Precious Metals News & Analysis - Gold News, Silver News from Money Metals Exchange

Gold Has an Eastern Bid — and a New York Problem

Fri, 13 Nov 2026 00:00:00 EST

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up, don’t miss a fascinating conversation on a troubling topic about how the state of Washington recently reversed its long-standing sales tax exemption on gold and silver purchases as we welcome in not one, but two guests to discuss the matter – Carolyn Biko of the Washington Coin & Bullion Association and Jp Cortez of the Sound Money Defense League.

Carolyn, Jp and Mike Maharrey dive into the shortsighted and damaging law put in place by the Washington state legislature that led to the sales tax exemption repeal, the harm it has caused now that it’s in place and then what our two guests are working hard on as they try to get this ridiculous legislation reversed to help restore sound money and local business in the Evergreen State.

So, stick around for a tremendous conversation you will not want to miss on this important topic, coming up after this week’s market update. And as a reminder, we would greatly appreciative if you would be willing to do us a favor and please download, like, rate and subscribe to this podcast wherever you consume this content.

Gold and silver are taking another beating here at the end of the week.

But while traders are dumping metals over fears of higher interest rates, buyers on the other side of the world are taking a very different approach.

They're accumulating the real thing.

More on that in a moment. But first, gold is trading around $3,900 an ounce Friday morning, with silver dropping a little below $50. Both metals have surrendered ground this week, reversing the optimism surrounding last week's rebound.

Thursday was especially ugly. Gold dropped to a one-year low yesterday but is holding steady here today, up a couple of bucks since trading began. The yellow metal currently checks in at $3,897 an ounce, down nearly $200 or 4.5% on the week.

Silver meanwhile is still selling off today despite gold’s resilience. Silver is giving back pretty much all of last week’s gains and is down nearly $3 on the week or 5.2% to check in at $49.86 an ounce as of this Friday midday recording.

As for the PGMs, platinum is down 3.0% and comes in at an even $1,500. While palladium is down 1.7% to trade at $1,026.

The immediate culprit for all the selling in the metals is a familiar one: inflation is running hot, and traders are betting the Federal Reserve will respond with higher interest rates. A stronger dollar and rising bond yields have added to the pressure.

Friday's wholesale inflation report offered little comfort. Producer prices were up 6.5% from a year earlier, the biggest annual increase since November 2022.

So, here's the frustration for precious metals owners. Inflation keeps eating away at the dollar, yet gold gets punished because traders expect the Fed to fight inflation.

That can happen. Gold doesn't move in a straight line, and it doesn't rise automatically every time prices at the grocery store go up.

But expectations for another rate hike don't settle the bigger question: How much financial strain will policymakers tolerate before they reach for easier money again?

Higher rates make debt more expensive to carry. They squeeze borrowers, pressure businesses, and raise Washington's financing costs. The Fed can talk tough. Following through becomes harder when the bills come due.

That brings us to a story our own https://www.moneymetals.com/news/2026/11/12/the-flow-of-gold-from-west-to-east-in-one-picture-005370";>Mike Maharrey highlighted this week: the continuing movement of physical gold from West to East.

Chinese demand for gold bars and coins rose 7% in the third quarter to 79 tonnes. Buying through the first nine months reached a record 393 tonnes.

Meanwhile, U.S. bar and coin demand fell 40% from a year earlier to just 8 tonnes, its weakest quarter since late 2019.

That's quite a split. Chinese investors are adding to their holdings while American demand has withered.

Asia is also investing in the plumbing of the gold market. Hong Kong has launched a gold settlement system, and Singapore announced plans this week for vaulting services serving foreign central banks.

These developments suggest a long-term commitment to physical gold, even while American investors remain hesitant.

The question for listeners is simple: What happens if Western investors regain their appetite for bullion while Asian buyers remain active?

That wouldn't guarantee an immediate rally. But it could make today's pessimism look shortsighted.

Here in the United States, growing concerns surround the resilience of our precious metals market infrastructure, including where metals can be stored and delivered.

That's why the bipartisan SILVER Act is gaining support in Congress, and backers are working to include it in the National Defense Authorization Act during the lame-duck session.

Senators Jim Risch and Catherine Cortez Masto introduced the Senate bill. Congressman Russ Fulcher introduced its House counterpart. Support now spans both parties and both chambers -- with 19 additional House and Senate cosponsors as of today.

The problem is straightforward: exchange-approved precious metals depositories are heavily concentrated in and around New York City. A major regional disruption could interfere with deliveries and settlement.

The legislation would require objective approval standards and transparent applications so qualified depositories across all four continental time zones can compete. Every facility would still have to meet rigorous safeguards.

Money Metals Depository and a broad industry coalition are supporting the effort. Proponents see an opportunity to reduce concentration risk, expand competition, and strengthen infrastructure serving financial markets and critical industries.

Because this is also a national security issue, the defense bill offers a possible path forward. Getting the SILVER Act included remains the next hurdle.

Put these stories together, and there's a useful lesson.

Physical metal matters. Who owns it matters. And the infrastructure that stores and delivers it matters.

A futures trader can change his position in seconds. Building a vault, developing a settlement network, or accumulating a substantial bullion reserve takes a longer view.

Investors would do well to take a longer view, too.

Nobody enjoys watching the value of their holdings decline. And buying gold or silver doesn't eliminate price risk. But a difficult week doesn't resolve the risks that lead people to own tangible wealth in the first place.

The daily quotation tells you what someone will pay for your ounces today. Your reasons for owning those ounces should extend beyond the next Fed meeting.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Maharrey: Greetings. I'm Mike Maharrey, and I have a treat for you today. I have not just one, but two guests. First, let me introduce Carolyn Beko. She is the president of the Washington Coin and Bullion Association. How are you doing today, Carolyn?

Carolyn Bezo: I am very well. Thank you. Thank you for having me on the podcast. I appreciate it.

Mike Maharrey: Absolutely. Pleasure to do so. And also joining me today is my good friend, Jp Cortez. A lot of you folks probably know him already. He's the director of the Sound Money Defense League. How are you doing, Jp?

Jp Cortez: Hi, Mike. Great to be here. Thank you so much for having me.

Mike Maharrey: Yeah. Well, it's great to have you both on. And why we're here is we're going to talk about a really bad move that the Washington State Legislature recently made when they got rid of a longstanding sales tax exemption on the sale of gold and silver bullion. And so, Carolyn and Jp are teaming up in an effort to reverse this dumb policy. So we're going to talk a little bit about how we got here, why it matters, and what is going on to try to reverse this. But before we get into all of the nuts and bolts, Carolyn, I would love for you to just real quickly give us a little overview of what you do with the Washington Coin and Bullion Association, and then what's your mission?

Carolyn Bezo: Sure. Well, as you said, I do own a coin shop as well. So, I own Redmond Rare Coins in Kirkland, Washington, and small shop business partner and I run it, just the two of us. So, we are very much understanding what's going on in Washington because we are directly involved with it. So when the association started back up again in, I guess about 18 months ago in 2025, I got involved with that. Someone made a call to me, said, "We're going to have this big Zoom call. You want to be involved?" They said, "Absolutely." And little did I know that I would then be involved as much as I'm the president of the association and take that job very seriously. And we've been working really hard to get the exemption put back into place. We had it for 40 years and that is our sole mission is to get that put back in place.

But at the same time, from that, educate people along the way, both customers and other dealers and legislators, of course.

Mike Maharrey: What's kind of the lay of the land in Washington? How many businesses are involved in the association, if you can give an approximate number? How many folks are we talking about?

Carolyn Bezo: It is difficult to give a number because there are many vest pocket dealers, as we call them, who don't have a brick and mortar store like I do. Brick and mortar, there's probably about 80 or so in the state, I would say at the most, but there are so many other people that do this on the side and they've been doing it on the side for years where they go to coin shows, they travel all over, not only the state, but the country. So, if you add in all those, we're talking several hundred. And it's a very diverse, we are across the state, we are in every district, we're on the borders. And also now with the advent, of course, since we've had the exemption 40 years ago, there was no internet, so there was no eBay, no whatnot and all of those things. So, those numbers we don't even have a good handle on, but there are a lot of us here in this state for sure.

Mike Maharrey: Yeah. And there's a lot of folks out there just in the business in general, as you say, not just big businesses that you might hear about. And the guys you see advertising on TV, but a lot of small businesses are very much affected by these kind of policies that we're going to be talking about. Jp, real quick, tell us what you're doing over at the Sound Money Defense League.

Jp Cortez: So thank you, Mike, for the introduction. My name is Jp Cortez. I'm the executive director of the Sound Money Defense League. We're a national public policy group working to re-monetize gold and silver at the state and federal level. And we do that primarily, we believe the most important issue keeping people from using gold and silver as money today is primarily the taxes. The friction imposed by state governments and the federal government make it impossible to use gold and silver functionally without taking massive, massive tax penalties every time you spend money and almost requiring you to be a CPA just to use gold and silver as money. So, there is a bunch of government induced obstacles standing in the way of people using gold and silver as money, but also as savings, as investment, which many people like to do, many people would like to do.

in Washington's case here recently, despite this longstanding exemption, the state legislature has decided to kind of do an about face and they're seeking legislative dollars or tax dollars now. Actually, Carolyn, I'm interested, I don't want to put you on the spot. I don't know how much you know about this, but my understanding is that the state legislature is desperately looking for tax dollars and they're kind of trying to look for it any way they can. They're headed towards a fiscal cliff and they have a real budget problem. Is that part of the reason we're seeing these taxes imposed on precious metals dealers?

Carolyn Bezo: Absolutely. When the session happened in 2025, our tax exemption repeal was one of probably I think about seven or eight taxes that were either sunset or instituted in one single bill. And that bill was signed on the very last day of session, and that is exactly what it was. I view it, my words were it was a money grab is that they saw dollar signs, they said, "We need these monies to balance the budget." And there really was not a thought process in my mind, again, of what could possibly go wrong. They saw the opportunity, they saw, "Well, gold is going up, silver's going up. If we can get a piece of that, that's significant money." And that's exactly what happened with that reversal there. So, we were not the only ones affected. There were other industries that were affected and we were all lumped into the same bill signed into law by the governor on the very last day.

Mike Maharrey: I was just going to say, this is so typical that government agencies, government entities will try to do things and it sounds like a good idea on the surface, but they never think about the actual unseen effects. And Bastiat called that bad economics, right? Not paying attention to the unseen. And this is a prime example. Oh, we need money. We can get it here without it really paying any attention to the ramifications of how that might actually impact the industry and other folks. And I kind of want to delve into that, but JP, you were about to say something, so I don't want to cut you off.

