Legislation introduced to recognize gold, silver as U.S. currency

Gold last traded at $1,727 an ounce. Silver at $24.87 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on bargain-hunting and a weaker dollar. U.S. stocks rose led by tech shares as investors cheered the federal government's proposed $2 trillion infrastructure spending plan.

Kitco--"Gold and silver are well established as stores of wealth, but the precious metals face complex challenges when it comes to being recognized as a valid currency. However, one U.S. politician is hoping to change that with new legislation.

Tuesday, U.S. Representative Alex Mooney (R-WV) introduced the Monetary Metals Tax Neutrality Act (H.R. 2284) bill in the House. According to the bill, the proposed legislation would remove capital gains, losses, or any other type of federal income calculation on gold and silver bars and coins. The legislation would effectively recognize gold and silver as forms of currency.

Under current laws, the Internal Revenue Service regards gold and silver as capital assets. It classifies them as 'collectibles,' which means they are subject to capital gains taxes. After selling their bullion, gold investors could potentially be taxed at the maximum collectible capital gains rate of 28%. The tax only applies when investors sell their gold or silver.

'My view, which is backed up by language in the U.S. Constitution, is that gold and silver coins are money and are legal tender,' Rep. Mooney said in a press release. 'If they're indeed U.S. money, it seems there should be no taxes on them at all. So, why are we taxing these coins as collectibles?'

According to the proposed legislation, the Monetary Metals Tax Neutrality Act states that 'no gain or loss shall be recognized on the sale or exchange of (1) gold, silver, platinum, or palladium minted and issued by the Secretary at any time or (2), refined gold or silver bullion, coins, bars, rounds, or ingots which are valued primarily based on their metal content and not their form.'

The proposed legislation is supported by the Sound Money Defense League, a national public policy group that works to promote gold and silver as recognized currency in the U.S."