Utah Governor Spencer Cox signed legislation on Thursday empowering the state Treasurer to secure state funds with a significant allocation to physical gold and silver.
Sponsored by Rep. Ken Ivory, House Bill 348 permits the Treasurer to hold up to 10% of certain state reserve accounts in precious metals to help secure state assets against the risks of inflation and financial turmoil and/or to achieve capital gains as measured in Federal Reserve Notes.
The Utah State Treasurer has limited options for holding, managing, and investing state monies, making this enabling legislation necessary.
Utah’s reserves are invested almost exclusively in treasuries, municipal bonds, corporate bonds, and agency debt.
These debt instruments carry risks – especially because they are not inflation-hedged and are therefore largely unprotected from the steady erosion in the real value of principal, coupled with interest rates that are often negative in real terms.
The legislation specifically pertains to the State Disaster Recovery Restricted Account, General Fund Budget Reserve Account, Income Tax Fund Budget Reserve Account, and the Medicaid Growth Reduction and Budget Stabilization Account.
“By enabling the State Treasurer to invest in the monetary metals, Utah is better equipped to protect Utah taxpayer funds and the residents of Utah against inflation and counterparty risk,” said Jp Cortez, executive director of the Sound Money Defense League.
An allocation to gold and silver fits squarely within the objective of protecting Utah against financial risks and would logically be included in a list of safe and liquid investment options.
The monetary metals provide an important hedge against inflation, debt default risks, and stock market declines – and they have historically boosted overall investment returns while also reducing portfolio volatility.
The Sound Money Defense League and Money Metals Exchange have been encouraging states to hedge reserve and pension funds using gold and silver, and enabling legislation has often been necessary.
Texas and Ohio have previously acquired gold. Meanwhile, legislation like HB 348 recently passed in Tennessee and is under consideration right now in Missouri, Idaho, and West Virginia.
Central banks worldwide have been stockpiling gold at record rates in recent years as concerns about the U.S. dollar expand.
Additionally, House Bill 348 requires the Treasurer to present other legislative proposals by October 2024 after conducting a study “analyzing the role of precious metals in augmenting, stabilizing, and ensuring the economic security and prosperity of the state, the families and residents of the state, and businesses in the state.”
Ranked seventh on the Sound Money Index, Utah has been among the leading states promoting sound money public policy, starting with the passage of the Utah Legal Tender Act in 2011 (also sponsored by Rep. Ivory).
The enactment of Utah House Bill 348 comes on the heels of Wisconsin this week becoming the 44th state to eliminate sales taxes from the purchase of gold and silver.
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