Utah Passes Legislation To Hold Gold and Silver As Reserves

The state of Utah has passed, House Bill 348, which will allow the state treasurer to hold physical gold and silver as reserves for state funds. The bill was sponsored by State Rep. Ken Ivory and will allow the state to hold up to 10% of state reserve funds in physical gold and silver.

Utah’s Previous Predicament

This move was championed at the state level as officials continue to look for ways to secure state assets against the risks of inflation with the goal of achieving capital gains. Prior to the legislation being signed into law by Utah governor, Spencer Cox, the state’s treasurer had limited options for holding, managing, and investing state funds.

As of right now the vast majority of Utah’s reserves, nearly exclusively, are invested in corporate bonds and banking corporations. These particular debt instruments may have low volatility but they also have substantial risks due to the level of inflation seen over the past 3 years. These bonds have likely been eaten alive by ‘above average’ inflation (which could be the new norm) which could have massive repercussions for Utah state over the next 5 years. A 10% allocation to gold and silver is a good start for the state to start diversifying its asset reserves with hard assets that are likely to combat inflation with the potential bonus of capital gains.

Echoing Sentiment Across The United States

Utah has now joined a small but growing list of states who also hold physical gold and silver as reserves for state funds. Texas and Ohio have already been at the table while legislation similar to ‘House Bill 348’ is currently being considered in Idaho, West Virginia, Missouri, and Tennessee. Market participants have to be at least speculating on how the new demand for physical gold coming from the state level will affect gold prices in the short and long term.