Texas Politics

A gold depository in Texas moves closer to reality

Texas’ gold depository is still in the works but officials say Texans will soon have a place to store their gold bullion and other precious metals.
Texas’ gold depository is still in the works but officials say Texans will soon have a place to store their gold bullion and other precious metals. AP

Texans: Are you looking for a safe place to store your gold?

If so, just hold on a bit longer.

On Friday, state officials called on Texas businesses to submit their plans for a bullion depository, where people and businesses can store their gold and precious metals, so that work on an actual faclity could begin by Dec. 1.

The proposals for a Texas Bullion Depository must be turned in by Sept. 30.

“This is an important step along the process,” said Chris Bryan, a spokesman for Texas Comptroller Glenn Hegar. “It does show the depository is moving forward.

“And it shows that Comptroller Hegar is committed to ensuring Texans and Texas businesses have a safe and secure place to store their gold.”

This is the latest development in the effort to create the state’s first bullion depository.

Plans for such a depository have been underway since last year, when state Rep. Giovanni Capriglione, R-Southlake, asked lawmakers to create the facility.

Under the new Texas law, the comptroller’s office has been working on guidelines for a depository — which could hold deposits of gold and other precious metals from financial institutions, cities, school districts, businesses, individuals and countries — at a location yet to be determined.

Storage fees will be charged, perhaps generating revenue for the state.

Those fees could add up, particularly in storing larger amounts, such as the estimated $650 million owned by the University of Texas Investment Management Company now stored at the HSBC Bank in New York.

The company pays about $650,000 a year to store the gold there. Some Texas officials have long indicated they would like for the gold to come home.

“While there is no reason to believe the state’s gold reserves are at any real risk in New York, there is also no reason to believe that they would be at even less risk (particularly in the future) if located here in the Lone Star State,” said Mark P. Jones, a political science professor at Rice University in Houston.

First of its kind

Capriglione has said this depository is similar to a bank that doesn’t do any lending.

“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 when signing the bill.

Any company that wants to manage a depository for the state must shoulder all the upfront costs and be reimbursed later down the road once storage fees and other payments begin.

The tentative schedule calls for written questions to be due Aug. 18. Proposals are due Sept. 30 and work could begin on a depository by Dec. 1.

At the depository, Texans will be able to open accounts similar to checking or savings accounts at traditional banks — and monitor them online.

Among the criteria laid out Friday in a formal Request for Proposals for a depository:

State officials want a facility “with an e-commerce component that also provides for secure physical storage for Bullion in an existing facility or a newly constructed facility.” Officials say plans for a depository should include online services that would let customers accept, transfer and withdraw bullion deposits and related fees.

There must be at least one location in Texas where bullion would be stored. Officials want businesses to detail plans for such a “vault storage services” facility. And they note it must be accessible by the comptroller.

Officials also want details on security measures — from closed-circuit cameras to fire control to disaster recovery to insurance — that would be in place to protect items stored in a depository, records show.

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),” the proposal states. “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. “Movements of metal” inside must be recorded and kept for at least three months. All depository staff must be “vetted and monitored,” and no employees may have been convicted of a felony, records state.

This gives ... a clear picture of what the state is looking for.

Chris Bryan, a spokesman for Texas Comptroller Glenn Hegar

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.

Not only that, but “all staff must be aware of threats and how to mitigate those threats. Training shall include, but not be limited to, attack response, hostage situation, duress response, and post incident intelligence gathering,” according to the request.

‘Self reliant’

Officials have long said a depository could be in one location, or many, in Texas.

And more than a dozen companies so far have offered input on creating a depository.

Earlier this year, one of those companies — Texas Precious Metals — even set up a booth at the Republican Party of Texas state convention in Dallas to give Republicans more information about their plan.

Officials with that company propose building a potentially $20 million facility with no Texas tax dollars on 40 acres of land it has in Shiner, about 250 miles south of Fort Worth.

Now state officials want firm details from all companies interested in operating the depository, which political observers say will only benefit Texans.

“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government,” said Brandon Rottinghaus, a political science professor at the University of Houston. “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.”

Setting the pace?

Earlier this year, the Tennessee Senate followed Texas’ lead regarding state bullion depositories. Members there approved a resolution showing support for a similar facility in their state.

“Because of our evolving and unpredictable national economy, there is an effort to achieve increased monetary stability and liquidity and greater financial security in the event of a national or international financial crisis,” the Tennessee’s resolution read. “In response to the state of our national economy, individuals and entities have purchased gold and other precious metals in the form of bullion and coins in order to achieve the desired financial security and stability.”

That’s why Tennessee supports a bullion depository there.

In Texas, a year after such a bill was signed into law, officials are ready to see how businesses propose creating an actual depository.

“This gives … a clear picture of what the state is looking for,” Bryan said.

And Friday’s request for proposals may seem to just be a procedural step, but it’s a key move.

“This is something they see,” Bryan said, “that lets them finally say, ‘Now, let’s get to work.’”

Anna Tinsley: 817-390-7610, @annatinsley

Could Texas eventually have its own Fort Knox? In this 2015 video created by his office, Texas Comptroller Glenn Hegar discusses the bullion repository. He also takes a look at some of the assets in Texas' unclaimed property cache.