Nation’s First State-Level Gold Depository
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Texas Governor Signs Bill Creating Nation’s First State-Level Gold Depository
June 17, 2015
CNS News
Texas Gov. Greg Abbott signed a bill last Friday that creates the nation’s first state-level gold depository.
The Texas version of Fort Knox will be used to store $1 billion in gold bullion the state plans to “repatriate” from the Federal Reserve Bank in New York.
“Today I signed HB 483 to provide a secure facility for the State of Texas, state agencies and Texas citizens to store gold bullion and other precious metals,” Abbott said in his signing statement.
“With the passage of this bill, the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state."
Abbott said the gold depository “will serve as the custodian, guardian and administrator of bullion that may be transferred to or otherwise acquired by the State of Texas.” The Texas Office of the Comptroller of Public Accounts will administer the depository and submit an annual report to the governor and the Texas legislature.
The final version of the Texas Bullion Depository Act , which was initially filed by state Rep. Giovanni Capriglione (R-Southlake) in December, sailed through the Texas legislature, passing 27-to-4 in the state Senate on May 30 and clearing the House 140 –to- 4 the following day. It was sent to Gov. Abbott for his signature on June 1.
According to the new law, deposits made to the Gold Bullion Depository - which can be made by individuals, political subdivisions, school districts, businesses, non-profit charitable and educational groups, and financial institutions - are “not subject to legislative appropriation.”
Deposits of precious metals will be recorded “in units of troy ounces pure, and the records must also specify the type and quantity of each precious metal deposited,” according to the new law.
Withdrawals and transfers from the non-interest-bearing accounts will be made “on demand by the presentment of a suitable check, draft, or digital electronic instruction to the depository or a depository agent.” The depository is prohibited from engaging in any activity “having the effect of hedging or leveraging the depository’s holdings of precious metals.”
The Texas law also contains a provision that seeks to protect depositors from any future confiscation of gold by the federal government similar to the executive order signed by President Franklin Roosevelt on April 3, 1933 that prohibited “the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”
“A purported confiscation, requisition, seizure, or other attempt to control the ownership, disposition, or proceeds of a withdrawal, transfer, liquidation, or settlement of a depository account…if effected by a governmental or quasi-governmental authority other than an authority of this state…in the course of a generalized declaration of illegality or emergency relating to the ownership, possession, or disposition of one or more precious metals…is void,” it states.
In 2011, the University of Texas Investment Management Co., which administers one of the nation’s largest endowment funds, took physical custody of 6,643 gold bars worth $991.7 million that were being stored in an HSBC Holdings warehouse in New York.
In 2013, Capriglione told The Texas Tribune that a gold depository would protect the state in the event of a future financial crisis. “For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there’s nothing there to back it up. So I think this cures a problem before it can happen.”
Texas Governor Signs Bill Creating Nation’s First State-Level Gold Depository
June 17, 2015
CNS News
Texas Gov. Greg Abbott signed a bill last Friday that creates the nation’s first state-level gold depository.
The Texas version of Fort Knox will be used to store $1 billion in gold bullion the state plans to “repatriate” from the Federal Reserve Bank in New York.
“Today I signed HB 483 to provide a secure facility for the State of Texas, state agencies and Texas citizens to store gold bullion and other precious metals,” Abbott said in his signing statement.
“With the passage of this bill, the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state."
Abbott said the gold depository “will serve as the custodian, guardian and administrator of bullion that may be transferred to or otherwise acquired by the State of Texas.” The Texas Office of the Comptroller of Public Accounts will administer the depository and submit an annual report to the governor and the Texas legislature.
The final version of the Texas Bullion Depository Act , which was initially filed by state Rep. Giovanni Capriglione (R-Southlake) in December, sailed through the Texas legislature, passing 27-to-4 in the state Senate on May 30 and clearing the House 140 –to- 4 the following day. It was sent to Gov. Abbott for his signature on June 1.
According to the new law, deposits made to the Gold Bullion Depository - which can be made by individuals, political subdivisions, school districts, businesses, non-profit charitable and educational groups, and financial institutions - are “not subject to legislative appropriation.”
