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 Texans shouldn't hold their breath while waitiing for their gold to arrive

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Cervelle de Veau

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PostSubject: Texans shouldn't hold their breath while waitiing for their gold to arrive   Thu Jun 18, 2015 9:24 pm

Texas establishes own gold depository independent of Federal Reserve
Published time: June 17, 2015 20:28
Edited time: June 17, 2015 21:14
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Reuters / Michael Dalder

Banking, Commodities, USA
Texas is planning to build its own state-controlled depository and wants its gold back from New York State. The Lone Star state will repatriate its $1 billion in gold bullion.
Texas Governor Greg Abbott signed House Bill 483 into law last Friday.

Read moreConfirmed: Hackers attacked St. Louis Federal Reserve Bank
“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,” Greg Abbott said on Friday. The location of the future depository is still unknown.
According to the new legislation, neither the federal government nor any other entity would be able to demand the gold back once it arrives in Texas.
“The depository in the case of receiving notice of a purported confiscation, requisition, seizure, or other attempt to control the ownership, disposition, or proceeds of a withdrawal, transfer, liquidation, or settlement of a depository account … may not recognize the governmental or quasi-governmental authority, financial institution, or other person acting as the lawful successor of the registered holder of a depository account in question,” the law states.
The bill was suggested by two Republican members of Texas House of Representatives: Giovanni Capriglione and Lois W. Kolkhorst.
Texas thus prevents an executive order in the style of Executive Order 6102 of April 5, 1933, which obliged people to give their gold bullions and coins to the Federal Reserve System.
Capriglione told the Texas Newspaper Star-Telegram that “…when I first announced this, I got so many emails and phone calls from people literally all over the world who said they want to store their gold … in a Texas depository.”
“People have this image of Texas as big and powerful … so for a lot of people, this is exactly where they would want to go with their gold,” he added. Capriglione also hopes that these measures will allow Texas to generate revenue of the state and reminds that the state pays New York $1 million a year to store its gold. The main holders of Texan gold are University of Texas and Teacher Retirement System.

Read moreA second Texan Republic?
That is the second attempt of Giovanni Capriglione to establish the depositary in Texas. The first one was made in 2013 but it was not successful.
“The lack of faith in central bank trustworthiness is spreading,” the financial blog ZeroHedge wrote Sunday on the reasoning behind the move.
“There are precisely two important reasons. One involves distrust in the current storage system. The second threatens the paper money system as a whole.”
The gold represents 5% of the university and pension fund which is managed by the University of Texas Investment Management Company in 2011. The decision to turn the fund’s investment into gold bars stored in New York was influenced by Kyle Bass, a Dallas hedge fund manager and member of the organization’s board. Bass is a critic of the Federal Reserve who has stated that he was preparing for an economic collapse by accumulating “guns and gold.”
"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," the free market think tank Mises Institute wrote on Monday.
Some conservative-leaning Twitter users who are skeptical of the federal government view this legislation as a positive development.
Liberal-leaning users, as might be expected, have a different take on the matter.
Texas is not the first depositor of the Federal Reserve System that wants its gold back. For instance, in 2013 Germany wanted to take away its gold from the Federal Reserve System but the answer was negative. The Federal Reserve System explained that it will take seven years – until 2020 – to fulfil the transaction.
It is unclear at the moment how the actual transportation of the gold will be executed. There hasn’t yet been reaction from the Wall Street.

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Cervelle de Veau

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PostSubject: Re: Texans shouldn't hold their breath while waitiing for their gold to arrive   Thu Jun 18, 2015 9:29 pm

Texas wants its gold back! Wait, what?
By Neil Irwin March 26, 2013

Texas has generally been at the front of the pack of a certain variety of uber-hawkish, vaguely paranoid monetary policy talk over the last few years. Recall it was the state’s governor, Rick Perry, who while running for president strongly suggested that Ben Bernanke would be committing treason should the Federal Reserve print any more money.

But now some in the state, including Perry, are looking to put their money where their mouths are. Literally.

Gold at the New York Fed. (Federal Reserve Bank of New York)


Perry and some in the Texas legislature want to bring the roughly $1 billion worth gold held by the state university system’s investment fund onto Texas soil, rather than in its current resting pace in a vault in New York.

“If we own it,” Perry said on Glenn Beck’s radio show last week, according to the Texas Tribune. “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”

Here’s the thing. Perry’s push to relocate the state’s gold to a newly created “Texas Bullion Depository,” in a strange way makes perfect sense. It lays bare the rationale for investing in the yellow metal to begin with, and is an excellent illustration of the strange role that gold plays in a modern economy and investors’ psyches.

Some basics: People speak of gold as an “investment,” but that’s not quite right. When you buy shares of a company’s stock , you are buying a claim to the future profits of that company. When you buy a Treasury bond, the U.S. government is pledging to pay you a certain amount of money on a certain schedule in the future. But when you buy a 1 ounce ingot of gold, no matter how long you will hold it, you still have exactly one ounce of gold.

In fact, if anything, gold has a negative yield. Because you have to store that gold somewhere; if you keep it in your house, there is a risk of theft. If you keep it in a safe deposit box at the bank, you will have some fee.