Jp Cortez: Yeah. No, no. I was just speaking to this experience that Carolyn just described is tragic. And unfortunately, we've seen it happen in a couple of states. We've worked. Maryland, for example, repealed their sales tax and then reimposed it after seeing the harm they did. In Louisiana, we had an episode several years ago where they had a sales tax, decided to eliminate that sales tax, or excuse me, had a sales tax exemption, decided to eliminate that, and within one year realized, oh man, we've just completely kneecapped an entire industry. And so it's really tragic and there are real humans and real businesses that are affected by the imposition of these really onerous levels of taxation on an industry that operates on razor thin margins. So yeah, Caroline, we'd love to hear more about the in-state experience and what the impact of this tax has been on you, on your business, from dealers specifically in the state.

What are you hearing?

Carolyn Bezo: Absolutely. And as you said, we had this exemption for 40 years and Washington also has a B&O tax. So talking about razor thin margins, when we make 2% on something, that sales tax is charged to the customer, but the B&O tax, which is what we pay for the pleasure of doing business in Washington, we have to absorb that. And that is half a percent. So, on a margin of 2%, half a percent, it's not half a percent, it's 25% of our profit. So, that's been a real issue. Just to give you an idea of Washington State and also back to Maryland, Maryland signed that law, their governor the same day that Governor Ferguson signed it here. And as you say, they've already reversed it because they saw the damage. We are painting the picture for our legislators of the damage we spent last year explaining what was going to happen, what we were concerned about, because the tax didn't go into effect until January of this year.

So, we spent March until December telling them this is bad, reverse course, this is not going to go well. They didn't. And now we get to show them everything we said was going to happen is happening. And the tax level, the lowest in the state combined sales tax, which is city, county, state is 8.9%. Highest is 10.7%. My shop is 10.4%. So on a $10,000 purchase, you're paying over a thousand dollars in taxes and it's been absolutely horrendous. So we have recently surveyed our dealers across the state and we're getting... I knew what was happening in my store. I know when I talk to people what's happening and they've just reconfirmed that sales are down between 50 and 95% across the board.

There are many shops, we all know of at least two shops that have closed. And so you exemplify, not exemplify, but put that across the board and there's a lot more going on there. So, it has been a real issue. Customers coming in saying, "I can't buy anymore." And it is, as you say, ruining an industry from the top down, from the dealers to the customers, to the people that used to just even come in once a year or once a week, everyone is being impacted by it. So, it's been a tremendous disadvantage to us versus the dealers in our neighboring states.

Mike Maharrey: I'm curious as to how the policy as it now stands in Washington compares with neighboring states. Say if I want to go to Idaho and buy some gold or maybe even Oregon, are the policies different there and is there, maybe, an incentive to walk?

Carolyn Bezo: Absolutely. And we sense people. We spend a lot of our day turning people away because in good conscience, as a business owner in Washington, I don't feel comfortable selling something to somebody that from the moment they walk out my door, it has to increase by 12% minimum for them to break even because then it's not a sound investment anymore and it is not a way for them to make a hedge against inflation when that is absolutely fundamentally true that they are absorbing that percentage. Then if they sell that back to me, I have to make money on both directions. Whether they sell it back to me in six months or six years, I'm still going to make a percentage or so. And more so now because I don't have that retail, I'm going to then ship it off to my wholesaler. So, we do encourage people to go to Oregon, go to Idaho.

There is no sales tax there. And that as well as what we've been trying to explain to legislators is the economic leakage is very real. It is worth for somebody who wants to buy gold and silver to make the drive to Oregon. They will pay 55 cents less per gallon on gas because they have a lower gas tax. If they want to go shopping, they will pay no tax on clothing because there is no clothing tax in Oregon. If they decide, "Well, I want to restock my bar at home," they'll pay less in alcohol tax.

And then they can buy their gold at no. So, it's kind of a no-brainer of, "Well, I'm going to save hundreds if not thousands of dollars making a nice day outing to Oregon. It's worth it to me." And people who have the ability to do that, that's great. But somebody who doesn't have that ability, who's only buying an ounce or two a week, they are really handicapped by that because they don't have another way. They don't have a 401k. They're not buying EFTs in gold and silver. They're buying physical metal for a reason, and now that's been taken away from them. So yes, other states, and Jp, he'll tell you, I think 45 other states do not tax this. A handful have thresholds, but we are an outlier here in Washington and most states are going the direction of Maryland in reducing or removing these and Washington's going the opposite way and at the top of the wrong list for sound money, very much so.

Jp Cortez: I think Carolyn was completely… she just nailed something that I think is so important and it's the exact same kind of phenomenon that we see in every state where this has been considered. Oregon, or excuse me, Washington, obviously surrounded by Oregon and Idaho, two states that do not have sales tax on precious metals. You just have to drive to your nearest border to avoid the tax. In Maryland, we made the same argument, you're surrounded by states that don't have a tax. You're pushing the industry out of state. In New Jersey, we passed a sales tax exemption in New Jersey in 2024, I believe that was, maybe 2025. And I was struck because it was mostly just me and another in-state dealer that were testifying at these hearings. And this in-state dealer was literally telling the committees that in Pennsylvania, right across the border, they have billboards.

They put up billboards that say, "Do you not want to pay tax for your precious metals? Come to my shop right across the border." So, it's something that states realize in some ways that this is a flourishing industry. And so, they're inviting it when they have good tax policies, they're inviting it into their states. And that comes at the detriment of the businesses in these states that have newly imposed taxes and the investors that would otherwise be not just supporting a local business, but also in many cases paying for taxable items, be it coin flips, be it cases, be it safes, these various other items that pertain to this industry that would be taxed. Now the state is losing all of that. And part of it, a big part of it is the myth or the belief that they're going to collect hundreds of millions of dollars.

In some cases, states believe that they're going to be made rich by taxing gold and silver purchases. And it's absolutely untrue. It's something that we have to go when we fight these fights, we have to go state to state and explain to them that the fiscal impact, the amount that you think you're going to be able to generate in revenue from these transactions is a fraction of what you think it is here.

Mike Maharrey: Yeah. This is like economics 101, but incentives matter. And it's crazy to me that policymakers seem to forget that because they know, right? I mean, we've all heard of syntaxes. They impose taxes with this absolute intention of making the activity less with cigarettes and alcohol or whatever. How do they think that all of a sudden, because it's a different kind of thing, this is not going to happen here? I'm curious, and probably both of you can answer this, so I'll let you guys both tag team on this one. But when you talk to legislators in Washington and you bring these things up, what kind of feedback are you getting? I mean, what are they saying in response?

Carolyn Bezo: I can go first if you want, Jp. We have spent the past year doing just that between myself, the rest of the board and our lobbyists. We've met with over 80 of our legislators here in Washington State. And at the beginning when we first started doing it, many of them were completely unaware of this. So there was an education process, and I don't expect them to know every single thing. This was put in on the very last day, but many were very surprised about it. And we've met with some of them numerous times and it is a bipartisan issue and we have bipartisan support. There are a couple legislators who want to see the tax. They are focused on balancing the budget and they are still determined to get revenue and are not necessarily listening to what is going on, but the majority are on board.

And I think right now we have about 28 people who are going to be sponsors of our bills when we pre-file them in the next 24 days. December 7th, we get to pre-file and then session starts in 60 days on January 11th. So, we have another 44 who want to see the data and we are providing them with that, with the help. I use the word help loosely from the Department of Revenue, but trying to show them that because it truly is bipartisan. It is hurting Washingtonians.

Everyone knows, not just Washington, everything is expensive right now. And especially people who buy gold and silver physical metals, they do that for a reason. And they do that because A, it's available to them, but B, they are not interested in doing something on paper. They're not interested in buying an EFT or investing in the stock market, or they might not have the ability to do so, and this is a forced savings for them. So, every dollar counts. So when something that costs them $102 is now going to cost them $112 or more, they make a real decision about that and say, "I don't know if I can afford that," because it's different than buying a car and you drive it off the lot and it's worth less and you're like, "Well, I'm going to enjoy this and it's a consumable." So, it is not meant to go up in value unless you have something specific there.

You know you're going to use it and when it's done, you're going to buy something new. Gold and silver, as we know, are not consumables and they should not be treated as such. They are an investment and they get treated as an investment with capital gains and all of that, but then they get treated as a consumable. So, they're trying to, in essence, tax us every direction on this. And it's egregious, it's regressive and really damaging. I mean, you can tell I get passionate about this because it is so frustrating and we've spent so much time educating these legislators. I'm cautiously optimistic that when the time comes, we'll have a chance to testify in person and really get in front of them. But we have been doing everything we can throughout this year to educate them and show them not only is this dangerous, the money's not going to be there because people are changing their buying habits.

They are going to Oregon, they're going to Idaho, or they are just going without.

Mike Maharrey: I really appreciate the passion that you have on that because I think you made a really good point earlier. A lot of the folks that really struggle with this kind of thing are your lower income investors, people that they want to save, they want to protect their wealth, they're aware, I need to do something for my retirement, but they don't have thousands of dollars every month. And there's this, I think a stereotype that gold investors are these rich people that are buying it and maybe throwing it in a vault and rolling in the coins or some ridiculous thing like that. And it's a lot of folks that are just everyday folks like everybody who's listening to this that are just trying to stay ahead and to have this double squeeze from government is just crazy. Jp, I'm curious from your perspective, and you can even give probably a little broader, as you bring this subject up in legislatures across the nation, what are the biggest barriers?

What are the things that you're really having to overcome in the mindset of legislators to get them to change their thinking on this?

Jp Cortez: I think my experience has been similar to what Carolyn just described in most cases. So there are nearly 8,000 elected legislators across the country. In most cases, these people are not ideologically opposed to gold and silver. It's not that they're acolytes of modern monetary theory and so they don't like gold. They simply don't have an opinion on it. In many cases, they don't know anything about it. And that speaks to why what Carolyn and the WCBA are doing is so important because so much of this game at this stage in the game is the education. You're having to inform these lawmakers who maybe when they drive through their town, they see a sign that says gold or they see a sign that says coins, but otherwise they have no exposure at all to the asset, to the industry as a whole, to the people that are working within it.

So, the education is paramount. And to the passion with which you're talking about this, Carolyn, and kind of displaying this, it's earned, it's understood because what the state has done here, I don't mean to overstate it, but this is something of an existential threat to every dealer operating in the state. This is people's livelihoods, people's retirements, and the government coming in and imposing this tax on that has real genuine costs. So, I strongly commend the work that y'all are doing to educate because that is perhaps the most important part, certainly a very large important part of this process. So yeah, I'm happy to hear that it's been so successful and you're opening eyes educating people on this topic that they may not know much of or anything about.

