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Kyle Bass Was Right: Texas To Create Own Bullion Depository, Repatriate $1 Billion Of Gold

Tyler Durden's picture




 

Most investors have heard Kyle Bass' rather eloquent phrase, "buying gold is just buying a put against the idiocy of the political cycle. It's that simple." However, what few may remember was his warnings in 2011, suggesting the University of Texas Investment Management Co. take delivery of its gold - as opposed to trusting it in the 'safe' hands of COMEX massively levered paper warehouse. Now, as The Star Telegram reports, Texas is going one step further with State Rep. Giovanni Capriglione asking the Legislature to create a Texas Bullion Depository, where Texas could store its gold. The goal is to create a secure facility that would allow the state to bring home more than $1 billion in gold bars that are owned by UTIMCO and are now housed at HSBC in New York.

 

From 2011:

"The University of Texas Investment Management Co., the second-largest U.S. academic endowment, took delivery of almost $1 billion in gold bullion and is storing the bars in a New York vault, according to the fund’s board."

 

The decision to turn the fund’s investment into gold bars was influenced by Kyle Bass, a Dallas hedge fund manager and member of the endowment’s board, Zimmerman said at its annual meeting on April 14. Bass made $500 million on the U.S. subprime-mortgage collapse.

 

“Central banks are printing more money than they ever have, so what’s the value of money in terms of purchases of goods and services,” Bass said yesterday in a telephone interview. “I look at gold as just another currency that they can’t print any more of.”

And now, as The Star Telegram reports, UTMICO would prefer a Texas depository than a New York one...

“We are not talking Fort Knox,” Capriglione said. “But when I first announced this, I got so many emails and phone calls from people literally all over the world who said they want to store their gold … in a Texas depository.

 

“People have this image of Texas as big and powerful … so for a lot of people, this is exactly where they would want to go with their gold.” And other precious metals.

 

House Bill 483 would let the Texas comptroller’s office establish the state’s first bullion depository at a location yet to be determined.

 

Capriglione’s changes to the bill must be approved by Monday, the last day of the 84th legislative session.

 

The goal is to create a secure facility that would allow the state to bring home more than $1 billion in gold bars that are owned by the University of Texas Investment Management Co. and are now housed at the Hong Kong and Shanghai Bank in New York.

 

“The depository would be an agency of the state located in the Office of the Comptroller, directed by an administrator appointed by the Comptroller with the advice and consent of the Governor, Lieutenant Governor and Senate,” according to a fiscal analysis of the bill.

 

The depository could also hold deposits of gold and other precious metals from financial institutions, cities, school districts, businesses, individuals and countries.

 

“This will allow for bullion to be deposited here, as well as any other investments that … any state agencies, businesses or individuals have,” Capriglione said.

 

Storage fees will be charged, perhaps generating revenue for the state. For instance, Texas pays about $1 million a year to store its gold in New York, Capriglione said.

 

A fiscal note attached to the bill states that the depository will have “an indeterminate fiscal impact” on the state, depending on the number of transactions and fees, but says it’s too early to determine the extent.

 

“It’s unusual,” said Cal Jillson, a political science professor at Southern Methodist University. “So far as I know, there are no states with bullion depositories.”

*  *  *

Perhasps the fact that Texas doesn't trust New York suggests the unitedness of the states is starting to quake and surely "the idiocy of the political cycle" has only got worse...

"buying gold is just buying a put against the idiocy of the political cycle. It's that simple."

This is Capriglione’s second attempt to create the depository.

Two years ago, then-Gov. Rick Perry was on board, saying work was moving forward on “bringing gold that belongs to the state of Texas back into the state.”

 

“If we own it,” Perry has said, “I will suggest to you that that’s not someone else’s determination whether we can take possession of it back or not.”

 

In 2013, the Legislature ended before Capriglione could win approval of the bill.

 

Jillson said the bill’s sentiment is consistent with the anti-federal approach that conservative lawmakers have taken this year. “It’s in line with the idea that Texas is exceptional and needs to keep a distance from the federal government that respects individual states’ depositories,” he said.

