(Newswire.net — July 5, 2015) — AUSTIN, Texas — Texas owns approximately 5,600 gold bars worth around $650 million. The gold had been held by HSBC bank, in an underground vault in Manhattan.
This summer, the Lone Star State officials adopted a ‘gold’ bill that says Texas’ gold should be kept within Texas borders, AP reported.
According to AP, the legislator’s decision to bring it’s gold back was backed by many conservatives. After the bill sailed through the Legislature, Republican Gov. Greg Abbott signed it and Tweeted: “California may be the golden state, but Texans deserve to keep their gold in-state!”.
Many, however, don’t understand why the move is relevant, and why it wouldn’t be better for Texas to dispose of that assets, especially when moving the gold is not cheap. Edwin Truman, a senior fellow at the Washington-based Peterson Institute for International Economics told AP
“Just moving it would be pretty expensive and, unless Texas is anticipating withdrawing from the union, which I suspect is some peoples’ want, I don’t see what advantage it is,” said Truman, wondering what will Texas get for money it pays for transfer and security.
Then there is the matter of building a suitable vault. According to the AP, cost of building a secured facility is around $23 million. In comparison, when Fort Knox was completed in 1936 it cost $560,000 — or roughly $9.2 million in today’s dollars.
According to Rep. Giovanni Capriglione, private companies would bid to create a depository in exchange for charging storage and service fees, which would justified the costs of building and maintaining the future Texas treasury, adding that the gold would be safer, especially close at hand.
Stacked together, the state’s gold occupies about 20 square feet. It’s unclear whether repatriating it could be done with an electronic transfer or would require a fleet of planes or armored cars.
One possible effect of the new depository might be more attention on the idea of returning to the gold standard. Since the birth of a petro-dollar, it doesn’t really seem to matter how much gold there is to back the US currency. However, according to James Rickards, author of the 2014 book “The Death of Money: The Coming Collapse of the International Monetary System, “Texas is once again showing they’re ahead of the curve.”
”They’re not waiting for the disaster, but preparing for it,” Richards said.
In reality, considering Texas’ population of 27 million, the holding or moving of this relatively small amount of gold, about 1/2 of a gram or $25 dollars worth per resident, seems to say more about the bluster of politics than the reality of economics.