If Texas moves its gold back home, it will deal with this in a very real way: Whatever it costs to build, maintain, and guard a facility secure enough to stash $1 billion of gold in will essentially subtract from whatever investment return the holdings offer. (The lawmaker advocating the plan pointed out that only about 20 square feet of space would be needed for the gold as evidence that the cost shouldn’t be high, which kind of misses the point. It’s not the real estate cost that is expensive, it’s the technology and manpower needed to prevent the heist of the millennium).

Texas media outlets have reported that the state's gold is held at the Federal Reserve Bank of New York, though it appears the gold in question is actually at the vault of a private bank, HSBC, in New York (here is a 2011 article about the acquisition; an aide to Texas State Rep. Giovanni Capriglione confirmed that this is the gold in question). Despite what you may have seen in Die Hard 3, in which thieves ransack the New York Fed, the security around major vaults is extremely sophisticated. Texas is considering replicating those security costs and giving up the convenience of being able to sell gold easily at the world's financial capital. But why?

The most common reason to buy gold is as something of an insurance policy against some very bad events, like a bout of significant inflation. In the more plausible scenarios, like a return of 1970s-style period of 10 percent or so annual price increases, gold would indeed likely prove to be quite a good investment. But in that scenario, the state of Texas would have no problem getting access to its gold stored in New York. There would be no need to go to the trouble and expense of setting up a miniature Fort Knox in Austin.

For it to make sense to go to all that hassle of storing your own gold, you have to be insuring against some much darker possibilities, like a collapse of the U.S. government and monetary system, and/or Texas making a (second) bid to secede from the United States.

In some episode of hyperinflation and U.S. government collapse, as the nation falls into a Hobbesian state of nature,  paper dollars will be no good, and gold would likely be the medium of exchange for buying food and guns and whatever else is needed for Texas to prosper amid the post-apocalyptic hellscape.

Similarly, if Texas were to decide that enough was enough and it wished to no longer be part of these United States (a notion that Perry himself seemed to joke about in 2009, saying “When we came in the union in 1845, one of the issues was that we would be able to leave if we decided to do that.”), one could imagine the desirability of having its gold supply close to home.  That would put New York banks, regulated by the U.S. government, in the position of having to determine whether the rebel republic of Texas was the rightful owner of the gold in its vault. In that scenario, it's easy to imagine Texas would have a hard time getting ahold of its gold.

In other words, if you think you need to hold gold as a hedge against a total collapse of the U.S. monetary and political system collapsing--not just as a hedge against higher-than-expected inflation--you had best store it close to home.

Texas, it is worth noting, is not the only large, prosperous economy with a hard-money  mentality to look to keep its gold close to home. Earlier this year, Germany’s central bank said it will relocate billions worth of gold from vaults beneath the New York Fed and French central bank, guarding them in Frankfurt rather than entrusting them to central banks elsewhere.

So there you have it: Texas, the Germany of America.

Update: An earlier version of this post stated that Texas's gold investments are stored at the Federal Reserve Bank of New York. The gold is stored at a New York vault of the bank HSBC.

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8/4/2013 5:32 PM EDT
The sneering tone of this piece reflects the dismissive attitude the D.C. elites have about anyone trying to defend themselves from the insane, reckless policies emerging from this harlot hell. The liberals now demand dictatorial authority from the same central government they were so worried about one administration back.
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6/23/2013 7:02 AM EDT
The US better hope Texas never wants to leave. One of the few States that is holding it's own. Give Texas their gold and then say Sorry for any inconvenience.
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4/24/2013 8:27 PM EDT
Good for Texas leading the charge! Like him or not, Perry is a good leader and strong fighter. Sucks I live in MN -- land of 10,000,000 liberals...
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5/8/2013 1:08 PM EDT
"Good for Texas leading the charge! Like him or not, Perry is a good leader and strong fighter. Sucks I live in MN -- land of 10,000,000 liberals..." 
Go back to the "Nigeria of the USA" if you don't like living in a "developed" society (enormous wealth disparity, deplorable public healthcare, violent crime, environmental degradation, etc.). I was born and grew-up in Texas, and now am pleased to live in one of the least regressive states in the Union (Minnesota). What members of the Redneck State forget is that the Republic of Texas was flat-broke and needed to be bailed-out by the Union in order to pay its accumulated debts to the Republic's several creditors in Europe, and the US. No one would extend Texas' lines of credit. Texas continues to receive more Federal funds than it pays in Federal taxes to this day, and states like Minnesota continue to subsidize states like Texas. Can we say "welfare"? I voted with my feet, now you do the same. Adios 'Legal Permit'.
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4/5/2013 3:30 PM EDT
maybe we should pass an amendment to the constitution. the right to bear arms.. the right to keep hold and sell gold.
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3/31/2013 6:27 PM EDT
What kooks in Texas! What, are they afraid that the Feds will confiscate their gold? That's just paranoid delusion. Something like that could never happen in a free country. Umm, well...
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Rita Kingsburgh
4/1/2013 5:11 PM EDT
Guess nobody trust New York or California now, going to bankrupt?
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3/31/2013 6:26 PM EDT
Let's put Texas up for sale on the open market and use whatever we get to lower the national debt
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3/31/2013 5:06 PM EDT
Generally I do not agree with Perry but I see nothing wrong with bringing what's theirs back home so they can use it as collateral any way they see fir instead of the Fed using the gold the way they want to.
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