Silver and gold will also have their uses. Utah and Indiana monetized silver and gold in the recent past as a statement of their faith in the Federal Reserve promissory notes people carry around in their wallets.
—Utah and Indiana monetized silver and gold
In practice, in Utah, individuals will be able to use gold and silver bullion in the same way as they would cash for transactions but also for currency exchanges. Individuals with the metal will be able to get fair market value in a trade for cash, or may start depositing or paying with it. The state will also be offering a one-time tax credit to offset any capital gains taxes accrued for individuals who choose to trade metal for paper.
The tax credit essentially ensures that the exchange works like any other currency exchange, say if someone went to Europe and needed to get Euros around that trip. It will also eliminate a shadow market for the metal as those with metal to exchange would normally call around for transaction prices in order to offset fees and taxes.
“the Federal Reserve promissory notes people carry around in their wallets”.
I don’t know that promissory notes is an accurate description. That would imply that they could be exchanged for “real” money or specie, and in our current monetary regime FRNs are the real money.
Federal Reserve Notes more closely resemble the “bank money” or “credit money” that private banks created before the Federal Reserve existed. “Credit money” was unbacked currency that constituted the credit portion of the money supply during the gold standard. It was created by banks, often against “real bills”- google “real bills doctrine” and you’ll get an idea of what that is all about.
FRNs also resemble Greenbacks or US Notes which were another unbacked currency issue that circulated during the gold standard. There was plenty of unbacked money circulating during the gold standard- it essentially was the portion of the American money supply that disappeared when banks failed during the Depression, and the disappearance of this money is what created the massive deflation of that time.