Sounds like Texas - just like Austria, Germany, Russia, and China to name just four - no longer trusts the status quo.

 

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Tue, 06/02/2015 - 06:53 | 6154681 22winmag
22winmag's picture

Until the day it too leaves you high and dry.

Tue, 06/02/2015 - 02:52 | 6154545 JailBanksters
JailBanksters's picture

Good luck with getting it back, I don't even like your chances of getting 1 Bar per day by Fed-Ex. You don'r need a Vault, you need a Shoe Box to put the Gold in.

 

Tue, 06/02/2015 - 03:09 | 6154556 q99x2
q99x2's picture

Texas is a big country. Do they have nukes.

Tue, 06/02/2015 - 13:24 | 6155919 SilverRhino
SilverRhino's picture

PanTex nuclear weapons facility is in Amarillo.  Plus we have several nuclear reactors.    And all the eggheads at NASA.

If we don't have nukes we can make several very quickly. 

 

Tue, 06/02/2015 - 04:22 | 6154613 Panic Mode
Panic Mode's picture

No point storing gold in Texas if they don't have enough fire power to protect it. Gold and War are intrinsically linked.

Tue, 06/02/2015 - 13:25 | 6155922 SilverRhino
SilverRhino's picture

>> No point storing gold in Texas if they don't have enough fire power to protect it. << 

Seriously?   Do you have any idea how many firearms are in private hands in TEXAS?   

Tue, 06/02/2015 - 05:47 | 6154644 CHX
CHX's picture

Good luck Texas. Get those ~27 tonnes ASAP.

Tue, 06/02/2015 - 05:57 | 6154650 Kina
Kina's picture

..

 

Warren Buffet and Bill Gates are worth over 70 Billion each......

 

Yes, but when their $70bn becomes worth $1bn that $1bn in gold will be worth $70bn

Tue, 06/02/2015 - 06:38 | 6154667 Kina
Kina's picture

Got an excellent gold share to buy into, already made a quick 40% out of it in a month then dumped it. But reluctant to own any share at the moment since when markets dive all dive together. So sitting waiting to get back into that (debtless) gold miner.

Tue, 06/02/2015 - 07:38 | 6154729 foghorn leghorn
foghorn leghorn's picture

Just posted  it on stocktwits.

Tue, 06/02/2015 - 07:42 | 6154743 yogibear
yogibear's picture

King Obama won't allow Texas to operate and thrive independently. 

He and his ultra-liberal/Marxist goon army will attempt to take the wealth of the state.

With Obama, the constitution doesn't matter anymore.

 

Tue, 06/02/2015 - 08:16 | 6154813 mastersnark
mastersnark's picture

That Kyle Bass is doing pretty good since leaving NSYNC

Tue, 06/02/2015 - 08:51 | 6154927 Monetas
Monetas's picture

A billion dollars of gold .... would fit inside a crystal sarcophagus .... just like that barbarous relic .... Lenin .... and the tax payers could see their gold .... every time they visited the depository .... the Lee Harvey Oswald Memorial Texas school book and gold bullion depository (a serving suggestion) !

Tue, 06/02/2015 - 09:46 | 6155123 YOU ARE DEMOCRACY
YOU ARE DEMOCRACY's picture

Next step: political reform?

Too bad Texans have only the choice of either the federally backed Republicans or federally backed Democrats to 'assist and represent' them in achieving fiscal independence.

I am confident that Texans are quite capable of making their own decisions. This 're-patriation' only reinforces this fact.  

 

YOU ARE DEMOCRACY

 

Tue, 06/02/2015 - 09:57 | 6155178 large_wooden_badger
large_wooden_badger's picture

PREPARE TO INVADE TEXAS! THIS WILL NOT STAND!

Tue, 06/02/2015 - 14:06 | 6156116 katchum
katchum's picture

Lol, do you think they will see their gold? Look at how low the registered gold is at COMEX.

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