The first state-run gold depository in the United States opened in Austin on Wednesday, offering Texans and other Americans a safe place to store precious metals.
The highly-anticipated Texas Bullion Depository has been in the works for three years. In 2015, Governor Greg Abbott signed House Bill 483, authored by state Representative Giovanni Capriglione (R-Southlake). This legislation allowed the creation of a depository as a state agency under the administration of the Comptroller’s office.
“We’re proud that the nation’s first state-administered bullion depository is now a reality — this is a big day for Texans who want to secure their precious metal assets,” said Texas Comptroller Glenn Hegar, in a prepared statement. He became the facility’s first customer, depositing some gold. He described the process as “easy.”
However, Texans are not the only individuals who can take advantage of the depository. The facility’s website lists criteria for U.S. citizens interested in setting up online accounts. Depositors can purchase bullion from a dealer and have it shipped to the facility or they can send in precious metals they already own.
The comptroller’s office says all metals admitted to the depository will undergo three types of non-destructive testing, including a density scan to ensure purity. Depository personnel will photograph the metals and a digital image will be displayed on the depositor’s online account dashboard. The depository accepts gold, silver, platinum, palladium and rhodium.
Last year, Hegar chose Lone Star Tangible Assets (LSTA), a private Texas-based investment firm, to build and operate the depository. LSTA specializes in precious metals and other high-value assets for hundreds of thousands of clients stateside and around the world. They also operate the highest-rated, Class 3 vault which serves as the depository’s initial 23,000 square-foot Austin location.
“Private depositories are not regulated, but ours is overseen by the same agency that has helped grow the Texas economy to the 10th largest in the world,” said Matthew Ferris, LSTA chairman. “You can feel comfortable storing your precious metals with us, knowing that we test and verify your items before they are deposited to your account.
The depository website explains that account holdings are displayed in troy ounces and grams for all products. Pricing is “clearly described” with no hidden fees. They break down daily storage fees as a percentage of an annual rate. Personally identifiable information is encrypted. Deposits are covered by an all-risk policy underwritten through Lloyd’s of London.
Additionally, the depository maintains its own internal security and investigation team, which is supplemented by Texas law enforcement stationed onsite every day. A larger, permanent depository is under construction at no cost to Texas taxpayers. The facility, expected to be completed in 2019, will be housed on a secure 10-acre campus in Leander, an Austin suburb.
“This facility is going to have state-of-the-art security, layered with cameras, alarms, and biometric access 24 hours a day, 7 days a week,” stated Tom Smelker, director of the Comptroller’s Treasury Operations division and depository administrator.
Breitbart Texas reported that part of the intent of HB 483 was to “repatriate” its roughly $1 billion in gold bullion from an HSBC Bank vault in New York City. These precious metals are part of the University of Texas (UT) endowment fund that costs taxpayers around $1 million a year in storage fees. The University of Texas Investment Management Company (UTIMCO) oversees this Texas-owned gold. UTIMCO has voiced reluctance to transferring the bullion and placed two conditions on such a move. First, it should not cost more in fees to store the gold in Texas than New York. Secondly, the Texas depository must be a member of the COMEX platform, the primary exchange for trading precious metals. All COMEX-affiliated facilities, though, are located within 150 miles of New York.
In 2017, Breitbart Texas reported Ferris commented that, while the Texas depository was not yet a COMEX member because of geographical limitations, they compensated by establishing a system with subcontractors that provides COMEX levels of liquidity and quality.
The comptroller’s office told Breitbart Texas that this solution, while prompted by UTIMCO’s requirements, is attractive to other institutional investors looking for similar liquidity.
Follow Merrill Hope, a member of the original Breitbart Texas team, on Twitter.