Mike Maharrey: Yeah.

Carolyn Bezo: Thank you.

Mike Maharrey: So Carolyn, folks are probably listening in Washington right now. We may even have some coin collectors or dealers. What can they do to get involved? How can they help out? How can they get their feet on the ground and help get this reversed and return us to a sane policy in Washington?

Carolyn Bezo: They can do a lot. They may not think they can, but I was not involved in politics much before this, and I've definitely learned a ton the last two years, so I'm happy to share my little knowledge off of that. But the first thing they can do, whether they're a resident or a customer, is reach out to their legislators, contact their senator, contact their representatives, and tell them how this tax is either affecting them, affecting their local coin shop, affecting their savings, whatever it is, and ask them to restore the exemption. That's a key thing that they can do. And they can ask them for a committee hearing on this. Right now, if they ask, we don't have bills for them to reference, but if they reach out again come mid-December and they can reach out as many times as possible, they record all of these calls, they record all these emails, so that's key so they can get their voices heard.

And that is valuable because they do hear from me all the time. They hear from dealers all the time. They want to hear from the person who used to have scrap silver and would go to a thrift store, buy scrap silver and turn it in and use it to supplement their social security. And now they can't do that because they're not getting paid enough on it because the dealer can't pay them because they're not reselling it. So those sorts of things, they need to hear from everyone. And as Jp said, these are people who, this is their livelihood. This is how they've forced a savings because they don't just now go to the bank and get out $100. They have to come down to my store and they have to sell something to get that money. So, it does help people save. Dealers, we sent out an economic impact survey.

They can ask me for that. If there's a dealer watching that isn't involved in Washington State, they can reach out to me through the WCBA and I can get them a survey and they can also donate to the WCBA. I'm a volunteer. I mean, I have my shop, all the board is volunteers, but we do have paid lobbying efforts. So any money we raise goes towards that. It's not a deduction or anything because we are just an association, but those are the things that they can do that will really help. And the more voices that are heard, the better. And time is of the essence. We've got 60 days until session starts, but we also have in Washington with our midterms, we've got at least 26 brand spanking new people who are going to be deer in headlights come January when they don't know where the bathroom is when they get to Olympia.

So, they can also get to know who their new legislators are and put this on their radar because those people definitely are not aware of this. They've got a lot of homework to do. So reaching out, making your voice heard is really going to be impactful for everybody.

Mike Maharrey: Yeah. I want to emphasize too, some folks might be listening and think, "Well, I've called my congressman and that didn't do any good. I got this form email back." Your contact with your state rep or your state senator has much more weight than it does with somebody in Congress. First off, they're dealing with much smaller constituency. And then second off, they're not used to constituent contact. And when they hear a lot of chatter about a particular issue, they definitely take notice of that. So don't think that, "Oh, my voice doesn't matter." It does, especially when you start talking about the state level. Jp, before we go too, maybe you can add to what she said as far as practical steps, and maybe you have some things that folks can do that are outside of Washington, but maybe thinking about Sound Money and what's my state doing?

How can the Sound Money Defense League help with that and where can they reach out to you guys and find information?

Jp Cortez: Yeah, I think Carolyn kind of nailed it. The listeners of this podcast, people who heard me give interviews for a long time have been hearing me say that grassroots is the secret sauce. It is the special ingredient. Legislators first have to feel the heat before they see the light. And in-state pressure from smart, concerned human beings in the state that are negatively affected by these policies is among the strongest weapon that any of these legislative projects have, not just in Washington. So, I do encourage everyone to make their voice heard, especially at key times right before hearings, right before key votes, making sure that you're reaching out, making sure that you're staying in contact with groups like the WCBA and the Sound Money Defense League that will be sending out alerts when these key times do come up. And then more broadly, if just tuning into what's happening in Washington, you're in another state and you might realize, wait, I also have to pay a sales tax when I buy Silver Eagles at my coin shop, what's that about?

I encourage everyone to look at the Sound Money Index. It's a scorecard that we put out every year that ranks all 50 states based on their gold and silver policies, policies that include levels of taxation, different types of taxation, whether the state has established a gold reserve, whether it has reaffirmed gold and silver as legal tender, and several other policies. So, if you're in one of these other states and you want to get involved, you want to make your voice heard, you want to bring sound money to your state, I encourage you to look at the index, see where your state ranks, and let's figure out what we can do about it.

Mike Maharrey: Yeah. What's the Sound Money Defense League website, JP?

Jp Cortez: Yeah, the site is soundmoneydefense.org. You can find the Sound Money Defense League and me on Twitter or on X @Jpcortez27 or @soundmoneydef. My email, I think my phone number's on there. Feel free to reach out anytime. If there's a policy you're wanting to pursue in your state, we'd be happy to work with you.

Mike Maharrey: And Carolyn, what's the WCBA's website and contact information for you guys?

Carolyn Bezo: It is washingtoncoinandbullyanassoc.org. Assoc, A-S-S-O-C. We did shorten it a little bit. So washingtoncoinandbullionassos.org, and they can reach out there. They can reach out to me directly at cb, charliebravo@redmondrarecoins.com. And there's a ton of information on there. I will also add with Jp, Washington, I'm pretty sure it's on the bottom of the Sound Money list or really the top of the worst, whatever way you look at it. So, we are hoping that that will change and really appreciate the support of Sound Money and appreciate the support of you in getting us heard out there. And we will do a calling blitz. We're going to try and let people know in January before session starts where Everybody will hopefully reach out to their legislators on that day and give us a little bit more to heat them up before session starts.

Mike Maharrey: Absolutely. Well, both of you are doing fantastic work. I'm thankful that you're out there and hopefully folks have a little bit better sense of what's going on. This kind of thing requires, I guess, eternal vigilance because you think this was a 40-year exemption that they just got rid of. So, you can't just rest on your laurels and think, "Well, everything's fine here." You have to be vigilant. So, I'm thankful for the work that you guys are doing for Jp and all the work that you guys do to create the index and all the legislative efforts. People have no idea how much time, energy, and resources are going into this fight. So thank you so much, both of you, for what you're doing. Thank you so much for being on the show today, and hopefully it'll shine us a little spotlight and help increase these efforts.

Mike Maharrey: So thank you both.

Carolyn Bezo: Thank you. Thank you.

Really interesting discussion and I’m glad we were able to get a couple of great guests on to talk about what’s happening there in Washington state and in other jurisdictions around the county when it comes to this issue. Rest assured that Money Metals will be on the forefront of this fight to restore and retain sound money policy throughout this nation and be sure to stay tuned right here for more news on this front.

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. And remember to tune in to our second / midweek podcast as well, hosted by Mike Maharrey.

To check out any of our audio programs just visit https://www.moneymetals.com/podcasts";>MoneyMetals.com/podcasts or find them on Spotify, Apple Podcasts, Google Podcasts, or wherever you listen to your favorite podcasts. And as a big help to us we would ask you to please like, subscribe, download and rate our podcasts. Doing so helps us extend the reach of this material.

Until next time, this has been Mike Gleason with https://www.moneymetals.com/";>Money Metals Exchange, thanks for listening and have a wonderful weekend everybody.

Is This the Worst Savings Plan Ever?

Fri, 13 Nov 2026 00:00:00 EST

I may have stumbled upon the worst financial retirement plan ever conceived.

It's actually worse than my savings plan as a young man -- which was no plan at all.

About that. Here's a confession.

I’m not a good saver.

Now, I've been working on that, and I’m definitely better than I was when I was younger. Back then, my retirement strategy was “hope and pray.”

I have a plan now, but that doesn’t make it easy. Like everyone, I’m feeling https://www.moneymetals.com/news/2026/11/10/beyond-the-cpi-the-complete-inflation-story-october-2026-005362";>the inflation squeeze.

At least I’m not alone. Apparently, most Americans are struggling to save money. The personal savings rate dropped to 3.8 percent in September. With the exception of a post-pandemic dip in 2022, it’s the lowest level since 2008.

https://www.moneymetals.com/uploads/content/saving-rate-oct-26.png"; width="800" height="333" class="mx-auto p-3" alt="" />

And when we do manage to throw a few pennies in the penny bank, inflation is stealing our savings. Even in the best of times, the government devalues your money at a 2 percent annual clip. That doesn’t sound like a lot, but it compounds. Every five years, your money loses a little over 10 percent of its purchasing power. https://www.moneymetals.com/podcasts/2025/11/05/inflation-is-the-plan-004459";>And that’s the stated plan! The reality is even worse.

Back in the day, a family could put a few gold coins in a bag, and that money would buy roughly the same goods and services 20 years later. Today, you have to chase yield just to keep pace with inflation.

This incentivizes risk.

Sure, you could put your money in a savings account earning a small percentage of interest. But you’ll be lucky if you can maintain your purchasing power. Forget growing your wealth. To do that, you must move into riskier investments. And as inflation climbs, you have to take on more and more risk to generate adequate returns.

Of course, risk is risky.

And it’s gotten a little out of hand.

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Young people now consider gambling a retirement strategy.

No, I don’t mean figuratively gambling in the stock market. I mean literally gambling – as in sports betting.

According to a recent survey of retail investors, 52 percent of Gen Z respondents said they took money set aside for investing and used it for sports betting instead.

And get this: a quarter of those Gen Z investors said they consider sports betting a part of their long-term financial strategy.

If you’re thinking, ‘That won’t end well,’ you’re right.

According to data from the Bank of America Institute, on average, bettors get back about 75 cents for every dollar they bet.

This shouldn’t come as a shock. Las Vegas is a thing because the house ultimately wins.

You can see gambling's impact on savings rates. Household savings have dropped in states that have legalized sports betting.

Gamblers lose more than a bet. Let’s say I lose $50 betting on my beloved Tampa Bay Buccaneers. If I had invested that fifty bucks at age 25 and earned a 7 percent annual return, it would grow to about $750 by the time I was 65.

I get the gambling appeal. There’s always the possibility you’ll hit it big. But you probably won’t. Odds are, you won’t even break even. Vegas depends on it.

Regardless, saving is hard. But it’s possible. You just need to make a plan and execute it.

An investment planner recently told me a bad plan is better than no plan.

Well, I have a good plan.

Check out https://www.moneymetals.com/programs/monthly-program";>Money Metals’ monthly plan. You can take some of the money you’re dumping into your FanDuel account and buy gold and silver instead.

