Market News

BY Ian Salisbury

The commodity’s swings aren’t ideal for a currency, and the U.S. dollar’s pre-eminence is worth protecting.

Buy a cup of joe with a brick of gold? You might soon be able to do just that.

A growing list of states wants to let residents use the yellow stuff as legal tender instead of U.S. dollars. At best, it’s an impractical idea. At worst, it seems to take for granted one of America’s greatest strengths: the dollar’s pre-eminence as a global currency.

 legal tender for purchases made in the state. It isn’t just symbolic. The bill also instructed the state comptroller to build a digital payments platform that would allow Texans to store gold deposits and spend them with a debit card.

“The idea is simple: Let people use money that holds real value. No printing. No inflation. Just gold, silver, and a little modern tech,” wrote Texas Policy Research Action

, a right-leaning think tank, in support of the bill.

Texas is hardly alone. Other states including Florida and Missouri have also recently enacted similar laws. The laws seem to have gained political purchase for many of the same reasons that Bitcoin and other cryptocurrencies are popular: Some Americans dislike the notion that central bankers control the money supply and worry about the prospect of a weakening dollar, especially after the recent bout of runaway inflation.

One knock against the dollar is that it hasn’t held its value, especially in the past few years. Inflation, which peaked at more than 9% in 2022, remains elevated, with the latest consumer price index reading showing a 2.7% year-over-year increase. Meanwhile, the U.S. dollar 

USDEUR  has also sold off versus other major currencies like the euro 

EURUSD, declining 7% so far in 2025, its worst start to the year since the 1970s.

Gold by contrast has been steadily gaining in value, with its price up 28% in 2025 and 37% in the past 12 months. When it comes to serving as a currency, gold’s big run-up isn’t an advantage. What goes up can also come down.

One recent study from State Street Global Advisors found that gold’s average annualized volatility over the past 30 years was about 15%, meaning gold’s price is likely to be up to 15% above or below its average price for the year on any given day. While gold prices are up now, it was a different story in 2013. The metal lost 28% of its value that year.

Swings like that are fine for long-term investments; that’s more or less in line with the stock market. But they could spell chaos for a currency, making the dollar’s recent fluctuations look downright tame.

Another issue is taxes. Despite state lawmakers’ efforts, Uncle Sam still regards gold as an asset, not a currency. And it is taxed like one. If gold appreciates in value between the time you acquire it and spend it, you may owe capital-gains tax. This not only means you’d likely need to pay tax to spend your gold, it is also a big accounting headache, as many consumers who have tried to spend cryptocurrency

 have discovered.

Using gold as currency because you don’t trust the dollar may also be foolish politics, especially for anyone who believes in restoring—or for that matter, maintaining—America’s greatness. The fact that the Federal Reserve can print money as needed without major consequences is one of the U.S.’s greatest sources of financial strength, giving Washington financial flexibility and authority that no other nation enjoys. It is a big reason President Donald Trump was able to go ahead with his deficit-ballooning $3.3 trillion tax cut earlier this month.

To be sure, several foreign central banks, especially China’s, have been buying gold to diversify their foreign currency reserves away from the dollar, helping gold prices rally over the past few years. But they aren’t necessarily buying because they are convinced the dollar’s value is bound to erode. Rather, it’s because they are worried the dollar’s position as the global reserve currency gives Washington too much influence in global affairs.

The buying spree began in 2022, spurred not by the latest bout of inflation or U.S. deficit spending, but by Russia’s invasion of Ukraine. The Biden administration responded to Russia’s aggression by freezing the nation’s assets, and other governments began to fear their own dollar holdings could one day be subject to the same treatment.

In other words, anyone who wants America to be strong should be celebrating, not looking for a way around, the U.S. dollar’s pre-eminence as a global means of exchange.

Write to Ian Salisbury at [email protected]