Ep 29 – Stefan Gleason: The Politics of Sound Money

In this episode of the Gold Exchange Podcast CEO of Monetary Metals Keith Weiner interviews President of Money Metals Exchange Stefan Gleason. Stefan is a seasoned business leader, investor, political strategist, and grassroots activist. Stefan has worked for National Right to Work and is now the Director of the Sound Money Defense League. In this episode Keith and Stefan discuss:

  • Repealing state and federal taxes on gold and silver
  • Forced unionization and worker’s rights
  • Grassroots activism
  • The Sound Money Index
  • How to make moving to sound money profitable

Additional Resources:

Sound Money Defense League

National Right to Work

Money Metals Exchange

Sound Money Index

MMX Silver Lease

Transcript of the Politics of Sound Money with Stefan Gleason

Keith Weiner: Welcome, Stefan, to the Gold Exchange podcast. First question that I’m interested in what’s your background and history? How does anybody come to get involved in this crazy space full of gold bugs and other sorted geeks and freaks? How did you come to found Money Metals Exchange?

Stefan Gleason: Sure. Well, thanks, Keith. Of course, it’s great to be on your podcast, listening to you and reading your writings for years and then getting to know you over the last several years has been really great. And I think going back to what kind of got me interested in precious metals, I’ll talk a little bit more about my history beyond that, but it may have been the same thing that got your attention. And that was about 20 years ago. A little less than 20 years ago, I started reading the writings of Antal Fekete, who struck me as a really independent thinker and was bringing some ideas forward about monetary policy that fascinated me. And I was interested because I was investing and had long been investing in real estate and was interested in interest rates and how interest rates are moving and what causes them to move. And that led me into a discovery of how the Federal Reserve System actually works and then how really crazy and upside down it is. And that’s kind of what led me down the path to precious metals, along with some prompting from folks like Edwin Vieira, who I used to work with when I was at National Right to Work, who’s a monetary historian and on the legal side, but just backing up a little bit from that.

I personally was always interested in public policy as a sort of free market libertarian thinking person, starting with, at least in College, if not before in College at the University of Florida. It was learning about totalitarianism in the College administration and just kind of leaving a taste in my mouth about where people are trying to control others in such a heavy handed manner. And I think that may have inspired me to go into public policy. I went to Washington, DC in 1996 and started working in outside organizations such as Americans for Tax Reform and then ultimately National Right to Work, where I spent 15 years fighting forced unionism, which is the idea that Union officials use government force to compel individuals to join or support them, and of course, extract forced dues from them, which are then used and poured into Big Labor’s, Big government agenda.

Keith Weiner: Just let me interject how many States have forced Union laws and how many States are Right to Work right now?

Stefan Gleason: Yeah, I believe it’s up to 28. They passed several laws since I left in 2010. Actually, they passed more laws since I left than when I was there. So I’m wondering if there’s a correlation. But ultimately there were 21 when I started, and I think there were 23 when I left, and they’ve passed about five more since then.

Keith Weiner: These are Right to Work laws or forced Union laws?

Stefan Gleason: I’m sorry, state Right to Work laws, where States have exempted themselves from the federal policy of forced unionism. It’s actually imposed at the federal level, at least in the private sector. And then States have the ability to opt out, but only if they affirmatively pass a Right to Work law. States actually govern their public employees for the most part on their own, and that has stopped the expansion anyway of forced unionism. In fact, the US Supreme Court ruled recently, which was a national right to work case, that forced Union dues in the public sector is unconstitutional in full. So you literally cannot force an employee to pay Union dues as a condition of employment if they’re a government employee, because that’s state action and it’s forced speech. And that was reversing precedence from 40 years ago, which upheld the idea to an extent, trying to parse out the Union’s role as a bargaining agent from the Union being involved in politics. And that was a completely unworkable system where workers couldn’t opt out of really the bulk of Union dues and all of its politics anyway, especially if you’re out of a Union that’s lobbying the government for anything that’s including wages, that’s political speech. So anyway, the bottom line is the Supreme Court actually said you can’t have forced dues in the government sector at all. But the actual root power is the Union monopoly bargaining power, which is the idea that a Union can be installed, a private actor, and not even a government employee can be installed as the exclusive spokesman for all employees in a unionized government workplace. And that gives these private actors significant leverage vis a vis the government the power to shut down public services and hold them for ransom and through strikes and other things. So that’s the root problem. And there are about 30 States, I think that affirmatively prop up that system in the government sector still. But the trend is definitely towards more freedom on the right to work issue and certainly on the forced dues issue. That’s been major progress made there.

Keith Weiner: I remember getting some introduction to this, and I think it was in high school about the argument was, well, since the Union is benefiting you by giving you a higher wage than you would otherwise get, then the Union has the right to forcibly extract a certain amount of dues. And even then, I hadn’t studied economics, but that just seemed like a dubious proposition. You mean like there’s a certain wage and then somehow the Union does something somehow to raise that wage. And then later coming to Mises, he said the only way to raise wages is to increase productivity, which usually means increased capital investment. And the Union seems to be fighting that tide. But anyways, okay. Because we got you a higher wage than you would otherwise get. That gives us the right then to force you to be a member of the Union.

