Red States Push Gold and Silver as Inflation Hedge: What’s Behind the Trend?

Republican lawmakers in several U.S. states are pushing legislation to expand the use of gold and silver as currency and to establish state-backed gold reserves. Advocates say these precious metals provide a hedge against inflation, while critics highlight risks and practical limitations.

Legislative Push Across Red States

Draft bills in multiple states aim to recognize gold and silver as legal tender and enable transactions using these metals. For example, a Georgia bill states:

"Recognizing gold and silver as legal tender promotes economic justice. By allowing citizens of every economic status access to the ability to preserve their wealth by hedging against inflation with precious metals."

Mechanisms proposed in the legislation could include prepaid debit cards linked to gold holdings, similar to services offered by Glint, a U.K.-based company that supports such laws. While the Georgia bill failed in its first attempt, supporters plan to reintroduce it.

Other states, including Arizona, Oklahoma, and Iowa, have proposed similar "transactional gold laws" with varying degrees of progress. Utah recently passed its own law, building on a 2024 bill that allows the state to invest up to 10% of its "rainy day fund" in gold.

No Mandate, Just Options

Lawmakers emphasize that the goal is to provide additional financial options, not to replace the U.S. dollar. Marlo Oaks, Utah’s state treasurer, told Axios:

"It's essentially just giving people another way of being paid."

Why Gold and Silver Are Gaining Traction

The renewed interest in precious metals as currency stems from several factors:

• Easier access: The creation of gold exchange-traded funds (ETFs) has simplified buying and holding gold for investors.
• Investor demand: Everyday investors have shown increased interest in gold as a store of value.
• Central bank purchases: Global central banks have significantly boosted their gold reserves in recent years.

Gold’s Price Volatility Raises Concerns

Despite its appeal, gold’s price fluctuations pose challenges for its use as a stable currency. As of mid-2025, gold is trading around $4,800 per troy ounce—down from earlier peaks but still $1,000 higher than its price at this time in 2024.

Economists and financial experts widely caution against treating gold as a reliable currency due to its volatility. Jacob Goldstein, author of Money: The True Story of a Made-Up Thing, argues that gold has not functioned effectively as money for decades.

"Gold is not money," he says. "It hasn't been money for many decades. It didn't work very well as money when it was money."

Gold’s perceived independence from government control also fuels its appeal, Goldstein notes.

"It takes the power of money away from the government to, you know, in some fundamental way, I think that is part of the appeal."