Transactional Gold: Where and How Gold Works as Legal Tender in 2025

Gold has shaped financial systems across the world for thousands of years. Even after paper money emerged, most major currencies were gold-backed, providing stability and global trust. In the U.S., this era ended in 1971, when President Nixon severed the dollar’s final ties to gold, cementing fiat currency’s dominance.

Now, in a surprising twist, some U.S. states are reintroducing gold as legal tender. In a climate of geopolitical tensions, economic uncertainty, and rising concerns over dollar collapse, gold is regaining popularity, not just as an investment, but as a means of exchange. What could it mean for the future of money?

Table of Contents

1. States with gold as legal tender
2. What does it mean if you live in one of these states?
   1. Alternative to fiat currency
   2. Tax advantages
3. Can you actually use gold in transactions?
4. Is it practical?
5. Gold’s history as legal tender
6. Gold’s comeback
7. Gold and bitcoin
8. Should you buy gold right now?
9. Prospects in 2025 and beyond

Which states are adopting precious metals as legal tender?

Today, 11 states, including Texas, Utah, and Wyoming, accept gold and silver as legal tender. Florida is now joining this list: Governor DeSantis has signed a bill designating gold and silver coins as currency alongside the U.S. dollar. The new law comes into effect on July 1, 2026, and applies to gold and silver coins meeting certain purity standards (99.5% for gold and 99.9% for silver.)

Florida’s legislation is one of the biggest state-level moves so far to reintroduce gold and silver bullion into mainstream economy. In a press conference, Gov. DeSantis said this move will “authorize money services businesses like PayPal to transmit and accept payment in gold and silver.” According to DeSantis, the law aims for “the financial freedom to protect yourself against the declining value of the dollar.”

What does it mean if you live in one of these states?

Practically, how does your state’s adoption of gold and silver as legal tender affect day-to-day financial dealings?

An alternative to fiat currency

If you live in a state where gold and silver function as legal tender, you can, in theory, use bullion coins to buy goods, pay for services, and cover debts, rather than just for investment. Precious metal enthusiasts predict that gold and silver may gain in popularity for everyday transactions with wider adoption and established electronic payment systems.

However, businesses and lenders aren’t obligated to accept bullion as currency. That’s up to each business’s policy. Although we have no official figures, it appears that using gold in transactions is still a niche practice.

Tax advantages of using gold and silver as currency

Under the new bill, all transactions using qualifying precious metals are exempt from state sales tax. This eliminates the previous $500 minimum threshold.

Keep in mind that federal income tax still applies to gold and silver bullion, which the IRS classifies as “collectibles” rather than currency. Thus, when you sell precious metals, the profit is subject to a maximum federal capital gains tax rate of 28%.

Can you actually use gold in transactions?

People who opt to use gold as currency are unlikely to haul heavy bars or raw bullion to a store. Even gold coins are often too costly for everyday transactions. Some use privately minted Goldbacks, i.e., thin laminated gold-foil bills. As of mid-July 2025, one Goldback is worth slightly under $7. (Check the current exchange rate here.)The Goldback site features an interactive map you can use to locate Goldback-friendly merchants in your area.

Gold-backed debit cards and digital wallets can streamline gold transactions. For instance, the gold-backed VeraCash or Glint Mastercards work just like any card, allowing you to make payments or withdraw cash anywhere.

The crypto niche is also catching up, with gold-backed crypto tokens like PAX Gold (PAXG) and Tether Gold (XAUT). These tokens represent physical gold ownership, and you can trade them for bullion.

How practical is gold as currency?

Although investors value gold for its stability and inflation resistance, it comes with significant drawbacks as an everyday currency. As gold prices fluctuate, so does the yellow metal’s purchasing power, making it challenging to price goods or services.

Many value the security of tangible gold, but gold coins, bars, or bills are far less convenient to use than digital payments. Gold storage comes with risks like theft or exposure to natural disasters, while storage in secure depositories involves extra costs.

Even in states where gold has regained its official status as currency, it still mostly functions as an investment commodity. Right now, few businesses accept it as a payment form, and most people don’t use bullion for daily spending.

Gold’s history as legal tender

The first standardized gold coins were minted in Lydia (modern Turkey) around 550 BC. For thousands of years, gold had reigned as legal tender thanks to its durability, scarcity, and cross-border recognition. Gold was an accepted medium of exchange almost everywhere.

The gold standard

The classical gold standard tied the value of fiat currency to gold. This framework lasted from the 1870s until the First World War, when countries abandoned fixed exchange rates to print more money for funding war efforts. Postwar economic disruptions and, ultimately, the Great Depression finished the system.

In 1944, during the Second World War, the Bretton Woods system emerged. It pegged the U.S. dollar to gold and all other major currencies to the dollar.