Stefan Gleason: That’s their argument. And of course, it’s spacious because they actually specifically make it illegal or block the ability of the employee to bargain their own deal with their employer. So the best and most productive employees are held back and the lower performers are the ones that are sort of catered to. And as a result, performance declines, and so does individual excellence. The Union has this approach where they say, oh, we’re forced to represent everybody. So we therefore must be able to force them to pay dues. And then we introduce a bill saying, okay, we’ll remove the Union monopoly bargaining power. So you only represent people that are actually members and their media is like, no, absolutely, we want to leave that in place. So they want that monopoly stranglehold, and then they complain about it as their justification for forced dues. 

Keith Weiner: Yeah, it sounds like a perfect example of a term that I coined. I call compensation. So compensation is when you take for granted that something’s wrong somewhere that you cannot or will not fix it. So then you go and deliberately do the wrong thing, like on purpose, allegedly, to fix this other thing that you can’t fix. So letting the air out of three tires if you have a flat, or in this case, well, we’re forced to represent all those people. So therefore, we need a new law that forces everybody to pay us.

Stefan Gleason: Right.

Keith Weiner: Well, how about this? Repeal that first one and then problem solved. Right? Obviously, the whole thing is disingenuous as hell.

Stefan Gleason: Right.

Keith Weiner: It’s not really what it’s about. Yeah.

Stefan Gleason: So that was the first 15 years of my career, was working for most of that time, vice President of National Right to Work, where I was doing fundraising and media and policy. I was on the legal foundation side. So I was focused on all of our legal cases on behalf of workers who are being victimized by Union abuse. And so that was very fulfilling because I looked at big labor as the engine of the political left, or at least one of the main funding mechanisms for the political left. And all done with, for the most part, with compulsory money and government grants and other perks and so forth. All of that leads to corruption, of course, as well, because there’s no market forces or very few in the process, workers can’t withdraw their support, all that. So anyway, the bottom line was that was fulfilling work for a long time. And then I moved into publishing with a friend of mine, a financial newsletter, publishing property, and we launched Precious Metals as a offering to our subscribers, because the only folks that really and I was already an investor in Precious Metals at that time, personally, five or seven years before that.

But a lot of our subscribers were interested in precious metals and how to hedge against inflation. And this was 2008, 2009 right around the financial crisis. There was a huge amount of interest coming in. But all of the people, all the companies that wanted to advertise, or I should say, who could afford to advertise in our publication to give us what we needed to give them the ad slot were the ones that were selling the rare coins and the proof coins and the highly marked up high commission based products. And we’ve just seen both on the personal level, just knew that wasn’t a good thing to invest in unless you’re a true expert. And it isn’t the same thing as owning physical gold bullion or silver bullion or a bar or a bullion coin, but it’s more of an artwork type thing, a collector thing where a lot of the value is caught up in a very subjective measure of rarity and whatever year and whatever condition. And there’s all these beautifully holograms slabbed plastic encased collectibles that are sold for many multiples of the actual metal value. And just didn’t feel comfortable putting that kind of thing in front of our subscribers because we didn’t think it was a good investment.

So that’s how we decided, well, I’m just going to launch a precious metals company myself and sell bullion because that’s what people actually should be buying if they’re looking for gold and silver. And so that’s how we launched Money Metals. And that was in 2010. So we were able to launch it really from the get go with already a pretty significant customer base because we had the publishing company. And so I sold my interest in the publishing company a couple of years later and took over the full majority interest in Money Metals. And that’s where we started and built from there. And we’ve been in business for twelve years.

Keith Weiner: When I first started my journey into precious metals. And you’re right, I discovered Antal Fekete probably about eight or ten years after you did. I started coming to some of these conferences, and there were certain vendors that were promoting these numismatic coins. I’m as interested in the next guy and seeing something truly rare like this was a coin printed by Julius Caesar 2000 years ago, or this was the coin of King George the day before the US revolution or something like that. Those are kind of interesting, but most of these Numismatic coins don’t have that kind of provenance. And the way they would often try to sell it to me and to your point about a good investment is they said, well, it’s confiscation proof. And I’m like, wait, what? Because there’s no confiscation of gold? Well, if the US government ever confiscated when the US government confiscates again, because they seem highly certain of that market in their sales, high pressure sales push when the government confiscates again, then there’s an implication they would be bound by whatever it was that FDR did in 33, which is probably not the case. I’m not a legal expert.

It seems to me if you’re going to pass a new law now, it doesn’t have to say whatever law that anyway. But anyways, they exempted numerous amount of coins, and so these would be exempt. That was one argument, and I was like, I’m not sure I could really get my head around that. And the other one was, oh, well, you can’t carry more than $10,000 cash on an airplane. So if you really want to take a couple of million dollars to switch the lender, whatever you can buy just a few of these little dime sized, highly rare coins, and then as a way of conveying value, I guess. And then you sell them in Switzerland, where presumably the market is the same as it is here. I never verified whether or not that’s true, but that also seems to be a bit dubious. But the real question was what’s the bid ask spread? So you’re buying it. You have to pay the asked price of the dealer here and pay for all that high pressure salesmanship. Then when you go to dump it over there, you’re getting the bid price. And on those coins, I think the bids spread is 30 or 50% or more.