Deposits of precious metals will be recorded “in units of troy ounces pure, and the records must also specify the type and quantity of each precious metal deposited,” according to the new law.
Withdrawals and transfers from the non-interest-bearing accounts will be made “on demand by the presentment of a suitable check, draft, or digital electronic instruction to the depository or a depository agent.” The depository is prohibited from engaging in any activity “having the effect of hedging or leveraging the depository’s holdings of precious metals.”
The Texas law also contains a provision that seeks to protect depositors from any future confiscation of gold by the federal government similar to the executive order signed by President Franklin Roosevelt on April 3, 1933 that prohibited “the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”
“A purported confiscation, requisition, seizure, or other attempt to control the ownership, disposition, or proceeds of a withdrawal, transfer, liquidation, or settlement of a depository account…if effected by a governmental or quasi-governmental authority other than an authority of this state…in the course of a generalized declaration of illegality or emergency relating to the ownership, possession, or disposition of one or more precious metals…is void,” it states.
In 2011, the University of Texas Investment Management Co., which administers one of the nation’s largest endowment funds, took physical custody of 6,643 gold bars worth $991.7 million that were being stored in an HSBC Holdings warehouse in New York.
In 2013, Capriglione told The Texas Tribune that a gold depository would protect the state in the event of a future financial crisis. “For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there’s nothing there to back it up. So I think this cures a problem before it can happen.”
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Comments
<< <i>Or just another way to spend some money on a facility that some contractor is going to make a bucket of money on. >>
Yep!
What a complete waste of taxpayer money. Just why is the state of Texas even holding a precious metals reserve?
gold? Just did it out. Open for all to prospect and dig.
Aw, wait a minute Bob, you are off on a tangent again.
bob
<< <i>
<< <i>Or just another way to spend some money on a facility that some contractor is going to make a bucket of money on. >>
Yep!
What a complete waste of taxpayer money. Just why is the state of Texas even holding a precious metals reserve? >>
So when they secede from the nation and build that wall to keep all of the undesirable types out - they will have something to base their new currency on.
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<< <i>
<< <i>Or just another way to spend some money on a facility that some contractor is going to make a bucket of money on. >>
Yep!
What a complete waste of taxpayer money. Just why is the state of Texas even holding a precious metals reserve? >>
Probably for the same reasons that Central Banks hold one fifth of the world's known gold in their vaults. Ask all of them why they have a PM reserve and continue to shoulder the expenses in maintaining and securing those vaults. And to think several nations have even requested their gold back from current "safekeeping" at the NY Federal Reserve Bank's vaults.
The quantity owned by Texas is small (<30 tonnes) and probably is only a tiny portion of the state's official funds/assets (their teacher's trust fund is $120 BILL). The gold would take up a space about 70 ft3 or 4 ft per side. You don't need a very big vault. I would imagine the Texas facility would have other uses as well including charging fees for those services. In gold, like many other tangible assets, if it's not in your direct possession, you probably don't own it....or at least wouldn't have access to it if you needed to on short notice. If this is such a bad idea why aren't citizens up in arms about wasting money paying for gold bullion security at Fort Knox? That comes right out of your taxes. Germany couldn't get its couple hundred tonnes of gold out of the NY Fed bank. It will be interesting to see if Texas can get their 30 tonnes out of New York. The risk in vaulted gold today is not with a thief breaking in and taking it, but the banking elite themselves with reallocation and rehypothecation "laws."
Assuming an annual 1% storage/security fee. Texas has already paid out $50 MILL in fees since they purchased gold. So rather than keep forking out $10 MILL per year to someone else why not keep that money in Texas? Possession is nine tenths of the law. And the remaining tenth is having a better lawyer or lobbyist (or more ammo) than the other guy.
vaults
Jade Helm 15 ?
Can't fund education (something in the upper 40s of all the states) ... but we can waste money on this stupid boondoggle.
There isn't going to be any actual security, they're just going to bury the gold under a tree in Loving County and pay all the locals (all 82 of them) to call the Sherriff if the see somebody by said tree.