For as little as $100 per month, you can build your gold and silver portfolio over time. No. You won’t hit it big tomorrow. But you can rest easy knowing you’re saving in sound money the government won't devalue by design.

Trump Administration Kicks Off Fiscal 2027 With Record Spending and a Massive Deficit

Fri, 13 Nov 2026 00:00:00 EST

The federal government kicked off fiscal 2027 with a record October deficit.

After running https://www.moneymetals.com/news/2026/10/19/trump-administration-runs-third-largest-federal-budget-deficit-in-history-005303";>the third-largest budget deficit in history in 2026, the Trump administration spent $404.06 billion more than it took in last month.

Granted, November 1 fell on a weekend, and the government pushed some November benefit spending back into October. But even accounting for calendar adjustments, the October deficit was still $285 billion, 49 percent higher than October 2025.

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Net customs receipts fell by 39 percent to $19.2 billion. This helped drive government receipts down 9 percent year-on-year to $368.94 billion.

October revenue also took a hit as individual non-withheld tax receipts fell ⁠36 percent to $51 billion year-on-year. Tax receipts swelled last October when Californians with extensions due to the 2025 wildfires filed their taxes.

While government receipts dipped last month, revenue has trended upward over the last few years. Government receipts grew by 3.2 percent in 2026. Revenue in 2025 was 6 percent higher than 2024, which was 11 percent higher than 2023.

Meanwhile, the federal government can’t stop spending money.

The Trump administration blew through $773 billion in October. That was a 12 percent increase over last October. (November 1 also fell on a weekend last year, meaning last year's October deficit also reflected November benefit spending.)

https://www.moneymetals.com/uploads/content/oct-26-govt-spending.png"; width="600" height="353" class="mx-auto p-3" alt="" />

U.S. Department of Agriculture spending rose 80 percent due to $28 billion in farm relief payments. The Department of War reported a 30 percent year-on-year increase in spending.

This goes to show that the federal government always finds new ways to spend money.

And nobody seems interested in addressing the spending problem.

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Despite some non-specific talk about “spending cuts,” there seems to be little to no commitment to tackle runaway spending. In fact, the powers-that-be constantly find new reasons to spend money, whether it is a crisis at home or a war overseas.

Treasury Secretary Scott Bessent set a goal to reduce the deficit to 3 percent of GDP. The 2026 budget shortfall was 6.2 percent of GDP, so he’s not off to a very good start.

As the government borrows more and more to cover the budget shortfall, the cost of servicing the ever-growing debt continues to climb in this higher-interest-rate environment.

In fiscal 2026, interest expense was the second-largest spending category in the federal budget behind only Social Security.

The Treasury forked out $115.46 billion in interest payments last month. That was an 11 percent increase from the same period last year.

Net interest (interest expense – interest receipts) was $103 billion.

In fiscal 2026, the Treasury spent $1.36 trillion in interest payments. That was an 11.5 percent increase over fiscal ‘25.

Much of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and must be replaced with bonds yielding much higher rates. Meanwhile, Treasury yields are spiking as more countries spurn the dollar.

This is one reason the Federal Reserve finds itself in https://www.moneymetals.com/news/2026/03/19/gold-the-federal-reserve-and-a-catch-22-004773";>a Catch-22. It needs to hike rates to battle inflation, but the government can't handle even higher borrowing costs.

When people say the spending is unsustainable, it feels like an understatement. In fact, it’s fair to call https://www.moneymetals.com/news/2026/03/26/the-us-government-is-insolvent-yes-that-matters-004791";>the federal government insolvent.

However, very few people in the political class seem the least bit interested in tackling the problem. The bad news is that at some point, the problem will tackle them.

The Flow of Gold from West to East in One Picture

Thu, 12 Nov 2026 00:00:00 EST

I’ve written quite a bit about the movement of gold from the East to the West.

Here’s the story in one picture:

https://www.moneymetals.com/uploads/content/gold-asia.jpg"; width="700" height="700" class="mx-auto p-3" alt="" />

The picture needs no explanation.

Over the last couple of years, Hong Kong and Singapore have built out infrastructure to support the growing gold trade. Last summer, Hong Kong launched https://www.moneymetals.com/news/2026/07/09/hong-kong-launches-gold-settlement-system-to-challenge-western-dominance-005050";>a gold settlement system, hoping to challenge Western dominance of the gold trade. And just this week, the Monetary Authority of Singapore announced plans for ‌a vaulting service to hold bullion for foreign central banks.

As you can see from global gold flows, these efforts seem to be paying off.

We also see it playing out in gold demand data. Asian and Indian investors continue to buy gold, even as Westerners, particularly Americans, sell.

Chinese bar and coin demand rose 7 percent year-on-year in Q3 to 79 tonnes. Year-to-date demand of 393 tonnes ranks as the highest on record, 11 percent above the 2013 high.

Chinese physical gold demand is even more impressive in value terms. Year-to-date spending of $59 billion already exceeds every full year in the World Gold Council data series. Q3 demand alone surged by 32 percent to 11 billion.

Indian demand has been muted due to government efforts to limit imports, including https://www.moneymetals.com/news/2026/05/13/india-hikes-gold-and-silver-import-duties-to-support-rupee-004917";>a significant increase in import duty. However, demand picked up early in the fall festival season despite the higher price.

Meanwhile, U.S. bar and coin demand fell 40 percent year-on-year to 8 tonnes. It was the weakest quarter for coin and bar demand since Q4’19.

This isn’t anything new. Even during last year’s spectacular gold bull market, American investors generally stayed on the sidelines until late in the year. https://www.moneymetals.com/news/2026/01/30/gold-demand-topped-5000-tonnes-for-the-first-time-in-2025-004647";>Physical gold investment surged in 2025, with coin and bar demand hitting a 12-year high of 1,374.1 tonnes. More than half of the global coin and bar demand came from two countries – China and India.

The split between East and West becomes even starker when looking at the data for the first half of last year.

Chinese bar and coin demand grew by 44 percent year-on-year in H1 last year as investors snapped up 115 tonnes of gold bars and coins in the second quarter alone. It was the strongest H1 for physical gold buying since 2013.

Meanwhile, Americans continued selling. Year-on-year bar and coin sales plummeted by 53 percent in H1. Second-quarter demand was only 9 tonnes, the lowest quarterly level since Q4 2019.

You can https://www.moneymetals.com/news/2026/07/12/a-strange-dichotomy-gold-up-on-the-year-in-asian-markets-down-big-in-the-west-005059";>see this phenomenon play out in daily trading data.

During Asian trading hours, gold was up 12.9 percent through the first six months of the year. During North American trading hours, the yellow metal was down 15 percent. European sessions split the difference, with gold falling modestly by 1.3 percent.

The World Gold Council called Asia “the engine of price support.”

"Interestingly, intraday analysis suggests that the bulk of gold’s movements have been linked to activity during Asian and U.S. trading hours. Many of the pullbacks occurred during US hours and, conversely, gold’s rebounds generally occurred during Asian hours."

It will be interesting to see what happens when Western investors figure out what the Asians see in gold.

Bipartisan SILVER Act Gains Strong Momentum in Congress as Lawmakers Eye National Defense Bill

Thu, 12 Nov 2026 00:00:00 EST

WASHINGTON, D.C. (November 12, 2026) — The bipartisan SILVER Act is gaining momentum with the addition of a dozen more House and Senate cosponsors as an effort gets underway to incorporate the commonsense legislation into the National Defense Authorization Act (NDAA) during the lame-duck session.

The System Integrity through Licensed Vault Expansion and Resilience (SILVER) Act (S. 4621 and H.R. 8007) would address a longstanding national security and supply chain vulnerability in America's precious metals markets: the extraordinary geographic concentration of exchange-approved depositories for https://www.moneymetals.com/gold-price";>gold, silver, platinum, and palladium in and around New York City.

The legislation is also drawing growing support from the https://www.moneymetals.com/uploads/content/SILVER-Act-Industry-Coalition-Letter-6-11-26.pdf";>Precious Metals Industry Coalition for Market Security & Access, whose members span every major segment of the nation's precious metals supply chain, e.g., wholesale and retail distributors, mints, depositories, banks, refineries, mining companies, and industry trade groups.

The SILVER Act was introduced in the Senate by Jim Risch (R-ID) and Catherine Cortez Masto (D-NV), and has attracted additional support from important Senate cosponsors such as Senators Mike Crapo (R-ID), Jacky Rosen (D-NV), Ted Budd (R-NC), Mike Lee (R-UT), and Cynthia Lummis (R-WY).

In the House, the legislation was introduced by Rep. Russ Fulcher (R-ID) and has received formal support from other key cosponsors, including Reps. Mark Harris (R-NC), Susie Lee (D-NV), Mary Miller (R-IL), Mark Amodei (R-NV), Shri Thanedar (D-MI), Harriet Hageman (R-WY), John Rose (R-TN), Addison McDowell (R-NC), Tim Moore (R-NC), Pete Sessions (R-TX), Michael Cloud (R-TX), and Pat Harrigan (R-NC).

The expanding bipartisan and bicameral support comes as Congress prepares to address national defense priorities that include vulnerabilities in critical mineral supply chains and financial market infrastructure.

National Security Concerns Drive NDAA Effort

Lawmakers are embracing the SILVER Act because they recognize that a single terrorist attack, natural disaster, cyber incident, or major infrastructure failure in the New York region could severely disrupt precious metals delivery and settlement functions, with potentially far-reaching consequences for financial markets and critical supply chains.

Gold, silver, platinum, and palladium are not merely investment assets but also essential materials used in electronics, aerospace, energy systems, medical technologies, and defense manufacturing, which is why supporters of the SILVER Act highlight that geographically diversified storage and delivery infrastructure is essential for American national security and financial stability.

Current exchange practices reflect an outdated framework dating back to the 1970s, when precious metals trading and settlement relied heavily on physical paperwork, countersignatures, and proximity to New York’s financial markets. Despite significant advances in technology, logistics, and market infrastructure, depositories serving federally regulated precious metals futures markets remain concentrated in and around New York City, underscoring the need to modernize longstanding exchange practices.

"Congress has an opportunity through the National Defense Authorization Act to address a glaring vulnerability in our nation's financial infrastructure while promoting competition, reducing costs, and strengthening domestic supply chains," said Stefan Gleason, Chief Executive Officer of https://www.moneymetals.com/silver-gold-storage";>Money Metals Depository and a member of the industry coalition.