Stefan Gleason: That’s right, if you can sell it at all.

Keith Weiner: So a great way to convey $2 million worth of value between here in Switzerland is to buy $3 million coin. Except that’s the old joke. What’s the best way to add $20,000 to the value of your home, put in a $50,000 kitchen remodel? What’s the best way to make a small fortune in Las Vegas? Bring a large fortune.

Stefan Gleason: Right.

Keith Weiner: There seemed to be something about it that didn’t really quite work for the investors. Anyways. I don’t want to get too caught up in that. So you founded MMX. But the other thing that you’re involved in that I want to ask more about is the Campaign for Sound Money. And how do you see that both relative to MMX and where do you think sound money is going as a policy? And then I’ll probably but in a certain point, because I’ve had some experience in my own policy fights as well.

Stefan Gleason: Yeah, I know you’ve been involved in some of these state legislative battles over the years as well. So about five years into money metals, I guess part of my DNA is public policy, and I just kind of am always drawn back to that to some extent. And I got involved in precious metals because it fits my ideology. It’s free market money. And the idea of gold in the monetary system is a way of introducing discipline onto the politicians. Politicians that are desperately trying to avoid that and for the most part, with the unbacked Fiat system have avoided that with that system. So I look at the policies as I’m going along as a precious metals dealer and seeing a lot of things that are really a problem for our customers and for a reminder that in practical terms of gold and silver as a usable money again. So I decided that there’s a need that is not being addressed, unfortunately not very addressed very well at all by the industry groups and decided to launch the Sound Money Defense League as a project primarily or principally of Money Metals Exchange as a way of advancing actual legislation and thinking, but in particular with a focus on legislation that would promote gold and silver as money in the US and that involves both federal legislation as well as state legislation.

So we have been over the years working on a number of bills. We’ve had a fair bit of success at the state level. The federal level is another matter, but we do have projects there. But in particular, I feel that the number one problem, at least in practical terms, is the friction around the buying and the selling, which is the taxation. So you have sales tax, or at least did or do in most States you don’t, but you still do in a few. You have sales tax on the front end and then you have income tax on the back end. And so it’s interesting because on one hand, the idea of sales taxes, it’s a tax on consumable goods like clothing or automobiles or whatever. And then on the back end it’s like, oh, you have a capital asset and you now have appreciation. So you’re consumable. Now it’s gained value and you have to pay income tax on that side. So you basically have double taxation. So about seven or eight years ago, there were about 33 States that precious metals fully or partially exempted precious metals from the sales tax. So there was already a lot of these laws in the books exempting gold and silver from the sales tax in the States.

But now there are 41 there are 41 States that fully or partially exempt gold and silver from the state sales tax. And that’s partly a result of our efforts on the Sound Money project. In particular, the last five years we’ve passed working with in state legislators, sometimes dealers and grassroots people on our list who have been reaching out and lobbying their state legislatures. With our prompting, we’ve been able to pass sales tax exemptions in Louisiana, Ohio, Arkansas and West Virginia. In the last four years or so. We have bills right now in the nine remaining States where there still is full taxation of precious metals. On the sales tax side, we have bills in New Jersey, Kentucky, Tennessee, Mississippi and Hawaii. Right now the most promising of those, I would say, are Tennessee and maybe Kentucky and Mississippi, but Hawaii we’re not ruling out Hawaii either, because we actually passed it through a committee there already. And that’s a Democrat stronghold. But this isn’t necessarily a partisan issue, although it sometimes seems to be. So the sales tax is probably the most obvious and perhaps the least difficult thing to address. Then there’s the income tax.

So with income tax, you have both state and federal income tax on socalled capital gains. And of course, just like any asset in an inflationary environment that’s priced in nominal Federal Reserve notes, if it gains price in those Federal Reserve notes, the US government feels that you have a taxable gain and have to pay that at the federal level. But with gold and silver, it’s actually a discriminatory high capital gains tax rate of 28%.

Keith Weiner: That’s right. The higher rates and everything else as a special punishment.

Stefan Gleason: Right. So Congressman Alex Mooney has a bill that would eliminate all income tax on gold and silver. It wouldn’t just put it down at 15% or 20% like other capital assets, but actually would remove it. So it would be like the Federal Reserve note. You don’t get to deduct losses in purchasing power that you have on Federal Reserve notes. So why should you pay capital gains taxes on a nominal gain in your gold and silver, which in many cases are nominal, not real, because of inflation. So the bottom line is that the federal law needs to be changed on the tax issue. And as far as that goes, on the income tax for precious metals, it’s not even statutorily prescribed that gold and silver would be taxed at that higher rate, or at all, for that matter. The US Treasury actually has the ability, at least to some extent, like with gold and silver Eagles and things like that. They could literally just exempt them without legislation. They could say these are not going to be subject to income tax. So this bill in some sense reaffirms they shouldn’t be taxed, but then makes it clear that no gold and silver physical gold and silver would be subject to the capital gains tax.

