Last July, I wrote a post asking the unthinkable (in some quarters) the question: How much of the gold that’s sold actually exists?
Given the fact that at least a substantial portion of gold sales are in paper certificate form instead of physical gold, then we can’t dismiss the probability that some of the “gold” purchased doesn’t really exist in reality. Mark O’Byrne of Wealth News contends that as much as 80% of the gold owned by people across the world doesn’t exist.
That post evidently irked people because every comment on the post received at least one thumbs-down rating. LOL
But the question really isn’t so preposterous. Evidently, Texas Governor Rick Perry and some state legislators are also wondering about that. They would like the U.S. Federal Reserve to return the state’s gold bullions.
Emily Ramshaw and Aman Batheja report for the Texas Star-Telegram, March 21, 2013, that Gov. Perry wants to bring the state’s gold reserves back from a New York vault to Texas and he may have legislative support to do it.
Freshman Rep. Giovanni Capriglione, R-Southlake, is carrying a bill that would establish the Texas Bullion Depository, a secure state-based bank to house $1 billion worth of gold bars owned by the University of Texas Investment Management Co., or UTIMCO, and stored by the Federal Reserve.
The idea isn’t entirely new. Some Republicans worked on a gold bill last session that was never filed. And gold-standard-backing Ron Paul, the former Lake Jackson congressman, has raised repeated concerns about the safety of states’ gold supplies. He told The Texas Tribune: “If you think gold is a hedge, or a protection, you always want it as close to the individual and the entity as possible. Texas is better served if it knows exactly where the gold is rather than depending on the security of the Federal Reserve.”
Bringing Texas’ gold home has gained traction this session because of Perry’s vocal support. On Glenn Beck’s radio show, Perry said Texas is in the legislative process of “bringing gold that belongs to the state of Texas back into the state” because Texas is at least as capable as the Federal Reserve of safeguarding Texas’ “physical gold.” “If we own it,” Perry said, “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”
Capriglione said he was at a Tea Party event in Tarrant County this year where Perry spoke about the state’s gold investments as an economic development tool. Since then, he has worked with Perry’s office on the bill.
Capriglione says: “Something on the scorecards of a lot of these businesses in deciding whether they want to come to Texas is stability and gold as being one of those items. I think it’s been in his consciousness for a while in trying to get some sort of depository in the state of Texas. We don’t want just the certificates. We want our gold. And if you’re the state of Texas, you should be able to get your gold. For us to have our own gold, a lot of the runs on the bank and those types of things, they happen because people are worried that there’s nothing there to back it up. So I think this cures a problem before it can happen.”
The United States and many other countries stopped pegging their currencies to the gold standard decades ago. Capriglione said the bill is not about putting Texas on its own gold standard. Rather, a depository would give the state a reputation as being more financially secure in the event of a financial crisis.
Transporting gold from New York City or other banks to Texas, however, would be impractical from a security and logistics standpoint. Capriglione maintains it makes more sense to sell the gold that Texas has elsewhere and repurchase it within state lines.
He said the measure wouldn’t pose a significant expense, because the gold bars could be safeguarded in a small area, no bigger than 20 square feet. To lower costs, he intends to change the language to allow the private sector to handle some of the administrative expenses of building and running the depository.
But Rep. Lon Burnam, D-Fort Worth, said he is skeptical that Capriglione’s bill addresses a legitimate problem facing the state: “We’ve got plenty of real problems that we’re not going to deal with this session. Let’s deal with them.”
H/t FOTM’s Tina
~Eowyn