(Pharos-Tribune (Logansport, Indiana) Via Acquire Media NewsEdge) Feb. 27--Economic uncertainty, fears over growing a national debt and the prospect of severe inflation is leading some Indiana residents to protect their assets by investing in a commodity that is as desirable as it was more than 2,000 years ago: gold.

Jerry Titus, a Kokomo resident, said he began buying gold in November.

"I bought gold from eBay and eldoradogold.net, and I paid $1,100 per ounce," Titus said. "Already, in three months, the value of that investment has increased to $1,350." Paul Caudell is also a firm believer in the use of gold as opposed to a monetary system based on debt.

He said cash was just worthless paper unless supported by something with value.

"The reason I am involved in this is to give our money value," Caudell said. "Everything needs to be backed by something. A mile is a mile, a pound is a pound, a kilometer is a kilometer. It is the way you judge things." Peru resident Lynette Sherill has kept a close eye on the gold movement. She is enthusiastic about gold becoming a viable alternative.

"It is transportable, durable, rare and desirable," Sherril said. "It is no burden to the state. Why we would not want to do it, I don't really know." Their ideas appear to be spreading.

A grass-roots movement, in which Titus, Sherill and Caudell are active, is working to promote gold as a viable alternative that could be used in conjunction with, and as a competitor to, the everyday currency of the U.S. dollar.

Touting Austrian school of economics theories and the work of Edwin Vieria, as opposed to mainstream Keynesian economics, followers of the movement claim citizens should have the right to use gold as legal tender, as outlined in the first article of the U.S. Constitution.

Caudell promotes the movement in any way he can .

"I am a GOP delegate for Indiana's 9th District and several other organizations where I talk up the value of gold currency," Caudell said. "For me, it's a no-brainer." Titus believes owning gold is an idea that people need to be aware of given the current economic climate.

"A lot of people are discouraged about physically owning gold, but it appeals to me, particularly with the way wealth and the economy is going," he said.

The group has taken its concerns to the state level through the Indiana Honest Money act. The legislation, introduced by Republican Sen. Greg Walker of Columbus, has galvanized the movement. Similar legislation has also been drafted in New Hampshire, Missouri and Colorado.

While the legislation died this week without a hearing, supporters believe it will be back next year and will be resubmitted until it passes, especially if the economy continues to falter.

"It could happen in the next year or two," said Harvey Warfield, a supporter of the concept since 2003.

The gold money system proposed by the bill is entirely voluntary for citizens who are not tied to using the system for all transactions in the state. Money distributed in state tax returns could be requested in either conventional or gold tender, with individuals given electronic cards from which they could spend gold funds in the same way as they use a conventional credit card.

As part of the transition to the new system, the bill proposes state fees and taxes from tobacco suppliers be paid in gold, or sound money, based on weight. This would supply the state treasury with the needed funds to avoid earmarks or to provide any separate funds to establish the system.

Titus says getting the bill passed is only half the work.

He believes the difficulty of acquiring gold has put many people off investing. If legislation can be passed supporting sound money as a viable alternative, he says, investors will come in droves.

Economists, however, are skeptical of the proposed system.

Purdue University economics professor Robert Holland believes adopting an alternative to the socially accepted form of money goes against the essence of the monetary exchange system.

"When you have two main currencies where you can pay in either a fiat currency like the U.S. dollar, or another backed by gold, the reshaped law may drive out the good money," Holland said. "People will settle debts, but the currency with the least value is what we would use. The second currency would not be in circulation, but it would be hoarded." Holland said that the current monetary system relies on the good faith of its participants.

"It exists because of a social contract with the understanding that it is something that I am going to accept," Holland said. "When we trust the Federal Reserve system, there is no reason not to have a fiat currency. In this instance, where these ideas are being mentioned, I think it is because this trust has declined." Problems may also arise in the everyday use of gold if it is used as legal tender.

There are roughly 142,000 known tons of gold held throughout the world. Given current values, this equates to roughly $4.2 trillion, which is about the same amount of money circulating in America today.

There is, therefore, not enough gold to back the U.S. economy.

Titus said the increase in value of gold was a necessary element of the plan and something that would be addressed if it became successful.

"It is a reasonable concern and is one argument against going back to the gold standard," Titus said. "If gold goes up to an extent that it becomes a real concern, we can go to silver or platinum." Warfield argues the idea will take time to catch on, but given the national economic crisis, he believes trying something new is the answer.

"We like the status quo, we like money based on debt," Warfield said. "That is why I oppose it." Shevill agrees.

"It is about trying to do something new," she said. "Either you sink or you swim." Kevin Smith can be contacted at (574) 732-5148 or via e-mail at kevin.smith@pharostribune.com To see more of Pharos-Tribune, or to subscribe to the newspaper, go to http://www.pharostribune.com/.

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