- July 07, 2015 -
Recently, Texas Governor Greg Abbott approved a law creating the Texas Bullion Depository, the first state-level precious metals depository in the United States. The bill would also allow Texas to repatriate approximately $750 million in gold bullion back into the state, gold allegedly stored in the Federal Reserve’s vaults in Manhattan. The law will go into effect immediately, though it is still unknown exactly where and when the Depository will be built.
In passing this law, Texas joins the ranks of major global economies that want to bring their gold home. Germany, Austria, the Netherlands and other European nations have already begun to repatriate gold from the New York Federal Reserve or have proposed doing so.
In the midst of uncertain currency issues, countries want to bring this essential reserve asset back home in case of financial crisis. Some analysts also see it as a lack of trust in the Fed and an indication that the Fed may not hold as much gold bullion as it claims.
The Texas Bullion Depository will accept deposits from businesses, state government agencies and most importantly, individual citizens. The Depository regulations also lay the groundwork for day to day transactions to occur in gold or silver. Account holders in the Texas Bullion Depository may eventually be able to write checks or possibly use a debit card to draw funds directly from their physical precious metal holdings. In short, a person will be able to deposit gold or silver and pay debts electronically (or by check) in sound money.
However, one has to wonder if each gold or silver ‘withdrawal’ will be subject to IRS regulations, specifically capital gains or losses via Form 1099-B. Assuming federal and state tax ramifications can be resolved, making gold and silver available for traditional ‘bank’ transactions to the masses has the potential for wide reaching effect. If the general public in multiple states and locations actually start using gold and silver instead of Federal Reserve Notes, it could severely limit the Federal Reserve and end the federal government’s monopoly on money creation.