By Karen Brettell

(Reuters) – With the inflation rate at an all-time high, Steve Allred of Utah is worried about the decline in the purchasing power the U.S. Dollar.

Allred bought gold to help prevent it from getting worse. In the hardware shops he shares with his brother, he has begun to accept certain forms of the precious metal.

Allred is part of an increasing number of Americans turning to gold to replace their currency, as unimaginable government spending and Federal Reserve relaxation threaten to devalue the greenback.

Since 1971, 86% has been lost in purchasing power of the US dollar according to U.S. data. President Richard Nixon eliminated fixed currency of dollars to gold. The price of gold has risen from $40 to $1,900 per ounce during that time.

It is also used for jewelry and central bank reserves. Some gold enthusiasts believe that it has a higher value than fiat currencies, such as the dollar. Governments can print and issue money and debt at will.

The U.S. dollar in circulation is $2.25 trillion. This compares to $1.80 trillion early 2020 and barely over $800 billion in 2007. Federal Reserve data shows.

GRAPHIC: Currency in circulation – https://fingfx.thomsonreuters.com/gfx/mkt/jnpwerablpw/Currency%20in%20circulation.JPG

The use of gold as a currency gained momentum after the financial crisis in 2007-2009. It has increased during the pandemic of 2020 when the government spent trillions and the Federal Reserve bought unimaginable amounts of bonds to try and revive the economy.

It will never overtake the greenback’s primacy, but its popularity is rapidly growing. Innovative innovations that enable people to use the metal to make even small transactions every day are helping propel this movement.

Around three months ago, Allred started accepting Goldbacks in his shops. These money are infused with gold particles. They come in various denominations, from 1 (which is 1/1,000th an ounce) to 50 (1/20th an ounce).

Allred has seen his customers purchase goods worth between $3,000 and $4,000. The hope is that more people will use the notes and it’s possible to be used in a wider range of services and products within the community.

Jeremy Cordon (founder and president of Goldback Inc.) stated that approximately 25% to 50% small businesses in Utah would accept the note. Cordon estimates that the Goldbacks will grow to approximately $1 billion in the next five- or six years. However, the pace of the printing process may limit Cordon’s growth. The company already has $30 million in sales across the nation.

Jason Cozens is the founder and CEO at Glint Pay and gold trading app Glint Pay. He has seen strong demand for gold as a currency.

Glint can be used to buy gold from Switzerland. Customers then have the option of using Mastercard to spend any remaining holdings (NYSE:). Cozens claims that around half of the 105,000 clients are located in the United States. The number registered users increased 500% over the previous quarter.

“The money we’re using in less than one person’s lifetime has lost most of its purchasing power and that’s what’s driving everything,” Cozens said. “You start thinking about, ‘Well why is money depreciating? It is beyond my control.’”

GRAPHIC: Dollar purchasing power – https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwgnqwpo/Dollar%20purchasing%20power.JPG

The interest in crypto currencies and gold currencies is in some ways similar. This may be due in part to the desire for decentralized financial system. People are seeking more privacy as cash becomes less common and proposed central bank digital currencies risk giving some institutions more control over people’s finances than ever before.

As transactions are kept private, exact numbers on the use of gold as tender cannot be provided. Joe Cavatoni (regional CEO USA), said that gold has become more attractive as an investment due to the fact it can perform well in times of uncertainty. However, state governments have removed some restrictions from its use as currency.

In 2011, Utah made gold and silver legal tender. Oklahoma and Arizona followed suit. The tax restrictions on states are gradually being removed.

Jp Cortez is a policy director at the Sound Money Defense League. He stated that 41 states had exempted silver and gold from the sales tax. Five more are considering similar legislation.

This group also works with lawmakers to eliminate capital gains taxes. Arizona has removed the capital gains tax from precious metals. But, other states have continued to levie this tax and it is still payable at the federal level.

Cortez notes that ultimately, “if you can’t write off capital losses in the value of the dollar, we shouldn’t be taxed for capital gains when that gain in the price of gold isn’t really a gain – it’s just a representation of the loss of purchasing power of the dollar.”