Local Government Proposes to Reduce Investment Risks with Gold and Silver

Legislators in Wyoming just introduced three bills to “de-risk” the state’s financial investments, each bill requiring a minimum gold and silver allocation of 10% toward the state’s mineral trust fund, pension fund, and reserve fund.

Wyoming Sound Money Trust Act (HB 174)

The first bill, the Wyoming Sound Money Trust Act, would allow the state treasurer to allocate at least 10% of the Permanent Wyoming Mineral Trust Fund to physical gold and silver.

Should HB 174 pass, this legislative move would be quite significant as the mineral trust happens to be the state’s largest and oldest fund, holding well over $8 billion in assets.

Not only would HB 174 give the fund more flexibility to hedge the state’s largest portfolio of assets, but it would also make a bold statement regarding the state’s confidence in the soundness of monetary metals.

The Wyoming Sound Money Trust Act follows last year’s Wyoming Legal Tender Act, both bills introduced by Representative Roy Edwards. Having successfully passed, the Legal Tender Act removed state taxation from all purchases of gold and silver.

Wyoming Sound Money Pension Act (HB 156)

The second bill, introduced by Representative Mark Jennings, seeks to reduce the risks in pension funds by allocating 10% of the Wyoming Pension System assets to gold and silver.

Similar to HB 174, the Wyoming Sound Money Pension Act aims to hedge portfolio assets for pension recipients, a means to mitigate market risk, maintain purchasing power, and retain growth potential for all asset in the pension fund.

Wyoming Sound Money Reserve Act (HB 190)

Finally, the third and last bill, this one introduced by Representative Scott Clem, is called the Wyoming Sound Money Reserve Act. This bill would require a minimum allocation of 10% in gold and silver to be applied to the Wyoming Legislative Stabilization Reserve Account.

These proposed state measures are intended not only to mitigate the risks of holding stocks, bonds, and various short-term debt instruments; they would also ensure that the value of their assets’ purchasing power would hold up against the risk of inflation.

Another appealing factor giving confidence to the measures is that gold and silver are both monetary assets that have no counterparty. The monetary metals, all of which are to be stored physically in a state depository, are held neither to obligations of debt nor promissory delivery.

These proposed measures come on the heels of significant investment losses impacting the state over the last few months; among them a $220 million unrealized loss on Third World debt.

A Modest 10% Allocation in Gold and Silver

It’s often too tempting to make investment decisions based on popular sentiment, much of which is overly influenced by faddish notions, common assumptions, and speculation.

On the other hand, a big-picture view toward sound investment practices and sound assets is one perspective that is all too rare in today’s world. Both have been relegated to the margins of both media and public consciousness.

The irony of it all is that the investing public is fully aware of that fact that the most successful investors reside at the margins of the investing world. They see things that the average American doesn’t.

This holds true for local governments, which is what makes Wyoming’s legislative trajectories all the more meaningful and remarkable.

No, you don’t have to be a gold bug and transfer 100% of your wealth to gold, or even silver for that matter.

It’s about developing the kind of common sense no longer found in the common thinking that goes on in the world.

A minimum of 10% allocation in gold and silver is a modest amount. Yet it makes a big difference in de-risking an investment portfolio consisting of equity and debt securities.

Perhaps it’s time to make a sound decision by investing in the security of your wealth and your future.