Writing's On The Wall: Texas Pulls $1 Billion In Gold From NY Fed, Makes It "Non-Confiscatable"

Tyler Durden's picture

The lack of faith in central bank trustworthiness is spreading. First Germany, then Holland, and Austria, and now - as we noted was possible previously - Texas has enacted a Bill to repatriate $1 billion of gold from The NY Fed's vaults to a newly established state gold bullion 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 the Bill includes a section to prevent forced seizure from the Federal Government.

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, after we noted the possibility previously, as The Epoch Times reports, Texas Governor Greg Abbott signed a bill into law on Friday, June 12, that will allow Texas to build a gold and silver bullion depository. In addition, Texas will repatriate $1 billion worth of bullion from the Federal Reserve in New York to the new facility once completed.

On the surface the bill looks rather innocent, but its implications are far reaching. HB 483, “relating to the establishment and administration of a state bullion depository” to store gold and silver coins, was introduced by state Rep. Giovanni Capriglione.

 

Capriglione told the Star-Telegram:

 

“We are not talking Fort Knox. 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.”

 

But isn’t New York, where most of the world’s gold is stored, also big and powerful? Why does the state of Texas want to go through the trouble of building its own storage facility?

There are precisely two important reasons. One involves distrust in the current storage system. The second threatens the paper money system as a whole.

“In a lot of cases with gold you may not have clear title to the metal. You may have a counterparty relationship that makes you a creditor. If the counterparty has a problem unrelated to gold, they can default and then you become an unsecured creditor in bankruptcy,” said Keith Weiner, president of the Gold Standard Institute.

 

This means you get whatever is left after liquidation, often just a fraction of the initial value of your holdings.

 

“This exact scenario happened with futures broker MF Global. I knew people who had warehouse receipts to gold bars with a specific serial number. But that gold had an encumbered title and they became unsecured creditors in bankruptcy,” said Weiner.

 

In Texas, two big public pension funds from the University of Texas (UoT) and the Teacher Retirement System (TRS) own gold worth more than $1 billion.

 

Being uncomfortable with holding purely financial gold in the form of futures and Exchange-traded Funds, University of Texas actually took delivery of the gold bars in 2011 and warehoused it with HSBC Bank in New York.

 

At the time pension fund board member and hedge fund manager Kyle Bass explained: “As a fiduciary, which I am in that position to the extent you own gold and you are going for a long time, and it’s not a trade. … We looked at the COMEX at the time and they had about $80 billion of open interest between futures and futures options. And in the warehouse they had $2.7 billion of deliverables. We are going to own it a long time. You are on the board, you are a fiduciary, so that’s an easy one, you go get it.”

 

Bass is implying that there is much more financial gold out there than physical, and that it is prudent to actually hold the physical.

 

Taking the gold to Texas would then also solve the counterparty risk. “In this case it’s going to be a depository, the gold is going to be there, they are not going to be able to lend it out and it won’t serve as collateral for other transactions of the bank.” said Victor Sperandeo of trading firm EAM Partners. “Because if the bank closes, you are screwed.”

 

“I think that somebody was looking at that, we better have this under our complete control,” said constitutional lawyer and gold expert Edwin Vieira, of the Texas bill. “They don’t want to have the gold in some bank somewhere and in two to five years it turns out not to be there.”

So far most of the attention has focused on the part of the depository and the big institutions. However, the bill also includes a provision to prevent seizure, which is important for private parties who want to avoid another 1933 style confiscation of their bullion by Federal authorities.

Section A2116.023 of the bill states: “A purported confiscation, requisition, seizure, or other attempt to control the ownership … is void ab initio and of no force or effect.” Effectively, the state of Texas will protect any gold stored in the depository from the federal government.

 

And free from the threat of confiscation, private citizens can use gold and silver as money, completely bypassing the paper money system.

