In June of 2015, Texas Governor Greg Abbot signed House Bill 483 which establishes the first state-level gold bullion and precious metal depository. The bill, authored by Rep. Giovanni Capriglione (R) and Sen. Lois Kolkhorst, would transfer the $650 million in gold bullion owned by the University of Texas Investment Management Co. currently being held in the underground vault of the Federal Reserve Bank of New York in Manhattan back to a new secure facility in Texas.
Bringing Texas-owned gold back is a reasonable move for a Texas which is a strong supporter of local and state-level leadership. There is also rumor that shifting gold back to Texas displays a distrust of the Federal Reserve. Though there are many who endorse bringing the gold back, currently there is not a secure place to store the 5,600 gold bars. The next phase of the plan will be to construct a secure repository, which will cost an estimated $23 million, or 3.5 percent of the total value of the bullion.
The governor justified the relocation of the bullion stating that it will increase “the security and stability of our gold reserves” and keep “taxpayers funds from leaving Texas to pay for fees to store gold in facilities outside our state.”
The second part of the bill is what Rick Cunningham of the Texas Center for Economics, Law and Policy calls the “system” part. He describes it as “an advanced, state-owned and operated system… Not only could it sustain state and local government operations, it could potentially sustain large swaths of the Texas economy, even in the face of a national financial or currency crisis.”
By not allowing the federal government to maintain a currency monopoly, could this shift eventually lead to the return of the gold standard?
Stevi Knight is a research associate with the NCPA.