Officials Break Ground for Construction of Texas Bullion Depository
Last week, officials broke ground for construction of the country’s first state gold depository in Texas. The creation of the Texas Bullion Depository represents a power-shift away from the federal government, provides a mechanism for the state to establish a higher level of economic independence, and sets the foundation to undermine the Federal Reserve’s monopoly on money.
Countries that stockpile gold create a foundation of stability for their monetary systems. This is precisely why China, Russia, Turkey and several over countries are increasing their gold holdings. But it’s not just countries looking to gold to provide political clout and economic power. Texas is building its own gold depository. The reason? To wrest some economic power away from the Federal Reserve and the US government by establishing some monetary autonomy for the Lone Star State.
In June 2015, Gov. Greg Abbot signed legislation creating the state gold bullion and precious metal depository. In his signing statement, Abbot emphasized the autonomy the new facility will provide the state.
…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.”
University of Houston political science professor Brandon Rottinghaus also emphasized how the depository increases the state’s independence.
“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”
The Texas Bullion Depository officially opened for business and accepted its first deposit on June 6, 2018. Austin-based Lone Star Tangible Assets (LTSA) currently operates the depository from its existing facility in Austin. Officials say construction of the new 40,000 square foot depository building in Leander will be completed in late 2019.
According to LSTA chairman Matt Ferris, the facility’s vault will rank as the largest class 3 vault in the state and weigh as much as 10 space shuttles. The vault will have the capacity to hold $350 billion in precious metals – more than is currently held in Fort Knox.
“If market forces dictate – and we think they will – the site will have the capacity to expand by an additional 85,000 square feet,” Ferris said.
Texas Comptroller Glenn Hegar called the groundbreaking “a milestone in what is a historic achievement: the first ever state-administered gold bullion depository.”
The facility will not only provide a secure place for individuals, business, cities, counties, government agencies and even other countries to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in transactions. In short, a person will eventually be able to deposit gold or silver – and pay other people through electronic means or checks – in sound money.
You don’t have to be a Texas resident to use the depository. Any US citizen can set up an account online and then ship or personally deliver metal to the facility. The Texas Bullion Depository will accept gold, silver, platinum, rhodium and palladium.
The depository does not currently have a system in place to facilitate everyday transactions with gold and silver, but that remains part of the long-term plan.
According to an article in the Star-Telegram, state officials want a facility “with an e-commerce component that also provides for secure physical storage for Bullion.” While in the development phase, officials said plans for a depository will include online services that would let customers accept, transfer and withdraw bullion deposits and related fees.
Ultimately, depositors will be able to use a bullion-funded debit card that seamlessly converts gold and silver to fiat currency in the background. This will enable them to make instant purchases wherever credit and debit cards are accepted.
By making gold and silver available for regular, daily transactions by the general public, the new depository has the potential for wide-reaching effect. Professor William Greene is an expert on constitutional tender and said in a paper for the Mises Institute that when people in multiple states actually start using gold and silver instead of Federal Reserve notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.
“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes).
“As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”
Gresham’s Law holds that “bad money drives out good.” For example, when the US government replaced silver quarters and dimes with coins made primarily of less valuable copper, the cheap coins drove the silver out of circulation. People hoarded the more valuable silver coins and spent the less valuable copper money. So, how do you reverse Gresham?
The key is in making it easier to use gold and silver in everyday transactions. The reason bad money drives out good is that governments put up barriers to using sound money in day-to-day life. That makes it more costly to spend gold and silver and incentivizes hoarding. When you remove barriers, you level the playing field and allow gold and silver to compete head-to-head with Federal Reserve notes. On an even playing field, gold and silver beat fiat money every time.
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