''Midas'' commentary for February 8 speculates about a squeeze in silver

Section:

Bill Urges Use of Gold, Silver as Legal Tender

By Kevin Landrigan
Nashua (New Hampshire) Telegraph
Tuesday, February 3, 2004
http://nsnlb.us.publicus.com/apps/pbcs.dll/article?AID=2004202030362

CONCORD -- Promoting the use of gold and silver
by state government would trigger a flood of
investment in New Hampshire, according to
supporters who want a bill to proscribe their
future uses.

Rep. Henry McElroy, R-Nashua, donned an Uncle
Sam hat at a news conference Monday to urge
lawmakers keep alive his bill that would make New
Hampshire the first to endorse the use of gold and
silver as legal tender for state government.

"This is nothing new to this country," he said.
"It's what we were founded upon."

Dr. Edwin Vieira is a constitutional lawyer from
Virginia who helped McElroy, Rep. David Buhlman,
R-Hudson, and others prepare the bill.

"Paper currency in this country has lost its
purchasing power since World War II. Precious
metals have retained their purchasing power.
This will stimulate investment in New Hampshire
if you take this important first step," Vieira said.

But the House Commerce Committee found little
support for the change due to the strain it would
place on the state treasurer's office and the
private banking system, said Rep. Leo Fraser,
R-Pittsfield.

"The committee was having trouble believing that
gold, which also may be devalued as a currency,
would be of any benefit," Fraser said.

State Treasurer Michael Ablowich said as a courtesy
he assisted lawmakers in trying to refine the bill
(HB 1342), but he also saw many flaws in it.

"Like 90 percent of the Legislature, I'm fairly
skeptical about how it might work," he said.

The federal government began getting off the
gold standard in 1933 and in 1971 discontinued
all purchase of gold or silver to back up Federal
Reserve notes stored in the U.S. Mint.

Rep. Dan Itse, R-Fremont, said this has led to
more inflation in the economy and a devaluing of
the dollar here and abroad.

"Even today, we have low inflation now, but the
common bank savings account interest rate is
lower than the inflation rate. That is the definition
of an unstable economy," Itse said.

Federal Reserve Chairman Alan Greenspan has
praised the stability of the U.S. economy when
gold backed its currency.

Any federal conversion would require the
government to purchase huge stockpiles of the
precious metal, Greenspan said.

If the government estimated the price of gold it
was to buy as too low, Greenspan has warned
taxes would have to be raised to keep government
operating.

Edward Lee of Merrimack, who owns his own gold
and silver depository, insists state government
costs under this bill to allow gold and silver as an
optional choice would not be significant.

To cover costs, Lee said the state could mark up
the price and charge a handling fee for those who
would want to be paid in gold or silver.

"There would be a small investment to get things
going and the state could be profitable in a period
of months," Lee said.

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