For many Americans, the traditional path of home ownership as a reliable wealth-building vehicle is becoming an elusive dream.
Owning a home isn’t just a symbol of American success, it also serves an important role in many portfolios. People have flocked to real estate with the expectation that the value of their asset will either keep up with or even exceed the rate of inflation.
But as housing costs have risen faster than wages all over the country, an increasing number of Americans are finding themselves locked out of this common savings method.
The Federal Reserve’s manipulation of interest rates has driven mortgage rates to levels not seen in decades. Additionally, the increasing trend of corporations purchasing large swaths of housing further limits the potential housing stock for those seeking a starter home.
To alleviate some of this pressure, states are removing taxes and other disincentives to investing in gold and silver, giving residents access to a time-tested inflation hedge.
America’s Broken Money: How Does One Save?
Financial options are limited in our inflationary environment. One can save U.S. dollars and be guaranteed to lose at least two percent in purchasing power every single year. One can consume by spending the U.S. dollars on immediate goods and services, getting the most out of today’s purchasing power. Or one can speculate, trying to beat the Federal Reserve’s deliberate inflation, seeking higher returns by investing in complicated and unstable asset markets.
Once upon a time, people would simply hold money itself as a form of savings. This made sense when the money was literally gold. However, because of the inflationary policies enacted by the federal government and the Federal Reserve, whose stated purpose is to depreciate the value of the dollar by 2% every year, simply holding cash is no longer a workable long-term financial strategy.
People are forced to “invest”—in homes, in risky and complicated financial instruments, in anything that may hold value better than the U.S. dollar.
But it doesn’t have to be this way. The risks associated with stock market investments, paired with the eroding value of cash due to the inflation tax, have led many to explore alternative avenues for wealth preservation.
States Easing Access to Investing in Gold and Silver at Breakneck Pace
This pivot is in lockstep with a remarkable shift in pro-sound money state-level legislation. Various states are introducing measures to facilitate investment in constitutional sound money, namely gold and silver.
Alaska, a state without a state sales tax, recently passed legislation through their State House that eliminates any local or municipal tax on the purchase of gold and silver. This popular bill has more than 20 cosponsors, and also affirms the metals as legal tender.
The New Jersey legislature, a state with one of the highest state tax rates in the country, recently passed a bill to end the sales tax on purchases of gold and silver statewide. This measure passed without a single “no” vote through several committees, the State Assembly, and the State Senate (before ultimately being pocket vetoed by the Governor).
Alaska and New Jersey are only two of the nine states to have advanced or passed similar laws through at least one legislative chamber in the last three years. Dozens more have introduced legislation to remove barriers and disincentives to buying, using, and selling gold and silver. Already in 2024, 13 states have introduced pro- sound money legislation (Alaska, Georgia, Indiana, Iowa, Kansas, Kentucky, Missouri, Nebraska, New Hampshire, New Jersey, Oklahoma, Vermont, West Virginia, Wisconsin), with more to come.
Most states don’t charge a sales tax when an individual buys a stock, bond, ETF, or other financial instrument. Removal of sales taxes on purchases of gold and silver removes a major obstacle in the way of people storing their wealth in sound money, thereby leveling the playing field as far as tax treatment between metals and other investments.
43 states have already eliminated sales tax on investment-grade gold and silver, with some going further to exclude these metals from capital gains taxes. Of the seven states that still levy sales tax on bullion, four of them (Wisconsin, Vermont, Kentucky, New Jersey) are actively considering legislation to exempt the metals.
The wave of pro-sound money legislation is not confined to the borders of any particular political ideology. Both red and blue states are realizing that taxes slapped on precious metals unfairly shackle one of the few options that small time savers have to preserve the purchasing power of their savings.
The nonpartisan nature of this movement underscores a shared recognition of the need for alternative methods of saving in the face of persistent inflation. While homeownership is an increasingly unattainable dream for many, anyone can work to acquire an ounce of silver or a gram of gold. It’s the inflation hedge as old as money itself.