I don’t know about you, but whenever I hear that my money is “backed by the full faith and credit of the federal government,” I can’t help but roll my eyes and laugh. The phrase is meant to inspire confidence, but in an age of massive debt, endless spending, and constant monetary expansion, it sounds much more like punishment than reassurance.
Fortunately, it seems more states are waking up to the idea that gold is the future. Alabama is one of them.
The Alabama Legal Tender Act, sponsored by State Sen. Tim Melson (R-Florence) and State Rep. Jamie Kiel (R-Russellville), was signed into law by Gov. Kay Ivey last April and went into effect Oct. 1, 2025. According to the legislation, any form of refined gold or silver, whether bullion, specie, or coin clearly marked with its weight and purity qualifies as legal tender in Alabama. Passed unanimously, the legislation confirms that the acceptance of gold or silver in transactions remains voluntary unless a legal or contractual obligation applies.
Why is this important? History shows us why.
In 1971, President Richard Nixon ended the convertibility of the U.S. dollar into gold, marking a turning point in American economic history. The decision effectively severed the last ties between the dollar and a tangible standard of value, ushering in the era of fiat currency – money backed by government decree rather than physical reserves.
Critics, like Peter Schiff – a modern gold standard proponent and economist – argue that this shift has unleashed chronic inflation, weakened purchasing power, and eroded fiscal discipline, essentially sparking a long economic decline. Schiff constantly criticizes modern economists and politicians, Republicans included, for dismissing the gold standard as outdated, pointing out that central banks still hold vast gold reserves, suggesting they still recognize its enduring value. According to Schiff, history shows that paper money systems inevitably end in economic disaster.
It seems the U.S. Constitution originally tied legal tender to gold and silver for good reason. Article I, Section 10 reads: "No state shall … coin Money; emit Bills of Credit; [or] make any Thing but gold and silver Coin a Tender in Payment of Debts….”
According to Schiff, Nixon ended the gold standard not because it failed, but because it worked too well. It forced the government to have fiscal discipline that made continued deficit spending politically impossible. Faced with the choice between devaluing the dollar or cutting spending, Nixon chose to enable unchecked inflation and debt expansion.
Schiff believes that the gold standard’s discipline prevents endless government borrowing, precisely why it is essential today. He points out that allowing markets, not central banks, to set interest rates and control money supply would restore economic stability, curb political manipulation, and most importantly protect liberty.
While I am very appreciative of our state passing the Alabama Legal Tender Act, in practice the law is largely symbolic, rather than useful. It does not create any mechanism for residents or businesses to actually use precious metals in daily transactions, nor does it require state agencies to accept gold or silver for tax payments or government fees. Instead, it simply affirms, if both parties are willing, that gold and silver marked with weight and purity can be used as money. This makes the measure more of a statement about monetary values and distrust for fiat currency than a functional change in Alabama’s economy.
By contrast, some states have taken more concrete steps. Utah, North Dakota, Texas, and Wyoming not only recognize gold and silver as a legal tender, but also have infrastructure to support their use, such as state-licensed depositories and permanent tax exemptions on bullions – unlike the current tax exemption in Alabama, which is set to expire in 2028. In Florida’s legislation, residents are allowed to use gold and silver for transactions through electronic means including debit cards linked to precious metal holdings.
Alabama’s gold legislation serves as nothing but a political gesture in favor of “sound money” principles, signaling support for financial independence and stability, but without offering citizens an immediate way to spend or save in gold and silver.
Matthew McLain is an Alabama Young Republican and an accountant for a Fortune 500 company.
The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to [email protected].
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