This order lasted until Nixon decided to suspend the dollar’s convertibility to gold in 1971 due to growing trade deficits and dwindling national gold reserves. Thus began the era of fiat currency, backed by government trust rather than gold.

How did this shape the economy?

Switching to a fiat-based economy has allowed governments to print more money and fueled economic growth. However, it also created unsustainable financial bubbles, a higher risk of inflation, and rising national debt. Currencies became more prone to swings. Some have argued that, without a gold peg, fiat money systems are inherently less stable.

Despite no longer backing currencies, gold has retained its position as a store of value and an inflation hedge. To this day, it remains one of the most stable and trusted commodities.

Why gold is making a comeback as legal tender

With the gold standard dead for over 50 years, why would gold reenter the scene as legal tender? The keyword here is stability. In a time of economic uncertainty, financial roller coasters, and depreciating fiat currencies, many view gold as a safe anchor. Goldman Sachs strategist Lina Thomas cites “uncertainty over the Trump administration’s tariffs and broader economic concerns” as factors boosting gold popularity.

Central banks share this sentiment and plan to keep buying more gold while expecting dollar holdings to fall. Investors turn to gold for risk management, wealth protection, portfolio diversification, and inflation hedging. In this climate, it is hardly surprising that more states are passing laws that reinstate gold as legal currency, even if practical use remains on the fringes for now.

Texas Republican State Rep. Mark Dorazio, a firm proponent of making gold and silver usable currency again, questioned, “How am I supposed to put gas in my car with a gold bar? Today, it’s an impossibility. You just can’t do it.” Dorazio has championed the recent Texas bill authorizing electronic payment systems for precious metals. “This bill makes gold and silver functional money in Texas,” Dorazio says.

Gold and bitcoin: Parallel paths to wider use

Not coincidentally, gold’s reintroduction as legal tender runs parallel to the growing acceptance of bitcoin and other cryptocurrencies. Once a niche investment, today bitcoin enjoys endorsement from financial institutions like JP Morgan and Fidelity.  

While gold and bitcoin may seem like polar opposites—one a time-tested and stable physical commodity, the other an innovative and notoriously volatile digital asset—both are gaining traction for similar reasons.

Both bitcoin and gold appeal to investors who:

• Feel uncertain about the future of fiat currency because of devaluation, instability, and eroding buying power
• Prefer to reduce their dependence on centralized financial systems
• Seek an alternative store of value that can resist inflation and unfavorable government policies

Together, gold and bitcoin represent a shift away from paper money and toward intrinsic value, decentralization, and hedging against inflation.

Should you buy gold right now?

At this point, you may wonder whether you should jump on the gold bandwagon and pour some of your wealth into precious metal holdings. Many investors choose this strategy as a safeguard against economic downturns.

However, we’d like to caution against over-investing in gold. Compared to other assets, like stocks or real estate, gold offers limited growth. It tends to appreciate slowly and generates no dividends or interest. Moreover, if you suddenly need to convert your precious metal into cash, selling bullion could take time and cost you money through dealer spreads. Gold works best as part of a balanced portfolio that includes other assets like stocks, bonds, cash or its equivalents, and other investments.

If you decide to add gold to your investment portfolio, purchase from reputable companies like American Hartford Gold to ensure you’re getting a fair price, secure delivery, and transparent buyback terms. Consider a gold IRA from a reputable company as a long-term, tax-advantaged method of investing in precious metals. Beware of unrealistic profit claims, high-pressure sales tactics, and overpriced gold products like numismatic coins.

Gold’s prospects in 2025 and beyond

Gold continues to shine bright. Right now, the yellow metal trades at $3,336.74 per ounce and has grown by nearly 40% in the last year alone. President Donald Trump’s tariffs have been one of the main catalysts behind the surge in gold prices in 2025.

• Gold gets affirmation from financial moguls like John Paulson, who expects gold prices to reach $5,000 by 2028 and says, “the best place to go if your faith in the (U.S.) dollar diminishes is gold as a reserve currency.”
• According to Gregory Shearer, JP Morgan’s head of Base and Precious Metals Strategy, gold “remains one of the most optimal hedges for the unique combination of stagflation, recession, debasement, and U.S. policy risks facing markets in 2025 and 2026.”

With gold prices climbing and central banks expanding their gold holdings, it is reasonable to suppose that more states will reintroduce gold as an alternative currency in the next few years. Gold-backed debit cards, tokenized gold, and other methods facilitating payments in gold without handling bullion will likely evolve as well.

Although gold is unlikely to become an everyday means of exchange again anytime soon, it’s possible that more people will use, and businesses accept, digital gold as payment. However, for now, gold remains more a store of value than a spending currency.