States Stockpiling Gold Amid Economic Concerns
Amid worries about rising prices and significant federal spending, several states are beginning to amass gold bars.
Texas, Florida, Utah, and Wyoming have implemented laws to build up gold reserves, seeking to mitigate inflation and excessive federal expenditure. State officials noted that these measures also aim to enhance access to gold for low-income residents and bolster state savings programs. This trend arises as Americans grapple with ongoing inflation, which has persisted since former President Joe Biden’s administration and continues without relief under President Donald Trump. Projections suggest that the national debt could surpass $40 trillion by November.
States, particularly those with historic ties to mining, are eager to enhance their gold reserves while exploring laws to facilitate gold trading similar to those established in 2015. Florida and Texas are among those taking these steps, allowing consumers to save and spend through accounts tied to gold.
Advocates for establishing national gold reserves argue that it could make gold more accessible for individuals who usually wouldn’t be able to afford it, acting as a hedge against inflation. They point out that gold has a history of maintaining or even increasing its value over time. However, opponents consider the legislation unnecessary, fearing it may create tax advantages for affluent individuals.
Utah’s Republican Governor Spencer Cox, who initially resisted the idea of gold stockpiling in the state, eventually allowed the gold legislation to pass without his endorsement, previously having vetoed a similar proposal. He expressed concerns about potential undue government influence in the gold market.
A law passed in 2024 permits Utah’s state treasurer to invest up to 10% of state reserves in gold, with around $178 million already held in private vaults.
State lawmakers, like Georgia’s Republican Senator Marty Harbin, emphasize the importance of preparing against inflation. Harbin once described inflation as “carbon monoxide,” a silent threat that can be difficult to detect. He sponsored a bill in Georgia aiming to recognize gold and silver as legal tender and to establish an electronic payment system. Although the bill did not make it through the Senate, he intends to reintroduce it in the upcoming session.
Oklahoma state legislators are likewise considering similar initiatives, with proposals under discussion in Arizona, Iowa, and Mississippi to create gold-backed electronic payment frameworks.
Texas leads the nation with the first state-operated precious metals repository since 2015, with Wyoming following suit by storing state-held gold in previously government-owned buildings.
Inflation surged during the Biden administration, hitting a peak of 9.1% in June 2022, primarily influenced by the extensive spending package meant to address the pandemic and climate issues.
Inflation escalated again in March under Trump, spurred by supply chain disruptions linked to the Iran conflict. The consumer price index saw a 0.9% increase that month, with energy costs playing a significant role in the rise of annual inflation, which hit 3.3%. Gas prices soared 21.2%, contributing to three-quarters of the overall inflation increase due to closures of critical oil shipping routes.
With national debt near $40 trillion, the strain of supporting boomer retirements will compound unfunded obligations like Social Security and Medicare, putting additional pressure on the federal budget. These mandatory programs make up around 60% of federal spending.
As the U.S. labor force participation rate dwindles, it poses further risks to an already stretched federal budget, reaching levels not seen since 1977.
Recent government spending triggered former Treasury Secretary Henry Paulson to urge the development of an emergency response plan to address potential crises in the U.S. debt market. He noted that continued borrowing may lead investors to seek higher interest yields due to perceived risks, thus increasing the cost of servicing the debt and heightening the chance of bankruptcy—a scenario economists have termed the “doom loop.”
“We need a targeted, short-term contingency plan, so when we hit a wall, we can react promptly,” Paulson remarked at a recent Wall Street Week event, highlighting the precariousness of the current fiscal landscape.
