You knew something like this could happen with America’s debt soaring by the minute.
Utah just became the first state in the country to legalize gold and silver coins as legal tender (currency). They are also going to exempt the sale of the coins from state capital gains as well.
It all started when Republican State Rep. Brad Galvez got fed up with the Federal Reserve’s monetary policy. Galvez believes that Americans are losing faith in the dollar. So he says if you’re mad about government debt … ditch your cash and use gold and silver coins instead.
Join the 3.5% of Americans who are truly wealthy and financially secure.
So if Galvez’s dream comes true … then it gives Americans an alternative currency.
But Galvez isn’t alone. North Carolina and Idaho and at least nine other states considering doing what Utah has just done.
Now right now, no merchant is forced to accept these as legal tender for sales in the retail market place. So it could very well be that this is just more of a symbolic move at first that could turn into a very literal move as time progresses.
What do I think of all of this? I think the way the Fed and Treasury have undercut the dollar since the 1980s, that we deserve some alternative that isn’t going to be able to be “watered down.”
The decline of the dollar is pushing down the standard of living for many Americans. It’s one of the reasons why 44 million Americans are on food stamps right now. You see, as the dollar declines, the cost of everyday goods goes up.
So when you go to the grocery store or gas station, you feel the effect of the decline of the dollar even if you never go outside of the country and exchange your dollars for another currency. Therefore, you can “feel the heat” right at home and that’s what is hitting Americans right in their pocket books.
The poor and lower middle class are feeling “the pinch” the worst. But practically everyone is being affected one way or the other.
I believe that as gold continues to go up and the dollar goes down that investors will seek out other alternatives to the dollar.
I believe that will help currencies like the Chinese yuan, Singapore dollar and Aussie dollar over time.
Investors will gravitate towards the yuan because it is in the best position to be the next “world’s reserve currency” or at least one of the main picks in a basket of currencies.
As the power shift continues to flow from the West to the East, I believe that the strong fundamentals of Singapore will cause investors to buy more and more into their dollars.
Since the Aussie dollar tends to track gold prices over time, I believe that investors will pour money into the Aussie dollar and sell U.S. dollars at the same time. That will cause the Aussie dollar to rise over time as well.
Owning the Aussie dollar is like owning gold but getting the benefit of being able to earn daily interest. So that has great appeal to currency investors.
So whether gold and silver coins are ever accepted at Wal-Mart or a Total gas station, you can still see a strong trend away from the U.S. dollar and into other assets that have much stronger fundamentals. Gold is one of those alternatives as are these currencies mentioned above.
Therefore, whatever you do … make sure you are protecting your wealth by having some of your wealth invested in foreign currencies with superior fundamentals to that of the greenback. This way, all of your eggs aren’t just in the “dollar basket.”
About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here
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