Can Cities Legally Buy Silver or Gold?
(Legally, according to the CA code? What about other States?!)
Silver Stock Report
by Jason Hommel, December, 2010
I have suggested to this council that they take a hard look at precious metals for investing the treasury funds of Culver City. I first asked the council to do this in Dec 2008. Gold was under $800, it currently is approaching $1400. In the CAFR from 2008-2009 the treasury reported a less then 4% return on investments. Not bad but had you invested in gold this return would have been even higher. I must now caution you that the US dollar will be declining severly in purchasing power by Spring 2011. I therefore implore you to protect our community now by diversifying a portion of our cities investments in physical precious metals, not ETF's or other paper promises for silver --
A City MPA Assistant Manager responds:
The Precious Metals Advocate asks for my help, and writes:
Jason my man, been following you for a while ever since I first came across your articles on silverseek.com.
I read the CA code sections from
I never saw any prohibition of investing in gold or silver.
I did find this, which would support the investment into gold or silver.
"When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, the primary objective of a trustee shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet the liquidity needs of the depositor. The third objective shall be to achieve a return on the funds under its control."
Thus, investing in gold or silver would meet all three objectives.
All of the rest of the sections provide limits on the types of bonds that a city may invest in.
Gold and silver are not bonds, and thus, would be exempt from all of the limits.
But consult a lawyer.
Readers, can you help? I cannot hire lawyers from all 50 states; that's beyond my capacity. But I can post position letters, if you get such a letter from a lawyer in your own state, and I can host such letters, for further reference at my website, to help enable city managers to invest funds into physical gold or silver.
Please help me. Consult a lawyer. Advocate precious metals investments to your city. Let me know the results.