State-Level Gold Reserve Proposal in Arizona Could Boost Demand for GoldPaul-Martin Foss
With the prospect of sound fiscal policies at the federal level becoming increasingly unlikely, state-level proposals in the United States are where fiscally-minded conservatives are beginning to focus more and more of their efforts.
Increasingly those efforts are taking the form of pushing state government to secure their assets by investing in gold and silver. Following the establishment of the Texas Bullion Depository that opened for business in 2018, Arizona is looking to follow in those footsteps.
Arizona has a Budget Stabilization Fund that is supposed to be used to take care of any budget contingencies that the state may face. The fund currently has almost $500 million in assets, however most of those assets are invested in stocks and bonds. A new bill that has been introduced in the Arizona legislature would mandate that at least 10% of those assets be held in the form of precious metals such as gold or silver.
It’s worth nothing that the bill’s sponsor, Rep. Mark Finchem, has previously passed sound money legislation that eliminated state income taxation of gold and silver in Arizona. He stated that the purpose of his bill is to protect the state’s Budget Stabilization Fund and safeguard it against the volatility of the dollar.
That certainly makes sense, as state finances are just as prone to stock and bond market crashes as anyone’s personal finances. And by taking even a relatively conservative 10% position in gold, the state could do a lot to protect its finances from taking a major hit when the economy turns south and stock markets drop.
If this bill is successful, and if other states follow suit, demand for gold could get a significant boost as states look to fill their coffers with gold. That wold be great news for gold investors who would see the value of their holdings rise as demand rose.