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Is it legal to bank with Gold and Silver?

So, I have a crazy idea, but I bet its not legal.

Basically, the idea is to create a bank that uses competing currencies instead of the dollar. Gold and Silver being the obvious choices, but really it could be used with any precious commodity.

The basic idea is that when you open an account, or take out a loan, you do so in gold (or silver). The Account itself would be measured in silver ounces, not dollars.

The bank would allow you to use a normal debit card to pay for things in dollars, since that is what the country uses as currency. But it uses the current exchange rate to deduct that much gold from your balance, converts it to dollars, and pays the transaction in dollars.

Same thing happens in reverse when you deposit your paycheck (which is probably in dollars). It converts it to Gold, and updates your balance.

If the bank loans you $20,000 to go buy a car, you decide at the time you take out the loan whether you want it to be $20,000 worth of Gold, or Silver that you owe back. You agree on a rate of interest that both you and the bank are comfortable with, and then they loan you that much gold, (convert it to dollars so you can pay the car dealer) and now you make your payments in a sound currency, rather than the dollar.

Seems like it makes more sense (as a consumer) to take loans out in dollars from other banks, and keep your checking / savings in silver and gold, but that is not the point.

The question is ... is this sort of arrangement somehow illegal?

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Great Idea

How about a county gold vault and debit cards issued to citizens for intra-vault transfers only. There would be regular audits and all balances would be public. It would act like a local currency but backed by gold. The county government would accept the card for payment of taxes. The stack of gold would only be a few feet high and could be stored in a time vault in the basement of the sheriff’s office.

Las Vegas

this sort of vault should be no problem in a place like Vegas (although I bet they wouldn't want the balances to be public info).

In a town like Vegas, I'm sure vaults have security above and beyond what is provided by local police. There would be plenty of parties who had a vested interest in keeping things kosher.

It' s A Good Idea,,,But,

From what I've read over the years, the IMF along with the FDIC {U.S. Federal deposit insurance corporation} forbids banks, credit unions, and other small banking type businesses from using U.S. Constitutionally mandated money {Gold/Silver} as money.

However, Gold/Silver clauses in contracts between consenting parties,are legal.


Gold Clauses

that is the basic idea, except, it is too difficult for someone such as myself (an average joe) to build contracts around gold for my daily finances ... and certainly not to purchase a car or something with.

And it would be cumbersome to use, unless it was instantly available as dollars when I needed to buy something from someone who wasn't gold savvy.

There are a lot of people I know who would seriously consider banking in real money, if it was convenient.

Seems like the transition to sound money wont happen overnight (for society), it has to be done one person at a time, until it gets to be popular enough that everyone is jumping off of the fiat money system, and companies actually start accepting payment in sound money again.

I read that

Peter Schiff has started something like this, but it is not available to us in the States. That's probably because of some laws making it either illegal or unprofitable.

Certainly it would be profitable

I mean, in a market based economy, anything could be profitable, if people are willing to pay for it. And it seems like there are at least some people willing to pay for it.

Certainly with the current popularity of gold an silver, if it were legal, it could be profitable, you'd just have to charge what it costs.

its got to be a legal problem.

but what I don't get is... how could it be illegal.
I mean, its basically the same thing as getting your paycheck, walking down to the precious metal dealer down the street, and walking out with a bag full of gold/silver.

then, each day, going back and cashing in enough to pay for the day's expected expenses.

the only difference being that they hold your gold for you instead of you. (which is what banks DO, right?).

I'm sure its illegal, but I don't see how its illegal. I mean, what law is there that you could be breaking that you wouldn't also be breaking if you held your personal savings in a bag instead of a vault?