Private and state bullion pieces: Precious metals basics

The differences between private and state bullion coins
By , Coin World
Published : 05/20/15
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Private firms produce a variety of gold and silver bullion pieces. The majority of these pieces are 1-ounce .999 fine silver round or rectangular bars, often called art bars. Some private mints produce rounds with reeded edges that have the appearance of bullion coins issued by governments. Pieces in different sizes and shapes exist, as well as similar products produced in gold. Many of these products depict artistic renderings of past coinage de­signs, and should not be confused with actual coinage. The pieces are neither official government bullion issues nor legal tender, and should not be confused with government bullion coin programs.

Official state bullion issues exist. California, South Dakota and Texas have issued, in the past, a variety of silver and gold bullion pieces. Many of these bullion pieces were exempt from state sales taxes. The state received a profit from the sale of these official bullion pieces.

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Virginia also has authorized precious metals commemorative pieces.

In 2010 and 2011, a “Constitutional Tender” movement began gaining support in several states—most notably Utah but also in other states—as supporters sought a return to the United States Constitution’s provisions in Article I, Section 10 that “No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts.”

Utah’s Senate voted 21 to 4 on March 9, 2011, to give preliminary approval to a bill that would recognize gold and silver coins issued by the federal government as legal tender for their precious metal value—not just their face value—in Utah. Utah Gov. Gary Herbert signed House Bill 317—the “Utah Legal Tender Act”—into law on March 25

The act also exempts the exchange of gold and silver coins from certain types of state tax liability such as state sales, income and capital-gains taxes, and calls for a committee to study and recommend alternative forms of legal tender currency for Utah.

In Montana, House Bill 513 was defeated on March 29, 2011, on a vote of 48 to 52. It would have required the state to back transactions of state business with gold and silver coins.

In North Carolina, Rep. Glen Bradley introduced House Bill 301 on March 10, 2011, which would allow the state to issue its own legal tender money backed by silver and gold. 

Rep. Bradley’s bill would establish a legislative commission to study a plan for an alternative state currency, noting, “In conducting its study the Committee shall consider recommendations for legislation, with respect to the need, means, and schedule for establishing such an alternative currency.”

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