SILVER Act Corrects Outdated Exception to Established Commodity Market Practices

Unlike other commodity futures markets, including agricultural products and base metals that already use geographically dispersed delivery facilities to ensure safer and more efficient operations, precious metals depositories remain heavily concentrated in and around New York.

This concentration departs from established commodity market practices and raises concerns about competition, supply chain resilience, operational disruptions, and national security, particularly given the importance of precious metals to financial markets as well as defense and critical industries.

The SILVER Act would address this disparity by requiring systemically important derivatives clearing organizations to establish objective approval standards and transparent application procedures that provide for the inclusion of qualified depositories across the nation's four continental time zones.

The legislation would not guarantee approval of any depository or dictate where metals must be stored. Instead, it would simply expand opportunities for qualified facilities that meet rigorous security, operational, and financial safeguards to provide services to commodity futures markets.

Industry Support for SILVER Act Spans Entire Precious Metals Supply Chain

The growing congressional support is matched by an expanding industry coalition representing businesses across the full spectrum of precious metals production, processing, distribution, financing, storage, and risk management.

Coalition members include major national bullion dealers, commercial depositories, precious metals refiners, private mints, mining-related companies, banks, logistics providers, insurers, financing companies, and industry trade associations.

The Coalition’s membership extends across the entire country, from the Northeast and Southeast to the Midwest, Texas, Mountain West, and Pacific states, reflecting the broad geographic reach of America’s precious metals industry and its diverse stakeholders specializing in mining, refining, minting, manufacturing, trading, and storage infrastructure.

"We have competing businesses from across the precious metals industry coming together behind the https://www.soundmoneydefense.org/news/2026/11/09/jp-cortez-discusses-the-silver-act-gold-repatriation-and-sound-money-victories-000703"; target="_blank" rel="noopener">SILVER Act because these outdated geographic restrictions are driving up costs, limiting competition, and creating unnecessary risks for everyone throughout the country," said Steven Reiner, Executive Vice President of Gold.com, a publicly listed (NYSE: “GOLD”), Fortune 500 company with substantial precious metal operations (including wholesale distribution, DTC retail, finance, minting and depositories) throughout North America, Europe and Asia.

https://www.moneymetals.com/uploads/content/SILVER-Act-Industry-Coalition-Letter-6-11-26.pdf";>In its letter to Congress, the industry coalition warned that the existing geographic restrictions also discourage investment in precious metals infrastructure outside the New York region, suppress competition, increase transportation and storage costs, and limit physical market liquidity.

CFTC Chairman Welcomes Attention to Geographic Concentration Risks

The legislation has also received favorable attention from the Commodity Futures Trading Commission (CFTC), the federal regulator responsible for overseeing U.S. commodity derivatives markets.

During an April House Agriculture Committee hearing, CFTC Chairman Michael Selig acknowledged the importance of evaluating concentration risks in precious metals delivery infrastructure and welcomed congressional attention to the issue.

"We applaud your leadership on this issue, and we'd be happy to work with your office on it," Selig told Rep. Mark Harris.

The Treasury Department’s Financial Stability Oversight Council (FSOC) has designated certain derivatives clearing organizations as Systemically Important Financial Market Utilities (SIFMUs), reflecting their critical role in the U.S. financial system.

Often characterized as “too big to fail,” these entities are subject to heightened risk management standards, including expectations to address geographic concentration risks arising from critical market infrastructure clustered in a single region.

Since SIFMUs are foundational to the American financial system, they may qualify for special government privileges, including access to Federal Reserve services and emergency liquidity assistance. These potential benefits further underscore the importance of addressing geographic concentration risks that could threaten financial stability and increase taxpayer exposure during a crisis.

"Clearing organizations that benefit from special government privileges certainly have an obligation to address known risks, including those targeted by the SILVER Act," concluded Gleason.

Can Debt-Riddled American Consumers Stomach Another Fed Rate Hike?

Thu, 12 Nov 2026 00:00:00 EST

Everybody is convinced that the Federal Reserve will raise interest rates again in December. With https://www.moneymetals.com/news/2026/11/10/beyond-the-cpi-the-complete-inflation-story-october-2026-005362";>October’s hot CPI print, some analysts even think the central bank will bump rates by 50 basis points.

Meanwhile, Americans are leaning on high-interest credit cards to make ends meet as rising prices strain budgets.

One has to wonder how long consumers can hold out as the central bank pushes their borrowing costs even higher.

This raises a question: can American consumers stomach more rate hikes?

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Gasoline prices skyrocketed 9.1 percent, driving the CPI up by 0.6 percent in September. Americans apparently coped with this sudden price surge by running up their credit cards.

Consumer debt surged by $27.84 billion in September, a 6.4 percent increase, according to https://www.federalreserve.gov/releases/g19/current/"; target="_blank" rel="noopener">the latest Federal Reserve data.

Americans are currently buried under $5.22 trillion in consumer debt.

The Federal Reserve consumer debt figures include credit card debt, student loans, and auto loans, but not mortgages. When you include mortgages, U.S. households are buried under record debt levels. As of the end of Q3 2026, https://www.newyorkfed.org/microeconomics/hhdc"; target="_blank" rel="noopener">total household debt stood at $19.105 trillion.

Revolving debt, primarily reflecting credit card balances, grew by $16.3 billion, a 14.5 percent increase. It was the biggest jump in revolving debt since 2022.

Non-revolving debt now stands at $1.37 trillion.

Non-revolving credit grew more modestly in September, rising by 11.54 billion, a 3.6 percent increase. This reflects borrowing for automobiles, student loans, and other big-ticket items.

Non-revolving credit growth has been tepid for a couple of years. It averaged around 5 percent before the pandemic but has averaged between 2 and 3 percent in recent months. Non-revolving credit growth indicates that consumers have cut back on big-ticket spending to cover the surging cost of day-to-day necessities.

Many analysts claim the big jump in credit card spending proves the resiliency of the American consumer. And while that is plausible, it more likely signals desperation. With gasoline suddenly 9 percent more expensive and other prices rising as well, Americans were forced to turn to Visa and Mastercard to make ends meet.

We’ve seen this pattern repeat multiple times over the last several years. Credit card borrowing surges along with price inflation. As price inflation moderates, consumers try to slow spending and pay down balances, only to be hit by another wave of price inflation.

Flush with stimulus and locked in their homes during the pandemic, Americans paid down credit card debt and built up savings. When the post-COVID inflation wave hit, consumers burned through that savings and turned to plastic. Credit card balances surged as Americans coped with rapidly rising prices. However, credit card spending began slowing in late 2024.

Over the last two years, credit card spending has trended lower, signaling credit stress. But we still see occasional surges in credit card use, generally corresponding with price shocks.

A healthy economy doesn’t run on credit cards. They have this inconvenient thing called a limit. At some point, Americans will hit that limit.

American consumers who lean on credit cards face a double whammy from rising debt and interest rates. https://www.bankrate.com/credit-cards/advice/current-interest-rates/"; target="_blank" rel="noopener">The average annual percentage rate (APR) currently stands at 19.71 percent, with some companies still charging rates as high as 28 percent. The average is only slightly down from the record high of 20.79 percent set in August 2024.

A Big Problem for the Federal Reserve

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This brings us back to those rate hikes.

There is a strong case for raising interest rates given persistent inflation. But there is also a case for rate cuts given $1.4 trillion in revolving credit. Every time the interest rate nudges higher, credit card payments creep up right along with it.

On top of that, the federal government is drowning under $40.5 trillion in debt, and its interest costs have eclipsed $1 trillion annually. Uncle Sam pays more interest expense each month than it spends on national defense.

Meanwhile, corporations are leveraged to the hilt.

Most analysts seem to forget this massive https://www.moneymetals.com/news/2025/11/15/debt-black-hole-putting-increasing-stress-on-american-consumers-004483";>Debt Black Hole when they forecast a higher-interest-rate environment over the longer term. At some point, higher rates will pop the debt bubble, and the economy will roll over.

The bottom line is an economy built on debt and addicted to easy money doesn’t function in a higher-interest-rate environment.

Simply put, the Federal Reserve is in https://www.moneymetals.com/news/2026/03/19/gold-the-federal-reserve-and-a-catch-22-004773";>a Catch-22 and has been for months. It needs to cut rates to support the debt bubble, and it needs to raise rates to slay price inflation. It can’t do both,

If you wonder why the Fed has slow-walked rate hikes despite CPI remaining above the mythical 2 percent target for 68 months, look no further than the debt black hole. The central bankers over at the Fed won’t say it out loud, but they know every upward nudge to interest rates increases the risk of an economic crash and a financial crisis.

The Fed may well raise rates in December. It may even go “big” with a 50-basis-point hike. But it’s only a matter of time before the wheels fall off and the Fed is cutting. I think 0 percent rates in a year are far more likely than 5 percent.

Keep this in mind when you’re tempted to sell gold because yields are rising.

Gold Is Falling on Hot Inflation, But Can the Fed Keep Raising Rates?

Thu, 12 Nov 2026 00:00:00 EST

Hot inflation is usually seen as bad news for gold. When prices rise faster than expected, investors anticipate higher interest rates, which can pressure gold and silver. But on the latest Money Metals Midweek Memo, host Mike Maharrey argued that markets may be overlooking a bigger question. Can the Federal Reserve keep raising rates when government debt already exceeds $40 trillion?

Maharrey’s answer is doubtful. He believes the Fed is caught between fighting inflation and protecting a debt-heavy economy, and that the tension could eventually bring rate cuts and renewed money creation, even as inflation persists.

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Hot CPI Data Keeps Rate Hike Fears Alive

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The https://www.moneymetals.com/news/2026/11/10/beyond-the-cpi-the-complete-inflation-story-october-2026-005362";>latest Consumer Price Index report showed prices rising 0.4% in October, above the 0.3% forecast. Core CPI, which excludes food and energy, increased 0.3%, also above expectations of 0.2%. It was the third consecutive month with a 0.3% core increase, a pace that annualizes to about 3.7%.

The Bureau of Labor Statistics did not publish a year-over-year CPI comparison because the government shutdown prevented it from releasing an October report the previous year. Monthly figures nevertheless showed price pressure across several categories.

Energy prices rose 0.7% in October after jumping 5.2% in September. Gasoline climbed another 1%, following a 9.3% increase the month before. Shelter rose 0.3%, while food prices gained 0.5%. Beef increased 0.9%, snacks 1%, and poultry, fish, and eggs 0.5%. Transportation services rose 0.8%, and new vehicle prices increased 0.2%.

