A gold depository in Texas is just the first step.
After work begins on the state’s first bullion depository — and proposals to create it are due by the end of the week — then officials hope to bring more commodity markets to the state.
“Gold is just the first thing,” said state Rep. Giovanni Capriglione, R-Southlake, who asked lawmakers last year to create the depository. “We have been talking to other commodity players, asking if we can create a bigger platform.
“This is just the beginning of something we are starting.”
After a gold depository is up and running, he said, officials should look at cattle, oil, gas and more.
“We want to say Texas is a place where you can go and not only buy and sell commodities, but you can receive a shipment of those products as well,” Capriglione said. “I see us being able to start turning this into something much more.”
But first things first.
Companies interested in creating the Texas Bullion Depository must turn in their proposals by Friday.
State officials will choose the winning proposal and a schedule already laid out calls for work on the depository to be under way by Dec. 1.
The depository, under the new Texas law, would give Texans a place to store their gold and other precious metals. But it wouldn’t be just for residents. Financial institutions, cities, school districts, businesses, individuals and countries could do business there as well.
Storage fees will be charged to generate revenue for the state.
About a dozen companies weighed in last year, offering suggestions on how to help Texans store their gold and precious metals. Those businesses very well might submit proposals to develop a Bullion Depository here.
“There’s a lot of excitement for this,” said Chris Bryan, a spokesman with the Texas Comptroller’s Office.
Bring the gold home
Capriglione recently visited New York with fellow lawmaker state Rep. Tan Parker, R-Flower Mound.
The two took a picture outside the HSBC Bank in New York, where an estimated $650 million owned by the University of Texas Investment Management Company is now stored.
“We have our gold in New York City,” Capriglione said. “It doesn’t make sense for our gold to be in New York City.”
Especially since the company pays about $650,000 a year to store the gold there — payments that instead could be given to a Texas depository.
“We want to work on the depository to make sure the gold is back here in Texas,” Capriglione said.
As for the commodities plan, some say that further shows Texans’ continuing independence.
“The Texas economy has always been rooted in self-sufficiency. Since settlers first came to Texas, the state has cornered some part of the market on certain goods — first agriculture, then timber, oil, technology, and oil again,” said Brandon Rottinghaus, a political science professor at the University of Houston.
“Encouraging investment in commodities, including gold, is part of the state’s long-held economic ethos to embrace stability,” he said. “Texas as a hub of commodity commerce can strengthen and stabilize state finances.”
As for the gold depository, Texas law says it can hold deposits of gold and other precious metals from financial institutions, cities, school districts, businesses, individuals and countries.
Capriglione and others have long said this depository is similar to a bank that doesn’t do any lending.
It could be in one location, or multiple sites throughout the state, depending on which proposal the comptroller’s task force, which will make the selection, prefers.
“I have been waiting for this for several years now,” said Capriglione, who unsuccessfully proposed a depository in 2013. “It probably ranks up there with my anniversary and Christmas.
I’ll be popping champagne on the day the contract is signed. State Rep. Giovanni Capriglione, R-Southlake, regarding a Texas Bullion Depository
“I’ll be popping champagne on the day the contract is signed.”
Keeping it safe
Texas Comptroller officials are tight lipped about the current proposal process, declining to say how many depository proposals they have already received — or how many they expect by the deadline.
Earlier this year, officials laid out criteria for a Texas depository, noting that any company wanting to manage a depository for the state must shoulder all the upfront costs and be reimbursed down the road once storage fees and other payments begin.
At the depository, Texans will be able to open accounts similar to checking or savings accounts at traditional banks — and monitor them online.
There must be at least one location in Texas where bullion would be stored. State officials want detailed plans for “vault storage services” facilities — and they note it must be accessible by the comptroller.
The state also wants detailed security plans showing what measures would be in place to protect a depository.
Any depository “must have adequate physical layers of protection with at least four (4) physical layers between the public and the contents of the vault(s),” state documents show. “These layers can include bulletproof windows and doors, metal detectors, key card access, access logging, or CCTV cameras.”
At the same time, a depository must have an electrical backup system that can operate for at least 24 hours. All depository staff must be “vetted and monitored,” and no employees may have been convicted of a felony, records state.
Security must be upgraded so that no one has all the access codes to get inside. There would have to be at least two access points, and no one person would have both codes for any door.
And security must be upgraded so that no one person would hold all the access codes to get inside. There must be at least two access points, and “no single person shall hold both codes for any door,” state records show.
The Texas Comptroller’s office recently posted more information about the proposed gold depository, noting that a depository will “record, track and publish each bullion bar serial number held by a depository account holder.”
Officials offer no guarantee that people or state agencies will put their gold into a Texas depository. The “comptroller cannot offer any assurance that Successful Respondent will receive bullion deposits from any person or entity,” according to state documents.
Officials do note that any and all depository locations in Texas will be inspected by the comptroller’s office or a third party.
Last year, the comptroller’s office put out a request for information and received responses from around a dozen companies that may or may not now be interested in creating a depository.
At the time, many of the companies offered suggestions and some indicated interest.
The 2015 documents included:
▪ A detailed plan by Texas Precious Metals to build a facility in Shiner. The company last year proposed a 46,000-square foot depository, described as “a monument of the state of Texas.” The company already operates a much smaller private bullion depository, where it stores “company-owned precious metals holdings.”
▪ A proposal to put multiple vaults across the state by Anthem Vault of Las Vegas. The company could expand to Austin to operate a bullion depository there — and hire Texans to do that. “Anthem Vault believes there should be multiple vaulting locations throughout Texas to enable all Texans access to their bullion within a reasonable distance from their homes to the nearest Texas bullion depository location,” the documents stated.
▪ An argument by Brink’s Global Services that a depository doesn’t need to be built in Texas. The company already has several high-tech “secure branch locations” across Texas that could be used to “provide the vault storage services.”
▪ Information about depositories in general. “There is no established industry standard for the operation of a bullion depository,” according to documents submitted in 2015 by Delaware Depository. “The level of security and quality of service of a bullion depository is highly dependent on the experience, integrity, and collaborative decision-making of the bullion depository’s managers.”
We want as many different organizations as possible to bid on it. State Rep. Giovanni Capriglione, R-Southlake, regarding a Texas Bullion Depository
State officials decline to say whether any of these companies has submitted a formal proposal — or plans to submit a proposal.
But they are hoping they receive a number of submissions.
“We want as many different organizations as possible to bid on it,” Capriglione said. “Everyone has to provide a complete proposal.
“I really don’t know what kind of proposal is most likely to be accepted,” he said. “But it’s going to be competitive.”