Forget paper money. Georgia senators want to legalize using gold and silver for everyday purchases.
The Senate passed a bill last week that would set up a system for Georgians to buy gold, store it in a depository, and use a debit card to spend it on items such as fast food or milkshakes.
Senators are selling gold as a hedge against inflation of the U.S. dollar, but skeptics say gold doesn’t necessarily protect hard-earned cash from rising prices.
Sen. Marty Harbin, R-Tyrone, the sponsor of Senate Bill 424, said making gold legal tender will bring “financial freedom” to Georgians.
“It’s really true money, because paper money is currency that we have the faith of the government in it,” Harbin said. “This is hard currency that we can own.”
The bill passed on a bipartisan 29-21 vote Friday and now advances to the House.
Under the legislation, a politically appointed “Bullion Depository Commission” would contract with a private company, such as Brinks, to provide vault and electronic payment systems for gold and silver.
Critics say the idea doesn’t make financial sense.
For Georgians are trying to avoid inflation, investing in gold also comes with risks, said Campbell Harvey, a finance professor at Duke University with expertise in decentralized finance and investment management.
“Gold is as volatile as the stock market. There is no guarantee that it will provide a hedge for inflation in the short term,” Havey said. “What if inflation surges and the price of gold goes down? This is not, in my opinion, the business that a state should engage in.”
Instead of buying gold directly, Georgians could instead purchase it through an exchange-traded fund, which has lower costs and security issues, Harvey said. Gold is near record-high values today, but he said buying at a high point is often an investing mistake.
The bill calls for the costs of gold storage to be paid in the form of storage fees charged to Georgia residents who choose to use it. Harbin said public money wouldn’t be used to run the depository.
Several other states recognize gold as legal tender, including Arkansas, Florida, Missouri, Texas, and Utah.