But then you have the state capital gains tax or the income tax, because the way that works at the state level is as people file their state income tax returns, the first number that comes down is what is your federal adjusted gross income? And so if you had to report so called gains on gold and silver federally, it imports it into your state income tax, and you essentially will pay state income tax on those gains. And so what some States have done, not many yet, but there have been States that have literally subtracted that back out said if you have a gain federally, you remove it. Some of them are neutral in the sense that if you had a loss federally, you add it back, which frankly, I’m fine with. I think it’s principally very consistent. In most cases, you’ll end up paying lower taxes, because on the whole, there’s inflationary impacts to the gold and silver price over time. So Arizona where you are, and you probably know this. In fact, I think you were involved in that bill passed a state income tax exemption on gold and silver. There was also one passed in Wyoming, although Wyoming did some other things with that bill, and they currently don’t have income tax at all.

But they basically said there shall be no taxes of any kind assessed against gold and silver. We pass it through Idaho, and one House didn’t become law a couple of years ago. But there’s a bill right now in Oklahoma and will be a bill in South Carolina and Iowa this session that remove income tax from gold and silver at the state level. So I would say half of what we focus on well, 75% of what we focus on is on the tax issue, but we actually have a ranking of all the States based on twelve policies, and we score them on all those policies in every state and about half of the weighting of what we call the sound money index is evaluating the tax policy and then the other half deals with other issues that we can get into.

Keith Weiner: Yeah. I was involved in Arizona from the very first year. I’m trying to remember if that was Senator Farnsworth introducing it in 2012, maybe. And it took five years of those five years, four of them passed out a committee to vote of the full House and Senate. You mentioned partisan issue in Arizona here generally passed on straight on partisan party lines. But I have to say this was to me as a legislative outsider, it was very amusing to see in one of the subcommittees. I don’t remember if this was the House because I know who it was. I’m not going to say there’s always discussion of it. And the Republicans were generally indifferent and maybe slightly indulgently tolerant of it. And the Democrats were pretty hostile to it, as I recall, when it came time to call Role and actually vote on it, the person who would have been the chair but had delegated, somebody else literally grabbed up the laptop and the notebook and whatever and ran out the back door. So in Arizona, there’s a back door where they can get to their private offices and then there’s the front door that the public goes into in the hearing rooms, ran out the back door right before calling Role.

I was like that’s bizarre. And then someone said, oh yeah, that person’s spouse is a banker or something like that, and didn’t want to be on record as voting for this crazy Gold thing, but didn’t want to be on record as voting against it either, because that wouldn’t have been politically astute in the state of Arizona anyway. Four times it passed, each time slightly more watered down because it received three vetoes from two Republican governors, one Jan Brewer, two, Doug Ducey viewed it twice before finally signing it the third time around. And I’d never heard of this before and I couldn’t have imagined it before I saw it. But here past strict party lines. Notice every Republican voted I and every Democrat voted Nay and Republican voter governor vetoed something that was unanimous on his own party side or her own party side. In the case of Jan Brewer, still not sure. I really quite understand that the politics were very bizarre. And then each time because I was working with the various legislators involved, Senator Farmsworth, Representative Fincham, both were just stalwarts of this effort and just real troopers. And every year trying to get some indication from the government what’s the issue, what’s the issue?

And then each year kind of narrowing the scope of the bill down to it went from gold and silver recognized as money and legal tender and all kinds of other things down to repeal the capital gains tax. Arizona is one of those States that you take your federal AGI, you subtract any gains you have from gold and silver. You add any losses that you deducted from your federal AGI, gold and silver, and that’s it. And then there was recently a torture storm where one of the free market is economists was saying Arizona passed legal tender. And I said, no, we didn’t. We only passed the repeal of the tax anyway. He said something kind of divisive and dismissive, kind of trying to treat me like a piano, didn’t know anything. And I was like, anyway, that didn’t go anywhere. So that was the result of that. And my personal takeaway from that was I was involved in also lobbying in Texas and a couple of the States you mentioned. And my personal takeaway is this is maybe you just need more patience than I have. Maybe I’m just wanting everything now. But I kind of walked away.

I was like, wow, is there really going to be progress at the legislative level? And I saw here in Arizona these two particular politicians and a few others, it almost seemed like that gold was a hobby for them. I don’t think there was a great deal of constituent support. I don’t think there was a great deal of voters who didn’t want it. I didn’t see any real opposition. Every time that they asked for testimony in these hearings, the only opposition was like legislative counsel or the Treasurer’s office. And usually it was a minor net, like one year state of Arizona government would have to accept payment of taxes, remitted in gold. And then the Treasurer’s office came to testify and say, we don’t have the means that somebody would show up at our counter and put gold coins on it. We wouldn’t be able to tell counterfeit for meal, we wouldn’t have the safes and the other handling procedures, that kind of thing. But there was no objection from the public, but nor was there a great deal of enthusiasm either. So if you’re a politician, you’re spending political capital, and you only have a certain amount of that.

And so is this something that they’re going to really get behind?

