The state of Maine could make it easier to buy, sell, and own precious metals like gold and silver if a series of bills from Sen. Eric Brakey (R-Androscoggin) can find support from the Democratic majorities in the Senate and House of Representatives.
Currently, Maine law makes it difficult and costly to own or transact in precious metals.
Anyone who purchases gold or silver in Maine must pay a 5.5 percent premium thanks to the sales tax.
Likewise, those who buy the precious metals at a low price and later sell them at a higher price must pay an income tax assessed against their capital gains.
Brakey has introduced legislation that would abolish the sales tax on gold and silver purchases and exempt bullion sales from the income tax.
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Another bill Brakey has introduced would restore both gold and silver as legal tender under Maine law.
Three other states — Utah, Wyoming, and Oklahoma — have rules that recognize gold and silver as legal tender.
“Practically speaking, [LD 1270] would allow Mainers to use gold and silver coins and bars as money rather than just as mere investment vehicles,” Brakey said, in his testimony for the bill.
“In effect, it would put gold and silver on the same practical footing as Federal Reserve notes,” he said.
A separate bill from Brakey would allow Maine’s State Treasurer to invest in precious metals as well. Brakey said allowing Maine’s state employee pension fund to invest in the metals would give the State Treasurer a tool to protect retirees against inflation.
All of Brakey’s proposals orbit one central idea: sound money.
Precious metals like gold and silver are considered “sound” because the growth in supply of gold and silver is physically limited. Historically, the supply of gold and silver mined in any given year has been limited by the practical constraints, like cost, of getting the metal out of the earth.
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While the supply of precious metals is relatively fixed, the supply of fiat currencies, like the U.S. dollar, can fluctuate wildly according to the whims of politicians and the unelected members of the Federal Reserve.
The danger of “soft” money, like the U.S. dollar, has become apparent in recent years as inflation rates in the U.S. have skyrocketed.
Those who held gold or silver prior to the surge in inflation that began in early 2020 would have seen the value of their savings increase rather than decrease.
In recent committee hearings, some Democrats have voted in support of Brakey’s hard money proposals, signaling a potential for a rare bipartisan vote when the bills come up for final roll call votes.