Anyone Have Experience Or Interest In Gold Backs?

The legal document on their website is their own letter to the Utah Tax Commission. It is not a ruling from the Utah Tax Commission or any federal agency.

The important part of their legal document is this: I serve as general counsel for both the UPMA (UPMA) as well as Goldback Inc. (Goldback), distributor of the GoldbackTM as a privately issued, Utah local currency.

Goldbacks are privately issued scrip. They are sold at a premium over their gold value. The only people guaranteed to make money on this scheme are the people who came up with it.

I was thinking the same thing, The NORFED Liberty Dollar, silver backed private volunteer barter currency (PVBC). http://goccf.com/t/348848

Thank you Sap for your very valid comments. Very helpful!

I think it all boils down to each State allowing them to be legal tender. Utah for example has approved for gold and silver to be legal tender in their State - as best I can tell. Also, Louisiana and Texas.

I misspoke with the term "Authorized" by the Feds. Oopsie! Sorry for the confusion. No, it doesn't seem that they've objected - yet.

I picked up 2 Wyoming gold backs for hubby for Christmas. I just thought they would be interesting.

Thanks again!

States cannot unilaterally declare "gold and silver", in any form whatsoever, to be legal tender. Section 10 of the US Constitution explicitly forbids states from declaring "any Thing but gold and silver Coin a Tender in Payment of Debts"; the same section also forbids states from "coining money". So, a state cannot declare bananas, or cigarettes, or any other commodity to be legal tender - and "gold" and "silver" are just commodities, unless they are in the form of "coins".

So, which "coins" might a state be allowed to declare to be legal tender? This goes back to the definition of "coin". And to me, as a numismatist, a "coin" is "a piece of metal or other material, issued by an officially recognized and authorized government, created for use as money and/or with a monetary face value assigned to it".

Bullion rounds are called "rounds" and not "coins", because they are not issued by a government. Hutt River Province coins are not "coins" either, because that government is not internationally recognized as a "real country" and thus has no legal authority to issue coins. Utah has no power to unilaterally declare these things to be "coins", since that label can only be assigned by a government granted the authority to do so, which states do not have. And state governments cannot create their own bullion rounds and then later declare them to be coins, as Section 10 forbids them from "coining money".

Nor can Utah reassign legal tender values to gold and silver US-issued coins, by declaring pre-1965 silver and pre-1933 gold to be legal tender for some other face value than what is depicted on the coins themselves, because Section 8 of the Constitution grants the US government sole rights to "coin Money" and "regulate the Value thereof", so a state government cannot over-rule the US government in declaring, say, a silver quarter as being worth more than a quarter. The US government would have to renounce the legal tender status of silver quarters before Utah could adopt them.

Thus, to my interpretation, the only possible "coins" that Section 10 can be applied to, in terms of states declaring them to be legal tender, are foreign coins; such objects are indeed issued as "money" by a legitimately authorized and recognized government, and so fall under the definition of "coin". And by the Constitution, those coins have to be gold or silver, which in this day and age restricts the application of Section 10 to bullion coins. So, Utah can declare sovereigns, krugerrands, onzas, maple leafs, kookaburras and such like to be legal tender, but pretty much nothing else. I suppose that obsolete, formerly-circulating foreign gold and silver coins might also be usable, but then comes the question of how the Utah government could get their hands on a meaningfully large supply of foreign obsolete gold or silver coins.

It certainly seems to be foreign coins that the original drafters of the Constitution had in mind, when they wrote Section 10. Which makes sense, given the financial situation of the early US government; using British, French or Spanish colonial coinage as legal tender might be a necessity for certain states, until the US Mint got up and running to full capacity, or maybe poor communication and slow transportation would mean that the more remote states could get supplies of foreign coin more easily than they could obtain US coins. Section 10 allowed for such emergency proclamations.

Maybe the Goldback company should ask the government of Tuvalu, Liberia or some other "flag of convenience" country to "issue" the goldbacks as legal tender... it might help.

Regarding the three states that have "made silver and gold coins legal tender":

Utah and Oklahoma both explicitly state their laws apply to "United States coinage" only - so the state declaring them to be legal tender is kind of redundant when the US government has already declared them to be legal tender. Wyoming is the only one of the three that extends it to include any bullion coin, be it US or foreign. And all three jurisdictions throw the decision, on accepting bullion rounds or other non-coin-forms of bullion as legal tender, back on the Federal courts and Congress.

You'll notice the law for Utah is very vague about what exchange value the "specie" will have; the law for Oklahoma is much the same. Having two different forms of legal tender money without having any frame of reference for an officially accepted conversion rate between the two forms is really rather useless, since the whole point of having "legal tender money" is having a government-mandated consistent standard value for that money. Utah still can't legally declare a silver quarter to be worth more than a quarter, or an ASE to be worth more than the "1 dollar" stamped upon it. People can trade in bullion if they wish, and the tax-free provisions are nice and all, but since one cannot be compelled to recognize anything above face value for a US silver or gold bullion coin, it makes me wonder exactly what difference it makes.

Yes, the people who are likely to go around trying to use silver bullion as legal tender are going to know how to go about doing that. But these laws are for everyone, not just bullion fans. And if you're going to go around re-inventing the wheel, then you really do need to be putting stupid, obvious things like "wheels are round" in the legislation. In the case of bullion legal tender laws, they really should be specifying what source they're going to use for spot bullion values.

Wyoming is constitutionally free to assign whatever face values it wishes to the foreign bullion coins it accepts as legal tender. As far as I can tell by their legislation, they haven't chosen to do so either, just leaving it rather vague and up to the parties concerned in each transaction to figure it out for themselves.



Not quite. Anyone is free go go into any store, anywhere in the country or really anywhere on the planet, and offer to pay for goods with bullion, and the store owner is free to accept or reject that offer. No special legislation is needed to allow such transactions, because they are not forbidden. Bartering and haggling over the price of goods for sale isn't illegal, just like it's not illegal for a store to put up a sign saying "We accept Mexican pesos!" or "$50 and $100 bills will not be accepted!".

Legal tender laws only apply in the rather limited case of a debt being owed. A tax debt, an interest payment on a loan, or even going into one of those restaurants where you pay for the food at the end of the meal, rather than at the start. In these cases, a debt has been incurred, and a "tender" is an offer to pay that debt in a certain form of money. A "legal tender" is a legally recognized form of money that can be used to pay that debt. If you offer to make a legal tender payment but the person or organization to whom you owe the debt refuses to accept your payment (and demands payment in some other form of money), then legally they are in the wrong and you would not be found guilty if they tried to take you to court for defaulting on your debt payment, because you have already made a "legal tender", which they unreasonably rejected.

I also feel there's little real utility for these, though they are certainly shiny and collectible -- and quite artistic.

The scenario that could really sabotage them for use in daily commerce would be a volatile gold market. If a merchant has a drawer full of these and the price of gold drops 15% in a week, he might effectively lose much of his profit margin. There's no bank where he can quickly lay off these goldbacks if the price is dropping. That's going to sour a lot of merchants on accepting them.

Not terrible to look at, but I just see "overpriced Franklin Mint collectable" written all over it. Or even worse, a scam that feeds on an individual's pessimism of the future or disdain for the Federal government. I could see myself grabbing a few as a curiosity, but no reason to ever use them. Come to mind, a collection and study of American pseudo-currencies would be very interesting.