 

“People can legally do that with gold contracts. The difficulty is the implementation. Now Texas has set up a mechanism with the depository. We have accounts in that institution and can easily transfer back and forth certain amounts. So we can run our money system a gold or silver basis if we were so inclined,” said Vieira.

 

This would not be possible if the gold is stored in a bank because of the risks of bank holidays and bankruptcies. It would also not be possible if the federal government could confiscate gold.

 

According to Vieira, this anti-seizure provision rests on Article 1, section 10 of the Constitution of the United States, which obliges the States to not make anything tender in payment of debts apart from gold and silver coin. 

 

If someone from the Department of Justice comes along you are going to see legal and political fireworks. The state is going to say ‘we need to have a mechanism to make gold and silver money. This is pursuant to the constitutional provision we have. You can’t touch this. Our state power on the constitutional level is more powerful than any statute you may pass,'” said Vieira.

 

Because one of the litigant parties is a state, the case would go directly to the Supreme Court.

 

“We are talking about something completely new in terms of the legal playing field. This is no longer a fringe concept,” he adds, but cautions about a possible fight with the federal government: “We will have to see how committed the governor and the attorney general are.”

 

Official Statement from Governor Abbott:

Governor Greg Abbott today signed House Bill 483 (Capriglione, R-Southlake; Kolkhorst, R-Brenham) to establish a state gold bullion depository administered by the Office of the Comptroller. The law will repatriate $1 billion of gold bullion from the Federal Reserve in New York to Texas. The bullion depository will serve as the custodian, guardian and administrator of bullion that may be transferred to or otherwise acquired by the State of Texas. Governor Abbott issued the following statement:

 

“Today I signed HB 483 to provide a secure facility for the State of Texas, state agencies and Texas citizens to store gold bullion and other precious metals. With the passage of this bill, 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."

*  *  *

Is this the first step down a road to secession? Notably, they'll need that gold to establish their own country once they win the potentially imminent war with the US military which starts on Monday (Jade Helm).

*  *  *

This implicit subordination of The Fed's gold sends a more ominous signal of rising fears of confiscation and leaves us wondering just how long before every state (and or country) decides to follow Texas' lead?

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Ms No's picture

Yeah Texas!  That state is starting to become damn respectable.  Clearly they must be punished.

Monetas's picture

It's been damn respectable a long time .... even without you .... but, hey .... Thanks to you and all your liberal friends .... for the recognition !  LOL

James_Cole's picture

Is this the first step down a road to secession? 

Please dear God yes. The sooner this happens the sooner the rest of the world can stop hearing about these looneys in the news and relegate them to DPRK status - only newsworthy when they’re up to something particularly comical.  

Deathrips's picture

Dont forget Silver!

 

RIPS

winchester's picture

lost me @ "First Germany"

 

germany didnt get back any ounce of gold.... wake up, it's theater.

wee-weed up's picture

 

 

Yep... Right now, they've only got a "bird in the bush." They need to have a "bird in the hand."

But the NY Fed just might decide to play the "Germany" trick on them and only dribble out a few bars at a time to them.

Until they have it all in hand, this is just bluster.

greenskeeper carl's picture

Yes, Texas. So respectable. That last bastion of freedom in America..... Where, according to an article posted earlier, police will forcibly stop two kids from selling fucking lemonade. And that says nothing of them being a big civil asset seizure state. Texas is run by authoritarians just like the rest of the country.

Captain Debtcrash's picture

I don’t understand how so many financial advisors can say 0% is the correct allocation to precious metals.  I’ve read over and over how you should not own any gold. Here’s a rebuttal to anyone who tries to say that 0% is the correct allocation to gold and silver.

Headbanger's picture

I hear Rhode Island is getting serious about secession too.

 

SafelyGraze's picture

"a newly established state gold bullion depository"

also known as a "walmart"

connected by tunnels to other "depository" installations with "plumbing" problems


Troll Magnet's picture

It's Jews vs Cowboys, bitchezzz!

