In 2011 Utah made waves by passing the Legal Tender Act. The discussion/media on this one bill alone outweighed everything else the Utah legislature did that year, combined. Everyone from Mike Maloney to Senator Mike Lee were discussing the implications. Among other things, this bill recognized that the Federal Reserve does not, in fact, have a monopoly on legal tender.

What is Legal Tender? If you try and transact in anything other than legal tender such as bitcoin, bitgold, or bartering then the IRS can go after you for capital gains taxes. For example, if you bought a bitcoin for $100 then were to spent it as $1,100 then the IRS would want 28% of the $1,000 difference.

There is a lesser known, rarely used way around the Fed monopoly on legal tender. Simply spend and accept payment in gold or silver COINS from the U.S mint. The face value of a one ounce eagle is $50. If you were to purchase a car that is worth $2,500 FRNs for $100 gold dollars (two coins) then it would legally be a $100 transaction. Utah added much validity to this point in passing the Legal Tender Act.

What if you want to buy something with gold that doesn't cost exactly one coin? There is only one organization that I know of that allows for accounts denominated in gold and silver legal tender dollars. It was put together by the same guy that wrote the Legal Tender Act, Larry Hilton. In the past these guys have had the Utah State Attorney General speak at their events as well as the chairman of Overstock, Jonathan Johnson, in fact, it was at the UPMA event that he admitted to saving 10 million in gold for his employees.

UPMA is still a small, relatively unknown group outside of the state of Utah it seems. There were only a couple of zerohedge articles on it. My understanding is that anyone in the country can have an account. What got me interested is that they actually allow small groups of members to participate directly in audits of the actual holdings if they wish.

The Texas depository may do something similar to UPMA because of the enormous advantages that legal tender offers. Goldmoney/Bitgold, rather than moving everything into coins, is trying to get a bill passed to turn ALL gold and silver into legal tender. I hope they achieve this because at this point the Fed will have lost a lot of power. Legal Tender laws only exist to protect monopolies. Oklahoma followed suit behind Utah and it looks like other states will be coming along as well.

FULL DISCLOSURE: My buddy works at UPMA and tells me about it all the time. That said, I don't have a large account there but I find the principle fascinating.