Stefan Gleason: Well, on that topic, this is where some of my grassroots experience with national right to work comes into play. And I think there’s a lot more ability to affect these policies by generating grassroots heat, if you will. And we’ve been doing that with our we have a pretty large email list, and we also have a very large customer list and hundreds of thousands of emails, hundreds of thousands of customers. And we have been leveraging those lists to contact people in these States at targeted moments where a little bit of lobbying on their part to the member of the committee or the chairman of the committee or the House leadership or whatever can make a difference in getting them to move forward on the legislation. And I can tell you that last year, for example, in Arkansas, we would not have passed the sales tax exemption had it not been for the grassroots mobilization that was done. Now we’re leading this, of course, but beyond that, we’re sharing these creatives with other groups. We’ve shared it with Campaign for Liberty more recently. And they have a grassroots base of people that care about these issues. More recently, I’ve shared some of these email templates with some of my competitors and encouraged them to send it out to their customers in those days.

Just last week, I sent it to a couple of major competitors of ours, and I’m hopeful that they’ll continue to I don’t know if they’ve done it, but they’re not as motivated necessarily on this topic as I am. We tend to be more ideological about monetary issues at money Metals, perhaps, than some of the other major dealers who are not necessarily ideological people. But the bottom line is the grassroots does make an impact. In fact, in Arkansas, as I mentioned, the chairman was not going to have a hearing on the bill, and he was blowing us off. And he started hearing from probably hundreds of people because we were emailing thousands of people. And he called up and said, you guys, you don’t need to do this. He was trying to talk to us. He was angry.

But at the same time, he was like, you’re going to get a hearing on the bill. So he gave us the hearing. It passed because it hadn’t passed like a couple of years earlier, we had a hearing. It didn’t go anywhere. And the politicians and this is something I learned. The politicians like to complain and try to make you think that if you’re getting their attention first, they ignore you. First, they ignore you, and they try to hope that you’re just going to walk away and all, they don’t care. They’re not listening, but then they start complaining. If you’re starting to get to them, they’re hearing from people. Now, there’s a problem. We have to figure out what this is about. It could get worse need to figure out what the issue is. Okay. So they focus on the issues that are getting their attention. And if you’re on their radar, that’s a good thing. Now that sometimes they’ll call and complain or threaten, if you keep this up, you’re never going to get a hearing. And the important lessons that I learned at national right to work in grassroots politics is that means that you need to double down, not back off, because the next thing is that first it’s ignored, then it’s complained, then it’s threatened, then it’s getting other people to threaten.

Call your board members, call your bill sponsor, whatever. And then there’s a cycle. And then hopefully, if you keep pressing, it ends in just capitulation, which is do what we want you to do. And I can tell you that that does work. And at the state level, compared to the federal I’m not saying it doesn’t work at the federal level, but it’s a harder thing to do at the federal level because it’s bigger. But at the state level, there aren’t many groups that are organized on a legislative policy issue that can do grassroots or are willing to do grassroots. And so when a state legislator starts getting dozens of emails and calls or more because somebody like us or on any issue that send out emails and letters to their people saying call this person and tell them to support this bill, that is organization that they don’t often see at the state level in any real way. And so that’s I think part of the reason why we’re making some progress here is because we’re using some of those approaches to let people know who care and ask them to take some action. And again, I think it’s part of the secret to success.

And so we’re really stepping up those efforts of grassroots mobilization in all of our bills as much as we can, and we’re going to continue doing that. And like I said, I’d like to get more competitors and others in the industry who have want large lists of people that care about these issues to join with us in putting pressure on these people to remove sales tax, remove income tax and so forth.

Keith Weiner: You mentioned Representative Mooney. I think at the federal level, do you think there will be any success at the federal level anytime soon, repealing the capital gains tax on gold? That would be like, oh, my God, stop the presses. Everybody in this space who’s ever written a word about gold would have to stop everything they’re doing to write about that. Do you think that’s in the cards anytime soon?

Stefan Gleason: Well, I don’t think anything that reduces taxes in any way is in the cards with the current Congress and this included, but other bigger tax type issues. So I would say the bill is written. It’s well written. It’s there there’s also a bill to audit the Federal Reserve or audit the gold reserves that Mooney has, which is also to look at any encumbrances and other burdens placed upon the national gold. So these bills are there, and in a certain situation, I could see lots of attention drawn to these if we have another crisis or there’s a change in Congress and there’s more appetite. So I don’t want to say that it’s not going to happen. I don’t think it’s going to happen this year. I don’t think it’s going to happen next year necessarily, but I think that we’re gaining strength at the state level on the sound money issue, and that has a way of reverberating. I think as things play out with the Federal Reserve and inflation, I can tell you this year, for example, on the inflation subject, we’re seeing seven and a half percent according to government statistics, which is probably understate the true rate of inflation.

We’re definitely finding more interest in our bills at the state level this year than last year because of inflation being a topic. Sometimes bad is good.