Paper Pushers vs Gun Owners.

I know who I'm bettin' on!

philipat's picture

It would be great if the csae were referred to SCOTUS. It appears that on Constitutional grounds, Texas has a very strong case and an affirmative ruling would open the doors to other States following suit.

Of course, there are many "Constitutional scholars" who may disagree.......

Manthong's picture

Maybe their gold is already re-cast into kilogram bars and sitting in China.

But that's OK, the Fed could just give them genuine, 100% pure fiat.

 

NoDebt's picture

I think Kyle Bass is building his own country.

Urban Roman's picture

When did the Supreme Court start upholding the Constitution?

the kings whore's picture

The joke's on Texas.  Gold is going nowhere.  It peaked.  Deflation is the name of the game.  The dollar is king.

Oh regional Indian's picture

Texas, it's the LONE STAR state for a reason. Always intended to stand amidst the ruins of RETORNO...

The last stand will be taken in San Antonio...again. Of course the heroic tale of the first one is a massive lie for those interested. The ALAMO story is an original MSM psy-op, making heroes out of thieves...

Anyways, divide, rule, sub-divide, rule, shatter, own...

progressions...like chords...

new...

https://www.youtube.com/watch?v=qyK3MwfBElw

 

Fred C Dobbs's picture

The Alamo "story" is a lie only in your head. 

Oh regional Indian's picture

Stay comfortable in your warm bed of a history FULL OF LIES Fred.

It is all good.

You have been merceneried for a long long long time. Loooong time. 

Davy Crockett was a land hustler....

Anyways, it's your history, learn it or repeat it....well, actually you are repeating it...over and over...

TwoShortPlanks's picture

Sorry for the shameless Blog post, but I did promise people I would let them know when the day came...and I always keep my promises.

http://twoshortplanksunplugged.blogspot.com.au/2015/06/second-company-es...

cookie nookie's picture

What day has come?  Gold is still going nowhere.  And the dollar still remains king.  Them's just the facts.

N2OJoe's picture

Getting the supreme court involved would be the worst outcome (in terms of bloodshed) as we all no that no matter how good your "case" for constitutionality, they will twist and pervert it into being the opposite.

nmewn's picture

What exactly are you trying to say ORI, that by virtue of the Spanish empires conquest of the land of the Aztecs and then Mexican independence from Spain, that Texans had no right to take land from Mexico? Mexico's "claim" to any land is derived through blood & conquest.

Its like Texan karma or sumpin, deal with it ;-)

MonetaryApostate's picture

IF YALL COULD STOP DAISY-CHAINING REPLIES TO THE FIREST COMMENT ON EVERY POST SO PHONE USERS CAN SEE COMMENTS, THAT WOULD BE JUST GREAT!

Oh regional Indian's picture

Here you go Nm and anyone else interested. This is just one article. 

The Alamo has been thoroughly debunked (the story as told).

Reality, as always, is a splash of cold water on the face:

http://revcom.us/a/1237/alamo.htm

TuPhat's picture

Mr. Morales, a self described 'beaner' does a decent job of presenting the facts and reviewing the movie but he presents very few facts to support his ridiculous allegations about the alamo.  He definitely has a chip on his shoulder about what he considers desrimination against mexicans but since the 60s those tables have been turned the other way.  I am a white minority in Texas and I know what I am talking about.  He spews a lot of garbage and other than a dislike of war which I agree with he is full of crap.

nmewn's picture

Travis Morales, Revolutionary Worker #1237 (lol) of the Revolutionary Communist Party, last seen in Ferguson Missouri, "working for" George Soros with a molotov cocktail in his hand.

Really ORI, thats all you got?

Oh regional Indian's picture

Who but the most dis-possessed and directly affected will tell the truth.

Do you think the MSM/MIC mouthpieces are telling the truth right now about Syria? Do you think "mainstream" reporting willl be the true tellingof what is happening in the world right now?

