The State of Texas announced earlier this month the location of its new Texas Bullion Depository--a development that signals a shift in power from the federal to the state level.
First announced in 2015 when Governor Greg Abbott enacted legislation to create a state precious metals depository, the construction of this depository will establish a state sanctioned location for individuals, businesses, and government agencies to store gold and silver, and to facilitate business transactions with the metals.
The depository will be built in Leander, a city located approximately 30 miles from Austin; its construction and operation managed by Austin-based Lone Star Tangible Assets. Construction for the 60,000 square-foot facility is scheduled to begin in 2018. It’s completion, according to Lone Star officials, may take about a year.
“This state-of-the-art facility will provide tremendous benefits to the citizens of Leander and will give Texans a secure facility right here in the Lone Star State where their gold and precious metals will be kept safe and close at hand,” says Glen Hegar, Texas Comptroller.
Anticipating the completion of its physical edifice, the depository will commence operations in 2018, providing nationwide services from existing Lone Star facilities.
In addition to the depository’s services for physical metals storage and transactions, state officials are also looking to implement an e-commerce option—one that would allow customers to accept, transfer and withdraw bullion via online portal. Ultimately, the depository will expand its services to international clients; a development scheduled to occur it in later phases, though no hard date has yet been announced.
For proponents of “sound money,” this development marks a potentially significant milestone: it presents a blueprint by which states can compete directly with the Federal Reserve’s power over the distribution and flow of money.
When people in multiple states begin using gold and silver in place of fiat currency, such an act diminishes the Federal Reserve’s monopoly over money. Essentially, it is a step in the direction of independence for individuals and states toward the use and storage of assets containing real and unalterable value.
As economist William Greene states in a paper for Mises.org:
“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes).
“As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”
The financial impact may be small at the outset, but the symbolic implication—and its ensuing social and political impact--will be striking, as it marks the opening of a potential movement in which individuals and states can circumvent the Fed.
The Texas depository marks one of the early steps toward the statewide mobilization of sound money principles and practices; a larger movement whose influence over the last few years has been bolstered by various states that have chosen to repeal the taxation of gold and silver sales. As Ron Paul noted, “It makes no sense to tax money.”
In light of these encouraging developments, it’s likely that the trend toward sound money will continue.