The Arizona Senate approved a bill Tuesday making gold and silver legal tender throughout the state. The GOP-controlled Senate passed the bill, and if signed into law by Republican Gov. Jan Brewer it will go into effect in 2014.
The Arizona Department of Revenue opposed the measure, which would make it only the second state in the nation, next to Utah, to accept precious metals created by the Fed and private mints as currency.
The bill passed in the House once an amendment was made to exempt the Department of Revenue from having to accept gold or silver as tax payments.
Supporters of the bill said it is a reflection of public distrust of government-backed money as the dollar declines in value. However, the price of gold is currently dropping as well. In early April gold took its biggest one-day plunge since 1983.
Democrat Sen. Steve Farley of Tucson opposed the measure because of the unpredictable nature of precious metals as currency, citing the price drop in gold. "Anybody who thinks gold or silver is a safe place to put your money had better think again," Farley said.
The measure would only allow the use of gold and silver as money when businesses choose to accept them. "Businesses are not clamoring for this, to say the least," Farley said. "This is basically growing the size and scope of government to create an entirely new currency system."
Farley said store clerks cannot be expected to know how to inspect, weigh, or otherwise determine the value of precious metals used as money.
“Yeah, I know gold is down right now,” bill sponsor Arizona State Senator Chester Crandell told the Daily Ticker. “People are still buying gold and using it as a commodity and I think they want to use it as actual legal tender instead of the dollar."
In 2011, Utah became the first state to accept gold and silver as legal tender. A similar measure in Maine was recently rejected.