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Would even a Texan trust the TX gov't to guard the gold?
<< <i>Boondoggle
Would even a Texan trust the TX gov't to guard the gold? >>
The only way they'll get their gold is to take it and their guns from their cold, dead hands!
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<< <i>Boondoggle
Would even a Texan trust the TX gov't to guard the gold? >>
How about using the Alamo?
This does not sound like the best way to spend tax payer dollars.
Maybe not. But most states have been frittering away their money for years on much worse boon-doggles that give them nothing in return. A bridge to nowhere anyone?
If the situation is dire enough, I can just picture the Federal Government saying "It's not yours any more. We have custody of it."
Why do you think so many individuals prefer having physical gold/silver/platinum in hand rather than just owning PM futures?
Some say boondoggle, I say prudent.
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No brainer.
At least states have to live in the real financial world, not the make believe world of unlimited funny money.
It is interesting that in 1949 the San Francisco Bank of America had a vault
with enough room to store 60 tons worth of silver dollars (2,000,000 coins).
Why not just rent a large (very large) safe deposit box?
Or doesn't Texas have a school book depository; they could use that building for a gold depository.
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<< <i>One billion ounces of gold (at $1200/oz.) would weigh around 28 tons.
Here is a brain teaser. What would one billion ounces of gold at $1400/oz weigh?
Reminds me of the joke/trick about which weighs more-a ton of bricks or a ton of feathers.
I used $1200/oz. as an estimate, today's ApMex price is $1174/oz.
They should still rent a safe deposit box.
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I think with that much gold in one place you might need more than a safe deposit box. Anyway, I think they are planning to allow private gold storage there too. It could be a money maker for Texas in the end. Who knows maybe foreign banks will want to use it. Any existing bank large enough to hold the gold would probably be under Federal control. I was talking to a banker just recently and she told me that the IRS could block access to my sdb and who knows who else could.
<< <i>Every time someone says they are for LESS government, they then go off and create another boondoggle that costs everyone money and creates zero value to the taxpayer. From a macro point of view, they are seeking to establish more storage capacity when what we have is adequate. Can't fix stupid or politicians trying to expand government yet again! >>
Government is not all one monolithic thing. Division of government is good. That is the way the founders set it up. Anything making States stronger is a good thing even if it costs a little. But as I said, this could be a revenue generator for the state and therefore not a boondoggle.
Now that high speed train that they threaten to build would be a boondoggle IMO and a huge terrorist target. After setting an armed guard at every post and pillar 24/7 it would make this look like chump change.
<< <i>
<< <i>Or just another way to spend some money on a facility that some contractor is going to make a bucket of money on. >>
Yep!
What a complete waste of taxpayer money. Just why is the state of Texas even holding a precious metals reserve? >>
They could use the partially finished Super-Collider tunnel!
<< <i>Its probably Texas' way of funding what will be their own republic government when they succeed from the US. Haven't rumors of this been flaoting around forever? Nothing better to start with than gold. Highly liquid investment. >>
I thought I have heard it said that Texas is the only state that has a legal right to secede. Not sure where that is found.
<< <i>
<< <i>Its probably Texas' way of funding what will be their own republic government when they succeed from the US. Haven't rumors of this been flaoting around forever? Nothing better to start with than gold. Highly liquid investment. >>
I thought I have heard it said that Texas is the only state that has a legal right to secede. Not sure where that is found. >>
I do not think that is the case. I believe the agreement that was made when Texas was annexed to the United States was that it retained the right to divide itself up into up to five new states.
<< <i>
<< <i>
<< <i>Its probably Texas' way of funding what will be their own republic government when they succeed from the US. Haven't rumors of this been flaoting around forever? Nothing better to start with than gold. Highly liquid investment. >>
I thought I have heard it said that Texas is the only state that has a legal right to secede. Not sure where that is found. >>
I do not think that is the case. I believe the agreement that was made when Texas was annexed to the United States was that it retained the right to divide itself up into up to five new states. >>
Wasn't that revoked after the Civil War?