly, this gold is Americans’ gold. It belongs to the taxpayers, and we should know what has been done with it.”