Maharrey said the report helps explain why investors expect more Fed rate hikes and why gold recently came under pressure. But he argued that CPI captures only changes in consumer prices, not the full picture of inflation.

Money Supply Growth Points to More Inflation

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Maharrey focused on the growth of the M2 money supply, describing monetary inflation as an increase in the supply of money and credit. From September 2025 to September 2026, he said, M2 climbed from $22.15 trillion to $23.41 trillion, an annual increase of 5.7%.

The money supply grew by $13 billion in September. So far in 2026, it has increased by an average of $136 billion per month, 89% more than the average monthly increase in 2025. Maharrey warned that monetary expansion may eventually push consumer prices higher or appear in asset prices such as stocks and real estate.

He also pointed to the Federal Reserve’s balance sheet, which began rising again in December 2025. It increased by about $5 billion in October and stood at $212.4 billion above its December 1 low. Maharrey characterized the Fed’s bond purchases as quantitative easing, arguing that they add money to the economy and help hold down government borrowing costs.

The Chicago Fed’s National Financial Conditions Index added another piece to his case. For the week ending October 30, the index stood at negative 0.45, which Maharrey said signaled historically loose financial conditions. It never turned positive during the Fed’s tightening cycle. Its high was 0.09 in October 2022.

The Fed’s Rate Hike Dilemma

Hot CPI data has fueled expectations of another rate hike in December, with some analysts discussing a possible 50-basis-point increase. Maharrey considered a 25-basis-point hike more likely, though he said stronger employment data could raise the possibility of a larger move.

But he questioned whether rate hikes can meaningfully slow inflation while money-supply growth and the Fed’s balance sheet continue to expand. Higher interest rates could also strain the government and broader economy, given the https://www.moneymetals.com/news/2026/10/29/fed-hits-pause-button-announces-new-meeting-format-005329";>more than $40 trillion national debt and rising borrowing costs.

Maharrey described the Fed as caught in a policy trap. It could raise rates to fight inflation, but doing so risks recession or financial instability. If a crisis follows, he expects the Fed to cut rates and expand its balance sheet to support the economy, even if that means accepting more inflation.

He also doubted that new Fed leadership would allow a deep economic downturn in pursuit of lower inflation. In his view, central bankers have repeatedly chosen easier money when financial stress threatens the economy.

Why Gold Is Falling and Why Maharrey Sees Opportunity

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Gold had climbed back above $4,100 https://www.moneymetals.com/news/2026/11/05/why-gold-crashed-below-4000-and-what-the-feds-rate-pause-means-for-gold-and-silver-005344";>after dropping below $4,000 in the weeks before the midterm elections. As Maharrey prepared the episode, gold was down about $120 and nearing https://www.moneymetals.com/gold-price";>the $4,000 level again. He said a move below $4,000 would not surprise him.

The immediate pressure came from expectations of higher interest rates, which can weigh on gold because it does not pay interest. Maharrey argued, however, that investors may be focusing too closely on rate forecasts and the latest headlines while overlooking the longer-term risks of money creation, debt, and currency debasement.

Even if the Fed managed to control inflation without triggering a crisis, Maharrey said, cash would continue to lose purchasing power. At 2% annual inflation, money loses more than 10% of its purchasing power over five years. He presented physical gold and silver as potential long-term hedges against that erosion.

The episode also highlighted a Money Metals offer on https://www.moneymetals.com/1-oz-american-silver-eagle-random-year/262";>American Silver Eagles at $7.97 over melt value. Maharrey described the coins as .999 fine silver, with their weight and purity backed by the U.S. government. He also cited a report that about 60% of Paraguay’s population could not access their https://www.moneymetals.com/news/2026/11/09/paraguay-banking-crisis-a-lesson-in-counterparty-risk-005353";>money during a banking crisis, arguing that physical silver can provide a backup when electronic banking is unavailable.

Midterm Elections Add to Gold and Silver Uncertainty

Maharrey said Democrats had won control of https://www.moneymetals.com/news/2026/11/05/what-does-the-blue-wave-mean-for-gold-and-silver-005347";>both chambers of Congress, with some races still outstanding. He cited a 54–44 Democratic advantage in the Senate and a 254–165 lead in the House. He expected divided government, with President Donald Trump able to veto legislation and Congress able to constrain parts of his agenda.

Gold and silver https://www.moneymetals.com/news/2026/11/09/the-precious-metals-sectors-impressive-relative-breakout-and-what-it-portends-005355";>rose after the election results. Gold recovered above $4,000, and silver climbed above $53 an ounce. Maharrey cautioned that these post-election market moves may be short-lived.

Citing the World Gold Council, he said the election’s lasting effect on gold will depend on whether policy changes are significant enough to outweigh broader global forces. He also referenced Metal Focus, which described the results as a new source of uncertainty for precious metals.

Congressional gridlock could limit additional fiscal stimulus and temper expectations for further rate hikes, potentially supporting gold. But continued government borrowing could keep long-term yields high, while slower growth could weaken industrial demand for silver and platinum-group metals.

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Maharrey said meaningful deficit reduction remains unlikely given existing spending commitments, rising interest costs, and the difficulty of agreeing on tax increases or spending cuts. He also discussed the ongoing U.S.–Iran war, saying its direction could affect inflation expectations, interest rates, and precious metals. An escalation could intensify inflation concerns and rate pressure, while a lasting resolution could remove some headwinds for gold and silver.

Maharrey’s Gold and Silver Outlook

Maharrey described himself as short-term and midterm bearish on gold and silver. He said the metals could remain under pressure until the war’s direction becomes clearer or markets recognize that the Fed may be unable to keep raising interest rates. Still, he viewed lower prices as a potential buying opportunity for long-term investors.

His central argument is that inflationary pressure is likely to persist because of money-supply growth, government debt, and the Fed’s response to financial stress. He sees physical gold and silver as potential https://www.moneymetals.com/programs/monthly-program";>hedges against currency debasement and useful parts of a broader investment strategy, while cautioning against putting everything into precious metals.

What Is Gresham’s Law? The Truth Behind “Bad Money Drives Out Good”

Wed, 11 Nov 2026 00:00:00 EST

If you were to ask someone, “What is Gresham’s Law?”, their answer, if they give one at all, will probably be “Bad money drives out good money.” This is not Gresham’s Law.

Gresham’s Law holds that when two or more currencies are held by law to be equal when they are not, then people will purchase the undervalued currency with the overvalued currency, and they will hoard the undervalued and spend the overvalued. This leads the undervalued to disappear from circulation, and the overvalued to dominate.

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The https://www.investopedia.com/terms/g/greshams-law.asp"; target="_blank" rel="noopener">familiar version of Gresham’s Law implies that people use bad currency for the sake of it being a bad currency, as if people were irrational, but people are rational. The real Gresham’s Law gives a rationale for why bad currencies sometimes dominate.

Bad money dominates because of government-determined rates of exchange that depart from the market rate of exchange. If you remove the government-determined exchange rates, the familiar version of Gresham’s Law—that the bad drives out the good—no longer holds. There simply would be no incentive to hoard the undervalued money.

An implication of this is that the fiat dollar in the US is not the bad money in Gresham’s Law. It may be bad for many reasons—not backed by a commodity, controlled by a central authority, monopolized—but it is not necessarily bad in the Gresham’s Law sense. It would be bad in the Gresham’s Law sense if the government determined exchange rates between the USD and other fiat monies. The value of monetary metals such as gold and silver freely fluctuates against the USD.

Where does Gresham’s Law matter?

It matters in foreign exchange markets where the US government and foreign powers seek to establish exchange rates between currencies.

Gresham’s Law also helps explain why we do not find https://www.moneymetals.com/bullion/what-is-junk-silver";>silver quarters or dollars anymore. For example, a silver quarter has an equal face value to modern quarters, which have zero silver content. The government has effectively established an exchange rate between silver quarters and the material in modern quarters. The silver quarter is undervalued in this case. People hoard the silver quarters by buying them with modern quarters, and the silver quarters disappear from circulation. This might theoretically happen with copper pennies as well, but the cost of searching for copper pennies likely outweighs the minuscule benefit of acquiring the copper.

What other common errors do people make about Gresham’s Law? Some economists make Gresham’s Law about asymmetric information. Asymmetric information occurs when one party of an exchange knows more than the other person. Economist George Akerlof used Gresham’s Law as an analogy for his famous https://www.sfu.ca/~allen/Ackerlof.pdf"; target="_blank" rel="noopener">market for lemons.

In the market for lemons paper, Akerlof runs through a hypothetical where bad cars (lemons) drive down the average quality of cars, and when there is asymmetric information, the bad cars drive down the price, and the owners of good cars take their cars off the market.

As a result, the average quality of cars falls, and the process repeats until there are only lemons on the market. In this case, bad cars drove out the good because of imperfect information.

Akerlof recognizes that this is not actually Gresham’s Law because, as he notes, the “buyer and seller can tell the difference between good and bad money.”

Despite Akerlof making this caveat, other economists have https://www.jstor.org/stable/30022760"; target="_blank" rel="noopener">referred to Akerlof’s paper as “the generalization of Gresham’s law” (emphasis mine).

Why is this important?

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It is important because ignorance does not lead bad money to drive out good money. Holders of money are being completely rational. In Gresham’s Law, they are responding to government policy. It may be the case that if the quality of money is unknown, and if so, then lower-quality money dominates precisely because of Akerlof’s point, but this is different from Gresham’s Law.

The two misconceptions covered above, that (1) bad money (unconditionally) drives out good and that (2) Gresham’s Law is an ignorance problem, contribute to broader misconceptions about consumer behavior in the market. It contributes to the misconception that consumers are irrational or ignorant, especially in the market for money, and require government assistance. Combating these two misconceptions is necessary for avoiding this greater error of government meddling in the market for money.

If we do not want “bad money to drive out good,” then we must avoid any and all regulations that impose a rate of exchange on monies/currencies. Consumers are perfectly capable of selecting good money. Without government exchange rates, they have less of an incentive to select the bad.

How can we escape the regime of bad money we are currently in?

Without government meddling in general, fiat money will be abandoned for money that has some backing of gold and silver. We must eliminate laws that establish a monetary monopoly. Under a metal-backed currency, we must be further vigilant against attempts to devalue this currency through debasement.

Inflation Heats Up and It's Worse Than You Think!

Wed, 11 Nov 2026 00:00:00 EST

The October CPI came in hot.

Unsurprisingly, gold and silver sold off on the news, as expectations for further Federal Reserve rate hikes increased.