Keith Weiner: One of my models when I got started in this in terms of lobbying and legislation was about 2012. For me personally, I remember looking at the marijuana policy, and I think it was called the Marijuana Policy Project MPP, and there’s a whole movement, obviously behind going state by state and legalizing it. I remember thinking this is brilliant, because first of all, if you get three States to do it, one, two, three trend journalists have to kind of cover it. I’m not sure that’s entirely been true in the case of gold, but it certainly wasn’t the case of marijuana. And then if you go from state to state to state and more States are legalizing marijuana, it becomes inevitable that it will be a federal bill. I think it’s not a question if it’s a question of when. That’s what I’m a big fan of, either getting high on marijuana or the way that they’ve turned it into more of a fascist regime where the government grants certain cronies licenses, which is a license practically meant money because the demand for marijuana is off the charts. And then, of course, they tax it, and they should just be decriminalized and unregulated.

But I guess it’s better than what it was, which was criminal before. And I wonder if there’s a similar thing with gold, like if you’ve got enough States to recognize that, hey, texting, this is wrong. Even if we fall short of recognizing it as money, we don’t necessarily want to open that door right now. But we said, okay, we’re not going to tax it. Would that eventually sweep into the federal level and become a thing?

Stefan Gleason: Absolutely. And that’s kind of why we’re focused on the States, because we’re making progress on the sales tax in particular. The income tax is sort of project number two. And there’s other things we’re involved with beyond that. But we’re down to nine States. It was 15 States only a few years ago. And so now you have like Tennessee or Mississippi. These States are surrounded for the most part by States that don’t have a sales tax. So it actually strengthens the argument because it’s like, well, people are just going to leave your state. Businesses are going to cross the border. Investors are going to cross the border. It just adds more arguments. And you’re becoming sort of an outlier, sort of way out of the mainstream of the States on the sales tax issue, and particularly if they’re surrounded by States that don’t have the same policy. So it becomes the momentum builds. And so I think over the next few years, I think we’re going to knock out a few more sales tax. We’re going to have exemptions on gold and silver like they should be because they’re not consumables anyway. They’re held for resale. I mean, remember the whole idea of sales taxes?

Oh, you’re the final user of the good, but these are inherently held for resale or exchange and not held for consumption. Maybe a rare coin is you could say that you’re consuming it, but as a rarity that it gives you pleasure, you put it on your wall or whatever. But the bottom line is that the whole idea of sales tax on gold and silver is completely Invalid, even if you look at what the sales tax is all about. I’m not trying to say sales tax legitimate, but it’s definitely not legitimate with gold and silver. And then beyond that, then you move. Okay. Then it’s like, okay, we’ve solved the sales tax problem for the most part. Now we have the state income tax and people get it. We’ve had bills, we passed them through Chambers, we passed them in Arizona. It passed completely. And then you start having this friction between States saying we don’t conform to your federal number of what is income. And the more States that do that, I think it puts more pressure on the Feds, which is really the main policy there is the income tax. There’s no sales tax federally.

Keith Weiner: Right. And the lion’s share of income tax on anything including gold would be at the federal level.

Stefan Gleason: Right.

Keith Weiner: Most people state taxes a small fraction of the federal anyway. Right. And I wrote an article for Forbes many years ago talking about how this tax is a real impediment to the circulation of gold and silver and not just the payment of it, but the record keeping. If you were to pay for a steak dinner by handing over a silver Eagle, you’d have to know which silver Eagle that was and what date you thought was your back basis. I don’t think most people are prepared in terms of their own personal balance sheet. I don’t think most people are prepared to have that kind of compliance, maintain those kind of records. I know what it takes like, to do that at a corporate level, it’s a big deal to really be able to get it right, to really be able to prove this is this item and that’s that item. And most people are probably intimidated by that. And it’s onerous. So it becomes much easier to just shove it in a safe. And even if it wasn’t for the temptation to spend the lower quality money anyway, people prefer to spend the dollars for 100 other reasons anyways, right?

Stefan Gleason: Exactly.

Keith Weiner: This would just be one more impediment to, hey, when did you get that and what was the price at the time? You got it. And now you’re getting rid of it on this day. And are you going to use the London PM fix? Are you going to use the Kitco closing price? Like what price of gold do you use? Is that contestable? Little things like, oh, the last P. M. Fix for the year is December 27. But there was a market in the US that was open on the 29th or 30th or something like that. How can you justify using the 27th? Well, the PM fix is the benchmark price, Kitco at the closing. There’s really any liquidity there. You can see the Volatility Blip at plus or minus $10 pretty easily, which is correct at the moment. The market opens later. But anyway, if you have all those kinds of issues, I think at the individual consumer level, nobody’s going to want to touch that. It’s intimidating. It’s onerous if you get it wrong and the IRS decides to go after you, you can be in a world of hurt. And for what? Right.

That would be exciting to look forward to if there was any real possibility. Maybe with a changing of the guard in Congress, I guess we’ll see what happens in November. With that.

