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Tuesday, May 24, 2011

A retreat from dollar regime

Utah, a state in USA, has adopted gold  and silver standard as an alternative form of legal tender.
This means, long after the year 1933, Utah residents will be able to shop in gold coins and
Utah becoming the first US state to accept gold and silver coins issued by federal government as legal tender.Georgia and Iowa are other two states which shall follow the suit.
The Utah state has eliminated the state capital gain tax to investors who shall buy gold and silver coins as investment thus giving a boost to investment in gold.
Earlier, gold and silver coins issued by US government, were considered as assets only but now currency status too has been given.
In Utah, citizens shall not be able to exchange gold and silver for goods and services based on the metal value but they can use the face value of the coins.
And that’s the funny thing!
A gold coins face value is far less than the market value,gold coin of denomination of $ 50 has metal value of $1400, and it shall be the height of lunacy if someone uses this gold coin to buy grocery worth $50.
 Why this impractical measure was taken?
It was done in a way to resent federal government's monetary policies and to give tax sops to investors of gold and silver.Us government, having printed money like anything, reduced the purchasing power of dollar.
Proponents of gold system, say this shall lower the risk of fiscal crisis in US, and message goes to the fed government that common man is losing the confidence in the US monetary system.

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