In this episode of the Midweek Memo podcast, host Mike Maharrey argues that the inflation picture is even worse than the CPI reveals and provides additional data to support the claim. But he doesn't think this is necessarily bearish for precious metals in the long term, and he explains why.

In this episode, Mike also speculates on how the shift in political power in Washington, D.C. may impact the gold and silver markets.

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Mike opens the show by remembering the Soviet Union.

"I was a Cold War kid. I was taught to hate and fear the mighty Soviet Union. When I think back to the late 70s and early 80s, it was just a given that the Soviets were a threat. It was a powerful bloc. A force to be reckoned with. And then, almost overnight, it was gone.

"For you younger folks, trust me when I tell you virtually nobody foresaw the rapid collapse of the Soviet empire. Even into the late 80s, we couldn’t imagine a world without an Iron Curtain. And then the Berlin Wall came down, and the rest of the Soviet Bloc soon crumbled right along with it.

"I kind of feel like there is a similar dynamic in play today when it comes to interest rates. Everybody is certain that the Fed is going to hike. Nobody can imagine a scenario where the central bank is cutting rates in the next few years. But I think rate cuts are a lot closer than most people imagine. And no, it’s not because I think the Fed is going to win the inflation fight. Quite the opposite – I think the Fed surrendered to inflation a long time ago."

Mike notes that inflation has been above the Fed's 2 percent target for 68 straight months.

"That’s 5.6 years for folks like me who struggle to do math in their head."

Persistent inflation and expectations of a more aggressive Fed fight have been headwinds for gold and silver for months, and they sold off yet again after the October CPI came in hotter than expected.

"Make no mistake, inflation did come in hot. In fact, it’s worse than the CPI indicates. Today, we’re going to take a deep dive into the inflation story."

Mike sets the stage by pointing out that gold got a boost from the midterm election results.

"After falling below the $4,000 support the prior week, the yellow metal recovered that level and moved above $4,100. But as I’m prepping for the show early Tuesday afternoon, gold is down $120 and getting close to challenging that support again. I’m going to record the show early because I have an appointment tomorrow morning, but I would not be at all surprised if we’re back to sub-$4,000 gold when you listen to this show."

Mike asserts that interest rate expectations have driven persistent gold market bearishness over the last several months.

"The Fed has a job to do. And it’s about to step up to the plate and get it done. Is it, though? I mean, there’s been an inflation problem for over five years. They haven’t dealt with it yet."

However, the markets aren't wrong about inflation. It's elevated and seems to be accelerating.

"But the fact is the Fed’s hands are tied by more than 40-trillion ropes. Of course, I’m talking about the national debt – and more generally the broader Debt Black Hole. It’s tied the Fed’s hands nicely. They’ll never say it out loud, but the central bankers are well aware of their Catch-22. Their actions reveal this, even as they try to talk their way around it."

Mike says the inflation situation is even worse than the CPI indicates.

"The CPI captures past monetary inflation in the economy, but it can’t predict inflation's trajectory. That means we need to consider other metrics to understand the entire inflation story. With that in mind, I publish a more comprehensive inflation report each month using four metrics – CPI, changes in the M2 money supply, changes in the Federal Reserve balance sheet, and the Chicago Fed National Financial Conditions Index."

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Mike runs through the data, showing that every metric points to more inflationary pressure in the pipeline. The money supply is increasing by 5.6 percent annually. Meanwhile, the Federal Reserve is running https://youtu.be/ipaQAgOCJBk"; target="_blank" rel="noopener">quantitative easing (QE).

"I can’t overstate the fact that the Fed is easing monetary policy through its balance sheet operations, even as it claims to be fighting inflation. Sure, the balance sheet increase is modest. But if you’re serious about an inflation fight, why isn’t the balance sheet shrinking?"

Mike points out that there is no indication inflation will ease anytime soon. That's because https://www.moneymetals.com/news/2024/02/15/the-fed-hasnt-done-enough-to-beat-price-inflation-002991";>the central bank never did enough to slay the inflation dragon.

Now, everybody expects the Fed to go all-in on the inflation fight. Some analysts now think the central bank will hike by 50 basis points in December. But Mike says it's not that simple.

"Don’t forget that a massive https://www.moneymetals.com/news/2025/11/15/debt-black-hole-putting-increasing-stress-on-american-consumers-004483";>Debt Black Hole restrains the Fed. The central bankers may want to hike aggressively, but they know an economy supported by debt won’t do well in a higher-interest-rate environment. The Fed is in https://www.moneymetals.com/news/2026/03/19/gold-the-federal-reserve-and-a-catch-22-004773";>a Catch-22. It needs to raise rates. The inflation data makes that clear. But one could also argue for rate cuts given the debt. This is why the Fed has tried to walk a tightrope by raising rates – but not too much. In all likelihood, the Fed will hike by 25 basis points in December and continue with its hawkish stance. However, another small rate hike won’t be enough to stop money supply growth nearing 6 percent. It won’t stop Fed money printing. But it may be enough to pop the debt bubble."

Mike says at this point, "All roads lead to inflation."

"So, why are investors selling their inflation hedge? Because they are tunnel-visioned on the current situation and they can’t seem to see past the latest headlines. I mean, I get it. I can’t expect the markets to respond to my macro theorizing. However, if your investment horizon is longer than about three weeks, you probably should take some macro theorizing into account. And even if you believe that the Fed can walk this tightrope, get inflation under control, and keep the economy from imploding under the influence of the Debt Black Hole, you still have to remember that inflation is the plan. Even if they get it right, your money is losing more than 10 percent of its purchasing power every five years."

Mike wraps up the show speculating on how the midterm "Blue Wave" might impact the gold and silver markets.

In a word -- gridlock.

"The bottom line is that we can expect more policy uncertainty in the weeks and months ahead. There will be a lot of bickering and arguing, but how much actually gets done remains to be seen.

"Probably not much.

"That means the Fed and the aforementioned macro environment will continue to be the primary drivers for the gold and silver markets. And as I already said, all roads ultimately lead to inflation."

Mike ends the show with a call to action, urging listeners to protect their wealth from currency debasement with gold and silver by calling 800-800-1865 and talking with a Money Metals precious metals specialist today.

Articles Mentioned During the Show

https://www.moneymetals.com/news/2026/11/09/paraguay-banking-crisis-a-lesson-in-counterparty-risk-005353";>Paraguay Banking Crisis: A Lesson in Counterparty Risk

https://youtu.be/lmvFyBBJORM?si=ldGhbPRTcU1ypPp0"; target="_blank" rel="noopener">Inflation Properly Defined

What Is Bimetallism - Bimetallic Standard, Coinage Act of 1792, and the 15 to 1 Legal Ratio - Gresham’s Law, the 1834 Ratio Change, and Why It Ended - Money Metals

Tue, 10 Nov 2026 00:00:00 EST

Bimetallism is a money system that defines a currency in fixed weights of both gold and silver. Under this system, the gold-silver ratio is set by law. In a bimetallic system, anyone can have either metal made into coins, and both coins count as legal tender money.

The United States operated under a bimetallic system from 1792 until 1873. Many readers find the idea of two metals to be intuitive. Indeed, many nations operated under a similar system at the time. That leads to an obvious question: why was the system abandoned?

The short answer is that a ratio set by law can’t keep up with a continuously moving market. This guide covers how the system worked, why it broke, and when it ended.

Keep in mind that bimetallism is not the same thing as the gold standard: in fact, the gold standard is what replaced our bimetallic system. Under bimetallism, both metals backed the dollar. Under the gold standard, only gold did. Our https://www.moneymetals.com/guides/shell-game-how-americas-money-devolved-from-gold-to-fiat";>guide to the gold standard covers how it worked, through Bretton Woods, and why it ended.

What Is Bimetallism?

Bimetallism (or bimetalism, as it is sometimes spelled) has three working parts. If you remove any of these factors, the system stops being bimetallic.

A legal ratio. The law determines how much silver equals one unit of gold in value.
Free coinage of both metals. Anyone can bring gold or silver to the mint and have it struck into coins.
Legal tender for both. Gold coins and silver coins both settle debts at face value.

The most important factor in this list is the second one. Under the https://www.usmint.gov/learn/history/historical-documents/coinage-act-of-april-2-1792";>Coinage Act of 1792, the law stated “it shall be lawful for any person or persons to bring to the said mint gold and silver bullion” to be coined. Anybody from any walk of life could walk into the Mint with metal and leave with money for little or no charge. That open door of exchange is what tied the value of coins to the value of the metal inside them.

Bimetallism vs. the Gold Standard vs. a Silver Standard

The three systems differ in how many metals back the currency. The table below shows how they all compare.

	Bimetallism	Gold Standard	Silver Standard
Metals that define the currency	Gold and silver	Gold only	Silver only
Needs a legal ratio between metals	Yes	No	No
What tends to circulate	Whichever metal the law overvalues	Gold coins and paper backed by gold	Silver coins and paper backed by silver
U.S. example	1792 to 1873	1900 to 1933 (in law)	None as a formal system

A bimetallic standard is simply another name for bimetallism. For the later system, see our https://www.moneymetals.com/guides/shell-game-how-americas-money-devolved-from-gold-to-fiat";>guide to the gold standard. For what counted as coin money, see https://www.moneymetals.com/news/2023/08/17/specie-money-the-forgotten-currency-002797";>what is specie.

Bimetallism vs. Bimetallic Coins

The word “bimetallic” has a second meaning. A bimetallic coin is a single coin made of two metals, such as a coin with a gold-colored ring surrounding a silver-colored center. The 2 euro coin is a common example. Those coins have nothing to do with bimetallism as a money system. This guide covers the money system only.

The Coinage Act of 1792: How the U.S. Set Its First Legal Ratio

The 1792 Act grew out of an economic plan devised by Treasury Secretary Alexander Hamilton. In his https://founders.archives.gov/documents/Hamilton/01-07-02-0334-0004";>Report on the Establishment of a Mint (January 28, 1791), Hamilton argued against choosing a single metal to back the currency.

In his words, “To annul the use of either of the metals, as money, is to abridge the quantity of circulating medium.” Put a little more simply, using one metal would necessarily shrink the money supply.

Hamilton also tracked how the market was moving. He found that the ratio between the two metals in the United States was “about as 1 to 15.” Congress wrote that figure into law.

You can see the exact wording in Section 11 of the https://www.usmint.gov/learn/history/historical-documents/coinage-act-of-april-2-1792";>Coinage Act of April 2, 1792, which states that the ratio of gold to silver “shall be as fifteen to one, according to quantity in weight, of pure gold or pure silver.” In other words, the legal ratio was 15 to 1. Today, the ratio fluctuates more: we track how that ratio has moved since 1792 in our https://www.moneymetals.com/gold-silver-ratio";>guide to the gold-silver ratio.