You are purposely blind.

nmewn's picture

Right, Santa Anna was an absolute saint, a regular freedom fighting John Brown-type for the common "dis-possessed" communist worker man. Thats why he ordered over 400 (Tejano's included) murdered at Goliad.

Got it...lol.

gladius17's picture

"IF YALL COULD STOP DAISY-CHAINING REPLIES TO THE FIREST COMMENT ON EVERY POST SO PHONE USERS CAN SEE COMMENTS, THAT WOULD BE JUST GREAT!"

Right. It's definitely our fault for trying to be seen, not the web site's fault for making it hard to be seen.

Socratic Dog's picture

Offhand, I'd say Waco was more relevent to modern Texas than the Alamo, myth or otherwise.

Soooo.....U Texas stores its gold with HSBC bank in New York.  I guess they promised they wouldn't rehypothecate it.  Sharp work, Kyle Bass.  How can I get him to advise me on where to store my pathetic stash?

And if the Feds turn up at the Texas vault, we're going to see "legal and political fireworks".  What a terrifying threat, Obama must be quaking in his boots.

This is a fucking joke.  If it's the best hope we have, then....ah, fuck it.  What time is the game on?

 

Farqued Up's picture

What in the hell are you saying, that.... that....... the Yellow Rose was NOT black?!

Heresy! 

The Blank Stare's picture

I love the clouds there. The people not so much.

Government needs you to pay taxes's picture

I once heard tell our Preezy was a Constitutional scholar.  So that and $2.75 gets you a ride on the subway.

VinceFostersGhost's picture

 

 

Preezy was a Constitutional scholar.

 

Yeah....he's really good at voting....present.

 

He's got that part of it down.

drendebe10's picture

..... yah, the fudgepacker is about as much of a constitutional scholar as it is a U.S. born citizen.... har de har har har...

"To the moon, Alice. To the moon.  Bang!  Zoom!"   Ralph Kramden

bilbert's picture

Yup - you got your money on Kinky Friedman, and the Texas Jewboys............

 

Good call!

 

847328_3527's picture

The present Texas gubnor, Greg Abbot is no dummy to central gubmint schemes. Abbot was on the Texas Supreme court and will prob take care of Texans alot better then Perry who fizzled out in his last two years. Also their attorney General, Ken Paxton is very on the ball. It looks like lots of new blood down there.

Kirk2NCC1701's picture

Troll Magnet, don't you know that Hollywood has already made that movie? 

"Cowboys vs. Aliens".  The Aliens had better tech, had a plan and were well organized.  Oh, they were after the Gold.  All the gold.

New_Meat's picture

"I hear Rhode Island is getting serious about secession too."

Actually, this summer, the Rhodies are preoccupied with winning the national STD rate, with 73% increases in some categories.

- Ned

{and no one gives a shit about "Metric" Chafee's run for the democrat nomination}

godiva chocolate's picture

Funny, they tell us that all the rates societal ills like STD's, teen pregnancy, illiteracy, food stamps, section 8 housing etc are the worst in the South, and supposedly best in the Liberal "Progressive" NorthEast States.

TheGreatRecovery's picture

One fascinating thing is how Rhode Island came to exist.  It's classic.

On a different note:

:-)   I believe Rhode Island has a right to exist.  Do you?  :-)

0b1knob's picture

Does the "writing on the wall" say anything about Jade Helm?

"Jade Helm" is kind of an indirect way of saying "Light Blue Helmet".   What group in the world wears such helmets?

PhoQ's picture

The reformed Devo World Tour 2016?

Divine Wind's picture

 

 

 

Texas is great, but only as long as conservatives are in power.

If the legislature ever swings left, ya better hope you do not have metal in the depository.

Sure as all hell the liberals will find a reason to sell it, borrow against it, etc...

Anusocracy's picture

Still got that advanced stage left-right mental dementing process, eh?

Alvin Fernald's picture

There is a cure for that condition you know.