Texas Bullion Depository

History

Digital Rendering of Proposed Facility

Texas Governor Greg Abbott passed the Texas Bullion Depository Bill, HB 483, on June 19, 2015.^[1] Rep. Giovanni Capriglione, R-Southlake, originally filed the bill on December 10, 2014.^[2] The bill was co-authored by 31 other colleagues and sponsored by Sen. Lois Kolkhorst, R-Brenham.^[3] In 2013 Capriglione announced his interest in creating the bill and was subsequently contacted by people around the world interested in storing their gold in a Texas depository.^[4] Capriglione was able to draw support for the depository by requiring that it be run by the private sector with no costs to taxpayers. The bullion depository has the capability to hold precious metals deposits owned by multiple entities: individuals, businesses, financial institutions and even foreign countries.^[5]

Texas Comptroller Glenn Hegar issued a request for information, RFI 212P, regarding the location of the depository.^[6][7] Many companies replied, including Texas Precious Metals, Brink's and Anthem Vault. All three companies envision different solutions for the storage of the precious metals. Tarek Saab, chief operating officer of Texas Precious Metals, proposed building a $20 million depository on 40-acres in Shiner, Texas, without the cost of taxpayer dollars.^[8] Brinks is in favor of relocating the state's’ precious metals to one of their branch locations instead of constructing a physical building.^[9] Anthem Vault addressed the issue of location by offering the implementation of multiple locations for the depository, including retail storefronts and coin shops across the state.^[10] Hegar is working through business models with his task force to ensure Texas has a safe and secure depository ^[11]

Content of HB 483

Texas HB 483 authorizes the establishment and administration of a state bullion depository to serve as the custodian, guardian and administrator of bullion that my be transferred to or otherwise acquired by this state or an agency, political subdivision, or another instrumentality of the state. The bill grants the Comptroller broad authority to interpret and implement the Act, which clearly allows the Texas Bullion Depository to "purchase" and "sell" precious metals in the "course of ordinary business" (Sec. 151.003). The legal and appropriate implementation of the Act would suggest a self-sufficient operation that authorizes third-party agents while a) protecting the depository from third-party and counter-party risks and b) permitting the depository to operate with the obligatory oversight mandated by the Act. The Texas Bullion Depository should be a monument to the state of Texas, a recruitment attraction for business, and an asset for domestic and international relations.^[12]

Challenges and Reactions

Although there has been both public and private support behind the bill which passed nearly unanimously with only one "nay" vote,^[13][14] some disagree that the bill should have been passed, claiming that any depository concept doesn't make financial sense for taxpayers and arguing that gold is more of a romantic than practical investment for the state.^[15]

The University of Texas Investment Management Company (UTIMCO) has gold bullion stored in New York, worth $647 million.^[16] According to Lois Kolkhorst, HSBC Bank in New York City charges Texas a fee to store each individual bar of gold.^[17] HB 483 does not require UTIMCO to move the $647 million in precious metals back to Texas. UTIMCO will only transfer the gold to the Texas Bullion Depository if it is a member of COMEX and if it will cost less than the current storage rates in New York.^[18] Currently, all COMEX rated facilities are located within 150 miles of New York City and earning a COMEX membership out of this region may be difficult.

References

External links

• Official website