Jump to content

Texas' Gold Depository Now Open

bernorange

By bernorange
in Daily Texan

 Share

Recommended Posts

bernorange

bernorange 8377

Posted
Posted (edited)
Quote

Texans can now store their precious metals in a publicly backed secure vault close to home, as the United States’ first state-run gold depository opens for business in Austin.
...
Any U.S. citizen hoping to use the Texas facility can set up an account online and either ship or personally deliver precious metals to the site in Austin. Customers will be charged for storage at an annual rate of 0.5 percent for deposits worth up to $2.5 million. Along with gold, the depository will accept deposits of silver, platinum, rhodium and palladium.
...

More:  https://www.texastribune.org/2018/06/06/gold-depository-texas-bullion-glenn-hegar-precious-metals/

Edited by bernorange
Link to comment
Share on other sites
RDCanecutter

RDCanecutter 26570

Posted
Posted
26 minutes ago, dingleberryswitzer said:

Exactly my thoughts.   This sounds  like a way for the government to hoard gold. I'll keep my gold in a coffee can in the backyard. 

Less trouble to keep it next to the clothes hamper, underneath a small pile of tighty-whities, stripe side up.

  • Haha 1
Link to comment
Share on other sites
Nice Guy Eddie

Nice Guy Eddie 13568

Posted
Posted

I always figured that someone's brother-in-law was somehow behind the building/management of this facility.  There never seemed to be a good reason for other than not trusting those Yankees in NYC with protecting our gold.   I've also predicted that when the facility starts to fail to cover their operating costs, there will be a law to punish state-affiliated groups when they refuse to utilize it.   We will pass laws to ensure its success.

Link to comment
Share on other sites
bernorange

bernorange 8377

Posted
  • Author
Posted (edited)
6 minutes ago, Nice Guy Eddie said:

... I've also predicted that when the facility starts to fail to cover their operating costs, ...

Back on the old site, I quoted a blog post from Bron Sucheki, (at that time) of the Perth Mint (Australia) regarding the economics of a repository.  The blog post doesn't exist anymore (404 error), but my quote on the old site does.  Here it is, FYI (tl; dr: ongoing operating costs are relatively low):

Quote

So Texas wants to build a bullion depository. Welcome to the club – The Perth Mint, wholly owned by the state of Western Australia, has been offering storage services to locals and overseas investors since the 1980s. Is it a smart idea or a fiscal folly pandering to doomers and preppers, as some in the mainstream media imply?

While being used to mainstream media derision about gold, I was surprised at the way the media made fun about Texas’ move, some examples:

  • Bloomberg: Texas wants its gold back from the Yankees, wherever they’re keeping it.
  • LA Times: Whether you call them visionaries or call them chuckleheads
  • Talking Points Memo: And in case the Fed or Obama wants to confiscate Texas’s gold, nice try Fed and Obama!

So much for journalistic objectivity but it certainly doesn’t help if Governor Greg Abbott can’t get the location or value of the University of Texas Investment Management Co’s (UTIMCO) gold right. While the media were happy to make fun of goldbugs, operating a depository is not a “perhaps generating revenue for the state” business.

For example, over the past 10 years The Perth Mint has generated $212,661 million in profit before tax and paid $164,299 million to its state government. Yes we do operate a refinery and mint in addition to a depository facility, but these figures show that a precious metals business can be profitable.

The key to profitability is scale, as margins in all aspects of the business are very low (the average profit margin before tax for The Perth Mint over those 10 years is 0.7%). In the case of a standalone depository, scale is even more important as it involves a large fixed cost (the building) compared to ongoing operating expenses (whether you hold $1 billion or $100 billion, the staff to watch it are pretty much the same).

Texas’ Legislative Budget Board Fiscal Note estimated first year costs of $10 million and ongoing costs of $4.5 million. While one could build a sizable depository for $10m, the estimate of 71 staff (which I guess is behind most of the $4.5m) is way out, even if it did include an electronic gold payment system.

