by Mike Maharrey
A state gold depository in Texas continues to move closure to reality and it appears to be happening at just the right time.
Since the beginning of the year, the price of gold has risen 26 percent and silver has skyrocketed 37 percent. Surging precious metal prices have sparked a corresponding demand for gold and silver storage.
A recent Bloomberg article highlighted the increase in business for an overseas vault in Singapore.
The stash of gold, silver and gems stored in the vaults and safe deposit boxes of Malca-Amit in Singapore has jumped almost 90 percent in the past year as wealthy investors seek a refuge in a world of negative interest rates, stagnating economies and political uncertainty.
The company’s facilities in the city-state are about 70 percent full and more than 90 percent of the hoard comprises precious metals, according to Ariel Kohelet, managing director of Malca-Amit Singapore Pte, a logistics and storage provider, without giving specific figures. Revenue has grown at least 45 percent in 2016 from a year earlier, he said in an interview last week.
There is no reason to think the Texas Bullion Depository won’t see similar demand.
On top of providing a local storage option for Texans, the Texas depository will offer an advantage private vaults can’t. Those storing precious metals at the facility will have the option of transacting business using sound money.
By making gold and silver available for regular, daily transactions by the general public, the new Texas depository has the potential for wide-reaching effect. Professor William Greene is an expert on constitutional tender and said in a paper for the Mises Institute that when people in multiple states actually start using gold and silver instead of Federal Reserve notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.
“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes).
“As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”
During the last legislative session, the Tennessee legislature unanimously passed a resolution calling for the creation of a similar depository in the Volunteer State. Surging demand for gold and silver coupled with an increasingly uncertain economic climate, makes this an ideal time for Tennessee to move forward and act on the resolutions. Legislators there should follow Texas’ lead in the next session and pass binding legislation establishing a state bullion depository. Other states should also consider following this strategy. It will not only take a step toward reestablishing constitutional tender within the states, it will also help secure economic choice and security for state residents.
William Greene is the author of the original Constitutional Tender Act, a bill template that can be introduced in every State legislature in the nation, returning each of them to adherence to the United States Constitution’s actual legal tender provisions. He is an Assistant Professor of Political Science at South Texas College.