by Michael Maharrey, Schiff Gold:
Bills filed in Florida and Oklahoma for the 2024 legislative session would create state precious metals bullion depositories. State-run bullion depositories would not only create a place to store precious metals; they could also encourage the use of sound money in those states and set the stage to undermine the Federal Reserve’s monopoly on money.
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Sen. David Bullard filed SB1351. The legislation would create the Oklahoma Bullion Depository in the Office of the State Treasurer. The depository would serve as “the custodian, guardian and administrator of certain bullion and specie that may be transferred or acquired by the state, or an agency, political subdivision or other instrumentality of the state.” The depository would also accept deposits of gold and silver by private individuals.
Significantly SB1351 would establish a mechanism for individuals to engage in transactions using precious metals including gold and silver.
“The depository shall make available a debit card, issued upon a request by the depository account holder, in which the depository account holder may make transactions which are debited from the balance of the holder’s account. The balance available to the depository account holder through use of the debit card shall be equal to eighty percent (80%) of the current spot price of the deposits of the depository account holder.”
In Florida, Rep. Doug Bankson and Rep. Chip LaMarca filed H697 on Dex. 4. Sen. Ana Rodriguez filed a companion, S750, on Dec. 6. These bills include several provisions to treat gold and silver more like money, including language to establish a bullion depository.
A depository account holder would be able to purchase, sell, deposit, or withdraw bullion. It would include “electronic systems” for the purchase and sale of bullion for depository account holders who cannot or choose not to travel to the physical location.
The bill includes provisions for the creation of an electronic currency backed by gold or silver and made available to the public. This would open the door for people to use precious metals stored in the depository in everyday transactions.
These bills are similar to legislation Gov. Greg Abbott signed a bill into law creating the Texas State Bullion Depository in 2015. The Texas depository received its first deposits in the summer of 2018. The following year, the state exempted precious metals in these depositories from taxation.
IMPACT
A state gold repository creates a path toward monetary independence for a state. This is why countries around the world include gold in their reserves. Over the last several years, central banks globally have significantly increased their gold holdings.
Several countries have repatriated some or all of their gold reserves over the last several years, most recently Poland, Hungary and Romania.
University of Houston political science professor Brandon Rottinghaus said a state depository could serve a similar function for Texas.
This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”
In his signing statement, Abbot emphasized the autonomy the new facility could provide the state.
…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.”
A state bullion depository also creates the potential for monetary competition by facilitating the use of gold and silver in everyday business transactions. This is a stated part of the plan for the Texas Bullion Depository.
In a nutshell, through the depository, Texans will be able to deposit gold or silver and pay other people through electronic means or checks. Private individuals and entities will be able to purchase goods and services using assets in the vault in the same way they use cash today. Doing so has the potential to open the market to sound money in day-to-day transactions. Ultimately, depositors will be able to use a bullion-funded debit card that seamlessly converts gold and silver to fiat currency in the background. This will enable them to make instant purchases wherever credit and debit cards are accepted.