If we assume a capital cost of $10m with a low depreciation of 20 years, then that is $500,000 a year. With UTIMCO reportedly paying less than $1m a year on its $500m worth of physical gold, the Texas depository is already looking good. Conservatively I would think they could get another $500m of institutional business and in terms of retail, considering that The Perth Mint stores $2.7 billion, Bullion Vault $1.5 billion and Gold Money $1.2 billion, a target of $1 billion in retail deposits is achievable, particularly since Giovanni Capriglione said that “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.”

Together that totals $2b, which at a 0.2% storage rate is $4m. Less $0.5m depreciation, insurance and operating costs that is a profitable business. You may not think those numbers sound like much, and that is true, but think about the 700 tonnes of gold stored for the GLD ETF. At 0.1% storage fee that works out to around $27m. In a depository business once you start talking volume almost every dollar of additional storage fee revenue is pure profit.
...

 

Edited by bernorange
Link to comment
Share on other sites
Nice Guy Eddie

Nice Guy Eddie 13568

Posted
Posted
19 minutes ago, bernorange said:

Back on the old site, I quoted a blog post from Bron Sucheki, (at that time) of the Perth Mint (Australia) regarding the economics of a repository.  The blog post doesn't exist anymore (404 error), but my quote on the old site does.  Here it is, FYI (tl; dr: ongoing operating costs are relatively low):

 

I'm skeptical that the state of Texas latched onto an idea that is guaranteed profit.    It would also have seemed that the threat of building a gold depository would have reduced their previous storage rates.  Did they even try that route?  Instead it seemed like Texas was hell bent on wanting their own gold depository over anything else.  

But anything with govt funding is usually strongly encouraged by someone waiting to earn a buck on it.  

On the plus for Texas employment, it sounds like we now have 70+ new state employees that will earn a lifetime of pay and benefits.  

Link to comment
Share on other sites
Surly Bevo

Surly Bevo 25542

Posted
Posted (edited)

In a true doomsday scenario (complete social order breakdown caused by some huge disaster, zombie apocalypse, whatever) gold is pretty much worthless given you can't drink it, eat it, live in it, defend yourself with it, or cure illness/disease with it.  

 

Now the motherfucker sitting on a shitload of clean water....eerbody is gonna want to kill his ass.

Edited by Surly Bevo
Link to comment
Share on other sites
Trey3216

Trey3216 15382

Posted
Posted
3 hours ago, Surly Bevo said:

In a true doomsday scenario (complete social order breakdown caused by some huge disaster, zombie apocalypse, whatever) gold is pretty much worthless given you can't drink it, eat it, live in it, defend yourself with it, or cure illness/disease with it.  

 

Now the motherfucker sitting on a shitload of clean water....eerbody is gonna want to kill his ass.

The only things on earth that matter in total societal breakdown are food, water, and the tools to acquire food and water.   Those tools include : land, water resources, water purification resources, guns/ammo for acquisiton by force if necessary, and can include precious metals as tradable commodity only when things have calmed.  

Link to comment
Share on other sites
52-80

52-80 19288

Posted
Posted
7 hours ago, Surly Bevo said:

In a true doomsday scenario (complete social order breakdown caused by some huge disaster, zombie apocalypse, whatever) gold is pretty much worthless given you can't drink it, eat it, live in it, defend yourself with it, or cure illness/disease with it.  

 

Now the motherfucker sitting on a shitload of clean water....eerbody is gonna want to kill his ass.

O yeah?  What if I got a 24k pistol?

Link to comment
Share on other sites
atomheartbevo

atomheartbevo 90143

Posted
Posted (edited)
Quote

Three years later, however, the prospect of UTIMCO moving its gold to Texas appears remote. UTIMCO officials say the new Texas depository would have to become a member of the Chicago Mercantile Exchange’s COMEX platform, where gold futures contracts are traded, for any transfer to move forward. And Lone Star Tangible Assets Chairman Matt Ferris acknowledged on Tuesday that simple geography has prevented the Texas Bullion Depository from joining COMEX, whose rules stipulate that approved depositories must be located within 150 miles of New York.