Stefan Gleason: Keith, let me just address the other topics in the Sound Money Index that we rank. And I’ll mention the best States and the worst States on the index, because I think that might be an interesting for sure. So I mentioned about 50% of the index scores States based on sales and income tax policies relating to precious metals. But we added other policies that are significant, such as whether the state has specific performance for gold clause contracts where a court cannot substitute Federal Reserve notes for a contract that was supposed to be payable in gold and that might be considered a relic. But you know a lot about gold costs contracts and how reintroducing those is part of remonetization of gold and silver. Another is whether a state has affirmed that gold and silver are money as Article one, section ten of the US Constitution says that the state actually cannot make payment other than in gold and silver coin, according to the US Constitution. So some States have said gold and silver are money in our state. They don’t necessarily build an apparatus around that. There’s a bill in Wyoming that’s coming up that actually puts some teeth into what that means and how that’s implemented by the state Treasurer with exchange rates based on the price of gold versus Federal Reserve notes, the power to accept it, the power to hold it in reserve, the power to invest it in leases or bonds.

There’s a bill that’s on the drawing board in Wyoming. It hasn’t been introduced yet. That adds a lot more to that concept.

Keith Weiner: Let me know if I can help on that, by the way.

Stefan Gleason: Yeah. And you know, Larry Hilton, the UPMA he’s involved with that. I’ll send you some information on that, and you can talk to him about it, too. I don’t think it’s going to be introduced this year necessarily, but it may be maybe next year. There’s another column dealing with whether a state has a state Chartered bullying Depository like Texas does. So we score that Texas is the only one. There was a study that we helped or urged Tennessee to do on whether to have a Tennessee bullion Depository, and they actually had a special legislative study committee put together this report, a 40 page report, and their conclusion was, no, it’s not a good idea. But one of the main reasons was because Tennessee still has a sales tax, and so nobody’s going to want to store their gold in Tennessee when it’s based on the state. You deliver the gold, too, and they have a sales tax. So that’s actually given some more weight to the argument to repeal the sales tax on precious metals in Tennessee, even though they’re not going to pursue the bullion Depository. There’s a bill in Oklahoma to set up a bullion Depository system.

I’m not a huge fan of the idea. I have mixed feelings, I guess I should say, about the government getting involved in a bullion Depository when there’s plenty of private depositories, including mine, Money Metals Depository. The argument, though, is that perhaps a depository that has a state charter might have some greater protection visa via the federal government in some sort of aggression against gold, where under the state’s police powers or somehow under the state’s umbrella, there’s a bullion Depository that might insulate it more from some sort of federal prohibition or seizure or whatever. So that’s a kind of a legal issue, but that’s part of the rationale. We also score whether a state has any gold or silver in their reserve funds or in their pension funds. And right now we only know that Ohio has gold in its pension funds. We heard that Texas actually sold their gold.

Keith Weiner: Yeah, that was some years ago.

Stefan Gleason: Yeah. And that came out in the Tassar study that was done in Tennessee. But there’s a bill currently in Idaho that will probably pass the Idaho House tomorrow, which would be February 17, and then go to the Senate. There’s a bill in Oklahoma to have the state at least have the ability to hold gold and silver as a reserve asset of because right now, a lot of States what they have and not that they have big reserves, but they also have these idle monies that are this perpetual sort of short term fund of surplus tax funds that are waiting to be spent. So in Oklahoma, they have $11 billion kind of on a rolling ongoing basis. And in Idaho, they have $10 billion on a rolling ongoing basis that is held in short, I’m sorry, low interest debt paper, entirely low interest debt paper at a yield nominally of less than 1% and a negative real yield of probably at this .5% to 7% or .8%. And so the idea is that at least for the longer term portion of these funds, shouldn’t we allow the treasury to add physical gold and silver as a hedge against the inflation that this massive pile of debt paper is suffering from?

So we rank whether a state has reserve funds or pension funds held in gold. We also added to the index one of your issues, the gold bonds idea. And right now, no state either invests in or holds or has a gold bond. So it’s there. They all get a zero on it. That’s fine. There’s a lot of work to do. I know Arizona considered that, and maybe at some point in the not too distant future, a state will do that. We also and this is the final one. We also score precious metals, what we call precious metals dealer and investor harassment laws. What that is, is the state laws that make it difficult for bullion dealers to do business, do normal business, or invade the Privacy of their customers who want to come in and buy or sell from that local dealer. And so I’ll give Arizona as an example, because it’s actually the worst, all of them. And what they do is they have a number one, if you sell to an Arizona dealer and there’s about 20 States that have this, more than 20, actually, you have to provide an identification. So you come in with $1,000 worth of gold, you have to provide a photo ID.

They take pictures of the gold that you sold, like gold bars or coins or whatever. Gold Eagles, they’re all fungible. They all look the same. Then they have to write down notes about your appearance, what you said, store this information, but upload it daily to the Sheriff into a database, set that gold aside, not sell it for two to three weeks, depending on the state. Sometimes it’s ten days, 20 days, literally. Just keep it on the premises, don’t sell it. So that in the off chance somebody makes a complaint that this was stolen goods. You know, in the case of jewelry, OK, every piece of jewelry is unique. That’s grandma’s brooch, whatever. But a gold Eagle coin, it’s fungible. It’s not identifiable. And in any event, it’s just a tremendous invasion on Privacy for the customer, but also the dealer who has to tie up money for long periods of time, leave more metal on this premises. These people sometimes have robberies, so that’s some of the stuff. In fact, in Arizona, it goes further. And this is what makes it especially egregious. Number one, you can’t buy gold and silver if you’re under 18 without a parent. And if the dealer sells it to you, they’re potentially susceptible to imprisonment for six months.