How the Coin Weights Produced the Ratio

The ratio was not just a sentence in the law. It was built into the coins themselves. You can check it with simple math using the weights in https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=23#book-reader";>Section 9 of the Act.

Coin	Value	Pure metal	Pure metal per dollar
Silver dollar	$1	371 4/16 grains of silver	371.25 grains of silver
Gold eagle	$10	247 4/8 grains of gold	24.75 grains of gold

Divide 371.25 by 24.75 and you get exactly 15. One dollar in silver held 15 times as much metal by weight as one dollar in gold.

A Common Error About the 1792 Ratio

Some summaries, including AI-generated answers, say the 1792 Act set a ratio of “15:1 or 16:1.” That is not what the law says, however. The 1792 statute names one ratio, and it names it explicitly in Section 11. The ratio did increase, but that did not happen until 42 years later. The change came from new coin weights, not from any ratio clause.

Gresham’s Law: Why One Metal Always Disappeared

https://www.britannica.com/money/Greshams-law";>Gresham’s law identifies the weakness that is inherent in a bimetallic system. The law says “bad money drives out good.”

When two coins have the same face value, but their metal is worth different amounts, people spend the cheaper coin and hoard the more expensive one. Other times, they melt it or ship it abroad to profit on the coin’s metal.

The law is named after Sir Thomas Gresham, a financial agent and advisor to Queen Elizabeth I. Under bimetallism, it works like this:

The law fixes the ratio between gold and silver.
The market ratio moves as mines open, trade shifts, and other nations change their own rules.
One metal is now worth more as bullion than as coin. That is the “good” money.
People melt or export the good money and spend the “bad” money.
Only one metal stays in circulation, even though the law still allows both.

In other words, a bimetallic system often ends up working like a single-metal system in practice. The only difference is which metal becomes the dominant one.

Gresham’s Law in Action: Gold Leaves America

The U.S. did not set its ratio in a vacuum. Starting in 1803, France valued https://en.wikipedia.org/wiki/Latin_Monetary_Union";>gold and silver at 15.5 to 1, and silver kept losing value in world markets. Gold was worth more abroad than the U.S. Mint paid for it.

The result was what Gresham’s law predicts. U.S. gold coins left the country or went into the melting pot. Economist J. Laurence Laughlin, in https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=5#book-reader";>The History of Bimetallism in the United States, cites a report that “gold had disappeared from circulation by 1818.” For years, Americans used silver coins, foreign coins, and bank notes. The country was bimetallic on paper and on silver in practice.

The 1834 Act: A Lighter Gold Eagle and a New Ratio

Congress tried to bring gold back into everyday circulation. The https://govinfo.gov/link/statute/4/699";>Act of June 28, 1834 changed the weight of the gold eagle. It did not change the silver dollar.

The 1834 Act cut the gold eagle to 232 grains, and that put the legal ratio at about 16 to 1. The math works the same way as before:

Coin	Value	Pure metal	Pure metal per dollar
Silver dollar (unchanged)	$1	371.25 grains of silver	371.25 grains of silver
Gold eagle (1834)	$10	232 grains of gold	23.2 grains of gold

Divide 371.25 by 23.2 and you get 16.0. Note that the 1834 statute contains no ratio clause. The new ratio came from the coin weights alone. A follow-up law, the https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=23#book-reader";>Act of January 18, 1837, set U.S. coins at 90% pure metal and fixed the eagle at 258 grains total weight. That left the ratio almost unchanged.

Gresham’s Law in Reverse: Silver Leaves America

The new ratio solved one problem, but it also introduced a new one. Gold was now overvalued at the Mint, so gold flowed in. Silver was now the “good” money.

The shift grew sharper after gold was found in California in 1848. New gold flooded the market and its value fell against silver. https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=7#book-reader";>According to Laughlin, by 1853 a silver dollar held about 104 cents’ worth of metal when measured in gold. As a result, silver coins used for small change “disappeared from circulation.” The result was that many shops struggled to make change for their customers.

Once again, Congress responded by passing a new coinage act. The Act of February 21, 1853 cut the silver in half dimes, dimes, quarters, and half dollars by about 7%. These coins were now worth less as metal than their face value. This move eliminated people’s reason for melting or hoarding the coins.

The Act also limited them to legal tender for debts of $5 or less. Laughlin called the Act “a practical abandonment of the double standard in the United States.” From 1853 on, the United States ran on gold for large payments and token silver for small change.

Bimetallism Outside the United States

The U.S. was not alone. Several European nations ran bimetallic systems in the 1800s, and their choices shaped what happened in America.

France set its ratio at 15.5 to 1 in 1803, under Napoleon. Because France was a large economy, its ratio helped steady world markets for decades.

The Latin Monetary Union formed on https://en.wikipedia.org/wiki/Latin_Monetary_Union";>December 23, 1865. France, Belgium, Italy, and Switzerland agreed to coin gold and silver to shared standards. Greece joined in 1867.

Germany moved the other way. After the Franco-German War of 1870 to 1871, the new German Empire adopted the gold mark through laws passed in 1871 and 1873. Germany then sold off large amounts of silver.

Those sales added to the fall in silver value. In 1874, the Latin Monetary Union agreed to limit how much silver its members would coin, and in 1878 it suspended silver coinage entirely. Some histories end the story of bimetallism with the Franco-German War, since it set off this chain of events. In the United States, though, the story ran longer.

Why Bimetallism Ended

Bimetallism ended for two linked reasons. The first is that Gresham’s law played out; one metal pushed out the other. A fixed legal ratio could never track a moving market for long. Second, once Germany moved to gold, the nation set a trend that many other countries followed. Any nation that stayed bimetallic risked being flooded with cheap silver from everyone else.

In the United States, the end came in two steps.

In 1873, in practice. The https://en.wikipedia.org/wiki/Coinage_Act_of_1873";>Coinage Act of 1873, signed on February 12, 1873, left the standard silver dollar off the list of coins. Silver owners could no longer have their metal struck into full legal tender dollars. That closed the open door of free silver coinage and left gold as the only standard. Silver supporters later called the law the https://www.econlib.org/library/YPDBooks/Laughlin/lghHBM.html?chapter_num=9#book-reader";>Crime of 1873.

In 1900, in law. The https://en.wikipedia.org/wiki/Gold_Standard_Act";>Gold Standard Act of March 14, 1900, made gold the formal standard of value for the dollar.

The years between those dates were not quiet. The free silver movement pushed hard to restore unlimited silver coinage. Congress passed the silver purchase acts, which had the Treasury buy silver without bringing back full bimetallism.

Arguments For and Against Bimetallism

Economists still debate bimetallism. Here are the main arguments on each side.

Arguments For	Arguments Against
Two metals give a larger money supply than one, as Hamilton argued.	A fixed ratio can’t follow the market, so one metal tends to vanish.
Prices may be more stable, since a shortage of one metal can be offset by the other.	Gresham’s law turns the system into a single-metal standard in practice.
A country depends less on the output of gold mines alone.	The system works best only when many large nations use the same ratio.
It kept silver, the metal of everyday trade, in use as money.	Changes to coin weights, as in 1834 and 1853, were needed again and again.

Some economists argue that France’s long run with a steady ratio shows a large enough group of nations could have held bimetallism together. Others argue the system was bound to fail once silver supply and demand shifted. Both views have support in the historical record.

How Bimetallism Connects to Today’s Money

Bimetallism shaped the early U.S. dollar. Its weights defined what a dollar was, and its failures led to the gold standard. The coins it produced were specie, money made of the metal itself.

The relationship between gold and silver did not end with the system. Investors still track how many ounces of silver it takes to buy one ounce of gold. Our https://www.moneymetals.com/gold-silver-ratio";>gold-silver ratio page shows how that ratio compares with the legal ratios of the 1700s and 1800s.

Frequently Asked Questions

Bimetallism is a money system where both gold and silver back the currency. The law sets how much silver equals one unit of gold, and both metals can be made into legal coins.

A bimetallic standard is another name for bimetallism. It means the currency is defined by both gold and silver at a fixed legal ratio.

Yes. Section 11 of the Coinage Act of 1792 set the ratio in plain words. The later 1834 ratio did not appear in the text of that law. It came from a lighter gold eagle. See the sections above for the exact figures.

Gresham’s law says that “bad money drives out good.” When two coins have the same face value but different metal value, people spend the cheaper one and keep or melt the more valuable one.

Fixed legal ratios could not keep up with changes in market conditions and the value of gold and silver. One metal kept leaving circulation. Once major nations such as Germany moved to gold in the 1870s, it became hard for any one country to stay bimetallic.

The Coinage Act of 1873 ended free coinage of the standard silver dollar, which ended bimetallism in practice. The Gold Standard Act of 1900 made gold the legal standard.

No. Bimetallism uses two metals to define the currency. The gold standard uses only gold. The United States moved from bimetallism to the gold standard in the late 1800s.

Conclusion

Bimetallism did not fail because of some flaw in silver and gold. The reason it ultimately failed is that no law can fix a price that the market continues to change. That lesson continues to apply to the https://www.moneymetals.com/gold-silver-ratio";>gold-silver ratio to this day.

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Articles Mentioned During the Show

What Is Bimetallism - Bimetallic Standard, Coinage Act of 1792, and the 15 to 1 Legal Ratio - Gresham’s Law, the 1834 Ratio Change, and Why It Ended - Money Metals

What Is Bimetallism?

Bimetallism vs. the Gold Standard vs. a Silver Standard

Bimetallism vs. Bimetallic Coins

The Coinage Act of 1792: How the U.S. Set Its First Legal Ratio

How the Coin Weights Produced the Ratio

A Common Error About the 1792 Ratio

Gresham’s Law: Why One Metal Always Disappeared

Gresham’s Law in Action: Gold Leaves America

The 1834 Act: A Lighter Gold Eagle and a New Ratio

Gresham’s Law in Reverse: Silver Leaves America

Bimetallism Outside the United States

Why Bimetallism Ended

Arguments For and Against Bimetallism

How Bimetallism Connects to Today’s Money

Frequently Asked Questions

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Is bimetallism the same as the gold standard? http://www.w3.org/2000/svg"; viewbox="0 0 24 24" fill="none" stroke-width="2" stroke="currentColor" class="size-5 shrink-0 transition" aria-hidden="true" x-bind:class="isExpanded ? 'rotate-180' : ''">

Conclusion