I thought that was a selling point, that UTIMCO would move here. LOL

Quote

Still, Ferris emphasized that the firm has found other ways to liquidate gold quickly. “We’ve created some opportunities for major institutional investors to have COMEX-like liquidity through major commercial banks, which we can set up for them,” he said. “They would be able to store in Texas, but also still be able to liquidate at any time.”

The state has also begun “very preliminary” talks with UTIMCO to discuss the possibility of moving the gold to Texas, according to Tom Smelker, the administrator of the state depository. 

And, on Wednesday, Hegar said the Texas comptroller's office will work to get the state depository approved by COMEX, even though it sits outside the platform’s radius.

“We’re not moving Texas to get closer,” Hegar said. “But if the depository is successful, then we will hopefully get to a point where COMEX will want us to be part of their system.”

So they think COMEX will want this thing and will bend their rules big time...

Edited by atomheartbevo
Link to comment
Share on other sites
Bevo

Bevo 13660

Posted
Posted
On 6/18/2018 at 9:29 AM, Larry T. Spider said:

If the point it to keep it from being stolen, then I get it. If it’s wealth building then the fee seems to be a lot, especially considering the costs associated with buying and selling. If it is doomsday prep, then good luck getting it back from the government when shit hits the fan. 

This is how I see it.

Link to comment
Share on other sites
woohorn

woohorn 1131

Posted
Posted
what a horrible waste of money. 
This and you already know UTIMCO is going to be forced to move and be seriously disadvantaged just to make this stupid thing even have a chance of succeeding.

My friend wants to know how much coordination there will be with the IRS...
Link to comment
Share on other sites
Brisketexan

Brisketexan 105701

Posted
Posted
29 minutes ago, Nice Guy Eddie said:

what a second, the main point of this was to work with UTIMCO but their rules prevent them?  And it's only being discovered now?

Reminds me of when Austin went and bought those super-fancy Swiss train cars....only to find out that they didn't comply with US transportation regulations.

Political boondoggle-ry is often funny like that.

Link to comment
Share on other sites
High Plains Drifter

High Plains Drifter 11085

Posted
Posted
On 6/18/2018 at 7:01 PM, Surly Bevo said:

In a true doomsday scenario (complete social order breakdown caused by some huge disaster, zombie apocalypse, whatever) gold is pretty much worthless given you can't drink it, eat it, live in it, defend yourself with it, or cure illness/disease with it. 

 

Can you wipe your ass with it?

Link to comment
Share on other sites
  • 6 months later...
bernorange

bernorange 8377

Posted
  • Author
Posted

Not that I can find.

Quote

...
Austin-based general contractor MHT Constructors LLC broke ground Dec. 12 on the 40,000-square-foot Texas Bullion Depository on Heritage Grove Road near U.S. Highway 183 in Leander. The depository will be operated by Lone Star Tangible Assets.

Construction is expected to wrap in late 2019. It is described as a class 3 vault, the highest level. According to LSTA Chairman Matt Ferris, the Leander depository will weigh as much as 10 NASA space shuttles and have room for up to $350 billion in gold, silver, platinum and other precious metals — more than what is held in Fort Knox, the famous U.S. Bullion Depository in Kentucky.

Ferris added in a statement that the Texas Bullion Depository could be expanded by 85,000 square feet if "market forces dictate — and we think they will."
...

https://www.bizjournals.com/houston/news/2018/12/19/texas-fort-knox-dirt-turns-for-states-first.html

 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
 Share
Go to topic listing


Football ... Basketball ... Baseball ... Other Sports ... Futbol ... 🤫995🤫 ... Gambling ... Movies & TV ... Music ... Hobbies ... Lulz ... Food & Travel ... Daily Texan ... Business and Markets ... Cloak Room ... Help ... For Sale ... Board Discussion ... Subscribe!... Donate!... Advertise... COOKIE MONSTER!

×
×
  • Create New...