Keith Weiner: Imprisonment?

Stefan Gleason: Yeah. You can be fined or imprisoned. It’s a misdemeanor. It’s a criminal, like a class one misdemeanor. So you have that. And then the other thing is you cannot in only two States, I think, do this. You cannot make any kind of cash payment to purchase gold or silver. You have to make an electronic payment or pay by check so that there is an electronic record of the transaction. So all these things are we call investor and precious metals dealer harassment laws, and we score that. So going just from the top, I’ll give you the top six States and the bottom six States. So the top six States starts with Wyoming. We give it a 61% on the index. Then Texas, South Dakota, Alaska, New Hampshire and Utah. And the worst States, starting from the very worst is Vermont and then New Jersey, Maine, Kentucky, Wisconsin and New Mexico. So there’s a lot of work to do. But if people want to see this, they can go to MoneyMetals.com and actually look at the index. It’s in the resources tab. Just look for Sound Money index and you can look up your state. You can even go and actually look at the actual laws on the books in the state that deal with these various areas.

Keith Weiner: Well, that’s very interesting. I hadn’t known that Arizona is one of the worst, at least in one of the categories. I certainly would encourage everybody to become aware of these issues. And then if you see that your state is doing something really bad, can they coordinate with the Sound Money Project to find other folks in their state to begin a smart and efficient way of logging? If I’m an individual and I see okay, my state is doing something that really is just wrongful, and then what am I going to do? Well, maybe I make a call to a Senator or something and then I give up and then the next person three days later, you’d never get the critical mass that way, even if there were thousands of people that were interested. But if people could coordinate their activities, they might actually get some traction.

Stefan Gleason: Yes, obviously, one way is to get on our email list. You can go to Soundmoneydefense.org or MoneyMetals.com and just get on our email list and we will be able to send you alerts about your state. You can go to SoundMoneydefense.org and look at the announcements about various pending legislation and see who the bill sponsors are or what the bill numbers are. And like I said, there’s literally well, we got five sales tax repeal bills, and we have about seven or eight other bills involving some of these other areas pending right now. And most of those there’s information about them right now on our Sound Money Defense website. So that would be probably the best thing to do, get on our list and then check out the bills and talk it up to your representatives in those States.

Keith Weiner: Very cool. I hope that this is a growing movement and that we can get traction and continue to make progress on this front. Very cool. 

Stefan Gleason: I like what you do, Keith, on every front. And what you’re doing is similar to in a different way, but it’s parallel to what I’m doing. You’re building a very successful business on something that really matters for the country. And it’s not just sort of Ivory tower public policy, but it’s actual practical, useful ways of using gold and silver and remonetizing gold and silver. And in my case, I feel like putting gold and silver into the hands of individuals and then storing it for them if they wish or and or giving them things to do on the public policy front, where we’re addressing problems at the same time as we’re running businesses that hopefully continue to be successful.

Keith Weiner: Yeah, absolutely. I founded a nonprofit called the Gold Standard Institute, 501 C3. And then at the same time, around the same time, I founded Monetary Metals, which is a for profit. And I thought that there would be kind of two arms of the pincers to attack this problem, one on a little bit more education outreach, definitely not grassroots organization, and then the other obviously offering a value proposition. And most of my energies now are focused on the for profit side, I guess partly because making money is good and there’s always that. But I think also I just got frustrated with the glacial pace of progress. And I’ve spoken to legislators in a lot of different States and also MPs and other legislators globally, and some central bankers globally, too, and just walking away with a sense of even if they personally agree, I know some central bankers that are big fans of my work and subscribers and have been for years. Oh, yeah. Whenever you write about our country or whatever, we pass the articles around and they’re well read and well like you’re respected around here, Keith. Does that mean there’s going to be any kind of gold related anything, even the word gold being uttered… by no way.

Not in a million years. Partly because I’m not dealing with the people that are the J Powells or the equivalent at the top. I’m dealing with people one or two layers below that and they know that it would be career suicide for them to talk about gold, at least in a professional context, so they can get together if I haven’t been visiting and have a beer with me and talk about it, but not officially, but it’s an interesting thing. We’ll see if inflation or whatever other drivers may continue to raise awareness and consciousness for gold, which is kind of both a good and a bad thing. It’s like, okay, awareness is going up, that’s a good thing, but awareness is going up because the world is headed in such a horrible direction. I guess I’m reminded of a Frodo saying to Gandalf, I wish I hadn’t lived to see such times. Okay, I get to be hero and do all these things, but man, it would have been helpful. I’ve easier if I could just stay in back end and enjoy life. Those are the times we’re in. Well, thanks for coming on the show. This has been very interesting to me and I hope very interesting to our subscribers and listeners. This is Stefan Gleason, who’s the founder and President/CEO of Money Metals Exchange, who is a client of Monetary Metals and has an open lease deal at the moment for silver.

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