Why Isn't Gold and Silver Legal Tender?

Years ago, if you wanted to buy something you paid in coins minted from precious metals like gold and silver.

Before the 1970's, United States currency was backed by gold held in Fort Knox by the government - and hence the term "gold standard". Each and every dollar bill was backed by a dollar's worth of gold. This meant, in theory, you should have been able to receive a gold dollars by simply turning in your paper dollar.

However, today the dollar bill in your pockets is no longer primarily backed by physical gold bullion.

Rather it is basically backed by itself on the condition of the stability of the United States government, the productivity of the citizens of the United States and the willingness of foreign countries to use it as a guarantee of their own currency. Hence the term "fiat" currency.

However students of history will tell you this clearly violates the United States Constitution which states, "No state shall coin money, emit bills of credit, make anything but gold and silver coin a tender in payment of debts".

So this poses the hard question: if no State can do this, then how can they allow a currency issued by the federal government to be used by their citizens?

None of the amendments made to this date shows no repeal of that clause was ever made. Which means that it is still valid and is still "the law".

Another strange incident occurred in November 2007 when FBI agents raided and seized the precious metals coins owned and minted by Liberty Dollar.

The company was owned by Bernard von NotHaus and has been minting its own coins for a decade which some individuals and companies have chosen to accept as legal tender for exchange of goods and services.

Over the years, thousands, probably millions, of silver and gold "Liberty Dollars" have been placed into circulation and all are backed by precious metals and a guarantee by Liberty Dollar.

The government claimed that the company's money was too "similar" to "official" U.S. currency even though the "official" U.S. currency isn't based on the Constitutional provision of being gold and silver backed.


Strangely enough, the Constitution doesn't give the federal government the exclusive right to be the sole source of "money". It only gives the government the power to issue money stating, "The Congress shall have Power... To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures".

There are also other bogus charges laid upon Liberty Dollar like "counterfeiting", a bogus charge because Liberty Dollar was not creating copies of the federal currency, and others such as whether or not the endeavor was a sort of ponzi scheme where the coins were sold at more than the value of the gold, silver, etc that backed them.

Can you see the potential problem here? You can't really make liberty dollar coins and pay for the costs of minting the raw metals into coins without charging more than it is worth right? After all, it takes many times the value of an "official" U.S. dollar bill to keep it in circulation than the value of the dollar bill in the first place. So the same problem exists with federal "fiat" money.

As long as people agree to accept the currency as payment shouldn't we let them? If people are willing to accept the coin and Liberty Dollar makes good on its pledge to redeem the currency for the precious metals that back it as promised when asked, what really is the problem here?

Should gold and silver not be legal currency? Should people not be allowed to barter and trade in any form they desire for goods and services barring the infringement of someone's rights in the transaction? Or should the government be allowed to dictate what we can and cannot use as "currency" for private transactions?

And if gold and silver are not to be legal currency, then wouldn't every coin dealer in America be just as guilty as those that created the Liberty Dollar each time they bought or sold a coin? What about the local pawn shop that buys and sells jewelry made of gold and silver? Shouldn't we be able, as free people, to trade something for something else of our own free will?

These are serious questions that need to be answered. Because in the past, Americans used to conduct our business in things other than the paper money and coins of modern day America. We offered gold and silver and even cows and chickens as payment for our debts and to acquire services. At one point in America, "wampum" (polished sea shells) was a currency too!