"I think it has merit," said Rep. John Dougall, R-Highland, who had the proposal brought to him by a constituent and committed to opening a bill file. Another representative will probably end up sponsoring the legislation.
"Fundamentally, what it comes down to is people's concern about the fundamentally reckless policies at the federal reserve and what it does long-term to the financial standing of the country and giving folks another choice of monetary tools for their financial transactions," Dougall said.
The concern is that the large U.S. debt and policies designed to increase liquidity by putting more dollars in the market have devalued the national currency.
"It's really about creating an option," said Larry Hilton, an attorney and insurance salesman who authored the "Utah Sound Money Act" and took it to Dougall. If the dollar falters, he said, it would be beneficial to the state to have an alternative.
"It's not intended to be compulsory in any way," Hilton said. "The state is offering to taxpayers, 'If you want to pay your taxes in gold or silver, we'll accept them.' "
Investing in gold has been pitched as an anchor during the recent economic turmoil. Rep. Ron Paul, R-Texas, has warned of the devaluation of the dollar for years, and conservative radio personality Glenn Beck plugs gold on his program as a hedge against inflation.
If it is enacted, the government would be required to transact any intrastate business in gold if that's the citizen's preference. Businesses could, if they choose, also accept gold as a form of payment.
Utah State Treasurer Richard Ellis said he hasn't seen the bill, but it raises some questions on how the state would comply.
Since gold coins aren't a standard currency, he said, he had questions about how the state would comply and how, for example, it could give change on a transaction. "Do they chip off a chunk of an ingot?" he asks.
Presumably, Ellis said, there would need to be extra security and he would have to talk with the banks about how they would look on the state doing business in gold and silver.
As treasurer, Ellis would be assigned the task of setting the exchange rate for Utah's gold and maintaining a registry of gold and silver coins that would be recognized by the state. Coins could be privately minted if they meet certain standards.
The governor would be required to muster the Defense Force which is authorized in state law to protect and transport the state's gold holdings.
The bill envisions "commerce cooperatives" that could be created to act like banks, to store the gold in Fort Knox-like caches and facilitate the gold transactions.
Hilton said he envisions a credit card that people could carry that would be linked to their gold account that the cooperative could manage, rather than bringing gold coins to a government office.
The cooperatives would enjoy privacy and tax privileges comparable to Swiss banks, Hilton said.
Alan Stephens, an economics professor at Utah State University, said rumblings of going to a gold standard always seem to pick up steam when the dollar looks weak, but making the shift would be a mistake.
"The gold standard limits the growth of the economy, because you're limited to the supply of gold that is available, which really is not all that much," he said. Besides, he said, there is no prohibition on transacting in gold if the parties agree to it.
"Gold is a freely traded commodity and I guess you could go back to the Gold Rush days and bring in little bags of gold that could be your payment," he said. "There's no particular reason that you couldn't trade that way right now."
Highlights of the Utah Sound Money Act:
All state and local government entities must offer the option of transacting business in gold or silver;
The state treasurer shall maintain a registry of recognized coins;
The treasurer shall set an exchange rate for Utah gold coins that encourages circulation;
The governor shall recruit and train regiments of the Utah Defense Force to store, safeguard, protect and transport the state's precious metal holdings;
Intrastate Commerce Cooperatives may be formed and contract with the state to store the state gold and silver holdings and aid in commerce;
Transactions between cooperative members are exempt from sales tax.
Source: Draft of The Utah Sound Money Act