Precious Metals

Sound Money Defense League | US Investors Hedging their Funds in Precious Metals

Physical Gold

In response to the COVID-19 pandemic, the Federal Reserve instituted an unlimited quantitative easing policy in March 2020, effectively injecting trillions of dollars into the economy. However, some analysts feel that the ramifications of that measure may go beyond stimulus checks and paycheck protection. According to Stefan Gleason, Director of the Sound Money Defense League, the Fed’s pandemic response is merely the most recent manifestation of a long-standing inflationary monetary policy facilitated by unbacked fiat currency. That is why Gleason and the Sound Money Defense League urge a return to a restricted currency backed by gold and silver to protect money’s worth and reward savers. Following that, several states in the US are considering allocating state funds to monetary metals to hedge their investment. Let’s have some more words on the topic…

Sound Money Defense League

What is Sound Money Defense League and What Do They Do?

The Sound Money Defense system works on the mandate to bring the money back to its origin. It strongly condemns printing new currency notes without maintaining the gold standard. They redefine money and claim that sound money “makes itself known and is not invented, but discovered”. They believe that sound money is the most marketable commodity that comes forth through a market process. In that sense, Gold and Silver are money not by government decree but for their ability to maintain value over time. They further argue that the Fed has ruined gold and silver’s free circulation by imposing taxes. They keep printing the currency notes that impact money’s true meaning, hence declining its real value. The inflationary effects came into being for such acts. The league is striving for practical steps that can be taken at the state level to appreciate the use and acceptance of sound money (Gold and Silver).

“Bringing gold and silver back as America’s Constitutional money”

Since 2015, the League has been proactively working at the state and federal levels to:
• Rally of concerned Americans to reject the federal government’s and central bank’s intentions to debase the currency and erode American savers’ buying power.
• Work with allies in elected office to introduce legislation to support sound money policies, such as auditing the nation’s gold reserves, auditing the nation’s central bank monopoly, eliminating gold and silver taxation, and otherwise supporting the recognition of sound money as legal tender.
• Expose the global money managers operating the Federal Reserve and the tax-and-spend politicians that weaken the US currency by supporting crushing debt, crony bailouts, and reckless money printing via aggressive legal and grassroots citizen action.

Investing in Physical Gold

Progressive Steps Taken by States to Invest in Gold

Various US states have taken some progressive steps to cope with inflation. Ohio allocates its public pension fund 3-5% in gold. In August 2022, the investment committee of the $15.65 billion Ohio Police & Fire Pension Fund authorized a 5% allocation to gold to assist in providing a strong diversifier to the portfolio’s growth while also providing a hedge against inflation. The move comes as gold is expected to hit an all-time high in 2022. Even Warren Buffett, who was not into investing in precious metals, has joined the 2022 gold rush.

The investment committee of the Ohio fund said that Wilshire Associates, the fund’s general investment consultant, started an asset allocation review and presentation a week before the decision. And although the complete review is still underway, the fund’s board has authorized one adjustment to the portfolio so far: the addition of a 5% allocation to gold.

Oklahoma to Consider Holding Gold and Silver

On January 20, 2022, an Oklahoma state lawmaker submitted legislation to allow the State Treasurer to shield Sooner State funds from inflation and financial risk by owning physical gold and silver.
HB 3681, introduced by Rep. Sean Roberts, would add physical gold and silver owned directly to the list of eligible investments held by the State Treasurer. Oklahoma money managers are currently primarily limited to investing in low-yielding, dollar-denominated debt instruments. HB 3681 merely adds the power to store physical gold and silver bullion directly without the counter party and default risks associated with other state holdings. HB 3681 further specifies safekeeping and storage obligations. The State Treasurer would keep the state’s bullion in a qualifying, insured, and independently audited depository, free of encumbrances and physically separated from other holdings.

Despite worldwide inflation and financial instability, aside from Ohio, no state is currently known to keep any precious metals. Nonetheless, Oklahoma’s own investment guideline specifies principal protection as a fundamental goal for investing public funds. “Currency debasement caused by federal monetary and fiscal policies has created an imminent risk of a substantial erosion in the value of Oklahoma’s investment holdings,” said Jp Cortez, policy director of the Sound Money Defense League. He also added: “With most taxpayer funds currently held in debt paper carrying a negative real return, Oklahoma would be prudent to hedge today’s serious inflation risks with an allocation to the monetary metals.”

Idaho House Votes on Gold and Silver Allocation to Hedge State Funds

On February 17, 2022, The Idaho State House overwhelmingly approved a measure that allows the State Treasurer to safeguard state reserve funds from inflation and financial risk by keeping physical gold and silver. House Bill 522, the Idaho Sound Money Reserves Act, was passed by a vote of 55-14, sending the legislation sponsored by Representative Ron Nate (R-Rexburg) to the Senate for a hearing. HB 522, which has the support of Idahoans and organizations such as the Sound Money Defense League, would allow, but not require, the State Treasurer to keep some portion of state funds in metals like physical gold and silver to help secure state assets against the risks of inflation and financial turmoil and to achieve capital gains as measured by devaluing Federal Reserve Notes.

“Inflation has reached every Idaho household to the tune of at least 7%, which implies that the true yearly rate of return for Idaho taxpayers on their $10 billion in ‘idle moneys’ is significantly negative, perhaps exceeding $500 million,” stated JP Cortez, policy director of the Sound Money Defense League.
HB 522 adds the authority to retain physical gold and silver directly, without the counterpart and default risks associated with other state holdings. The HB 522 law does not authorize the purchase of stocks, futures contracts, or other gold-based proxies or financial products. At least four depositories in the area are qualified to store Idaho’s gold and silver.

Final Words

The Sound Money Defense League and the Money Metals Exchange heartily endorse and are actively working to secure the success of these pro-sound money initiatives in Oklahoma. Mississippi, Tennessee, Kentucky, Alabama, and just a handful of the other states battling sound money in 2022.

Rebecca St Germain

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