Texas: Home of the first state-run bullion depository in the U.S.

The Texas state capitol building, Austin. (Photo by Ed Uthman)

Lone Star Tangible Assets (LSTA), an Austin-based firm, has signed a five-year contract with the government of Texas to manage the state’s bullion depository, which will be under the authority of the state comptroller general (currently Glenn Hegar).

Prior to the law authorizing the Texas Bullion Depository, such facilities were privately owned, with the exception of the massive depositories of the federal government. They tend to be clustered near the New York financial hub, in part because of COMEX requirements that its member depositories be located within 150 miles of New York City. (COMEX is the precious-metals arm of the New York Mercantile Exchange; the merger of the two companies created the largest physical futures exchange in the world.)

One aim of the Texas Bullion Depository is to bring the fees that Texas investors are paying for bullion storage elsewhere back to their home state. Another of the earliest aims of the effort, at least as articulated by then-governor Rick Perry, was to “repatriate” the more than $660 million in bullion owned by Texas universities and secured in NYC vaults. Ironically, that headline-grabbing aspect of the project appears to be on ice, as UTIMCO (which manages the universities’ funds) says it won’t move the gold unless two conditions are met: first, that it’s cheaper to store the gold safely in Texas; and second, that the depository is a member of COMEX. The fact that Austin is located a bit more than 150 miles from New York presents a problem, unless some kind of exception can be worked out. For now, LSTA’s goal is “to create liquidity of COMEX levels in the state of Texas for those large institutions over time.”

Texas legislators spent several years pushing for the state to have its own bullion depository—the first such state-administered operation in the U.S. The necessary law was finally passed and then signed by Governor Greg Abbott two years ago. In July 2016, the Office of the Comptroller issued a request for proposals from companies interested in running the depository. The selected organization would be responsible for the following (paraphrased from the original):

  • accepting, withdrawing, transferring, and transporting bullion deposits;
  • acting as a depository agent;
  • transacting business with depository agents;
  • collecting reasonable fees;
  • providing account transactions, including an online platform with software to provide one or more of these services;
  • providing secure physical bullion vault storage in Texas; and
  • other services with respect to handling, quality control, accounting, record-keeping and publication, etc.

Logo of the newly formed Texas Bullion Depository.

More than a dozen companies submitted proposals, with Lone Star Tangible Assets securing the final contract (five years, with the opportunity for up to two 1-year extensions). According to the depository’s website, TexasBullionDepository.gov, its development is taking place in three phases. In phase 1 (currently underway), LSTA is establishing the means for “Depository Account Holders and Depository Agents to open accounts with the depository.” This service should be in place by early 2018. Phases 2 and 3 will expand the depository’s offerings to large institutional and international agencies. It is hoped that one or more major national banks would become agents, allowing their customers to open accounts that would allow them to make debit-card transactions with their bullion investments.

In the meantime, LSTA—which already owns numerous secure vaults that are sufficient for start-up purposes—plans to construct a 60,000-square-foot facility on a 10-acre campus near Austin. According to the website, LSTA “has assembled a team of experts to advise on the design, construction and operations of the Texas Bullion Depository—including veterans of the precious metals industry, a former director of the United States Mint, veterans of the United States Air Force charged with operating our military’s nuclear weapons facilities, and a former SWAT team leader.”

Although Texas is the first state to open a state-run depository, other states are making similar moves. After Utah passed its Specie Legal Tender Act in 2011, for example, the non-profit United Precious Metals Association was established to allow members to “access their wealth by using a Visa debit card, ACH (electronic check), or by taking physical possession of their [gold and silver] holdings.” More recently, Tennessee passed legislation sponsored by Rep. Bud Hulsey (R) to permit the state to operate a bullion depository.    ❑

For further reading:

Texas Tribune.com: “Texas taps private vendor to manage first state-run gold depository in U.S.

DallasNews.com: “Texas just had to be the first state to start its own gold depository.

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Comments

  1. You Can't See Me says

    @HarryB
    The 2000 Leif Ericson silver 1000 Kronur (Kroner) should count.

  2. KML in KY says

    Flipping’s not what it used to be. I sent 27 of my 30 2017-S ASE’s to Great Collections to sell for me. Although San Francisco coins usually grade well I got only 13 70’s and 17 69’s. I’m hoping to make enough to get a tube of the next 5 oz ATB bullion coins when they go on sale. With MCM and others depressing the prices who knows.

    Did anyone else get an email from MCM trying to sell the “record low mintage” National Park Service coins to “preferred customers”? I sold some NPS 70’s on Great Collections. The unc golds went for $488.40, $490.35, $577.50, and $644.70. The unc clad halves went for between $80.00 and $125 approximately. The proofs and unc dollars went for a smaller premium. Not a huge profit for a record low mintage but at least I made a little. I kept 1 complete 70 set for my collection/hoard.

    I have largely been able to finance my coin hobby by reselling coins and I’ve had a lot of fun doing it. The modern coin market sucks right now. It’s not a good time to sell but it is a good time to buy selectively. It would be nice if the Mint had more surprises this year like the 2017-S ASE’s.

  3. cagcrisp says

    @KML in KY , That’s a good useful report with actual numbers.

    If I understand you correctly, you are trying to Clear enough money on 27 submitted “S” to purchase 1 tube of the next 5 oz bullion pucks?…

  4. says

    KML in KY – GREAT post! Thanks.

    Did your NPS $5’s auctions all end at the same time, or over a period of a week? Did they sell higher as they sold and decrease?

    I’m just curious, as it’s been my observation that there’s little to no demand on the bay.

    By the way, spent Father’s Day with pops on Lake Cumberland striper fishing, man I love that place. There was a Poker Run on Friday, sounded like I was at an airshow, impressive!

  5. Gary says

    @KCSO… The U.S. Mint modern coin market demand is so low, it has to go up to be down. Since precious metals hit the skids starting in 2012 most U.S. Mint precious metal items have been surefire losers.

  6. cagcrisp says

    Concerning the Proposed 2018 PROOF $10 Gold American Liberty 1/10 oz. coin:

    1. It COULD be Priced as High as $300
    2. It COULD be the Start of a new series

    I made My case for $225.00. I could EASILY see the Mint going to $300.

    Low Mintage, High Prices.

    After the Dismal sales of the Only Large profit makers for the Mint in 2017, I don’t see ANY possibility for the Mint to go in ANY other Direction.

    The Mint NEEDS the Revenue and they NEED the profit.

    Higher prices, lower mintages and selling to Dealers/Big Boys is the way to achieve that goal…

    http://www.coinworld.com/news/us-coins/2017/06/coin-designs-receive-ccac-recommendation.html

  7. earthling says

    How soon will Mint stuff require a mortgage to get into it? Call 1-800-Quicken to explore ownership of ALL 2018 US Mint Gold and Silver new issues. Be the envy of ALL your lessor privileged friends. We have terms for 5 year, 10 year and even 20 year plans. Call today !

    1-800-QUICKEN

    don’t be an unlucky clucky Chicken

  8. says

    Oh My –

    cagcrisp says
    JUNE 23, 2017 AT 4:29 PM

    http://www.coinworld.com/news/us-coins/2017/06/coin-designs-receive-ccac-recommendation.html

    The CCAC has considerable more clout than the CFA, this could be a game changer! Will be interesting to watch this one play out…

    Steve – I had the pleasure enjoying the laser light show at Stone Mountain in early June , it told a good story as to why we need to respect and appreciate the past, though move forward as one Nation, United.

    The tribute to our Veterns was beyond, touching.

    I could only hope our lame ass government could sit there butts down, get the message, and move forward for unity and progress! Now that dog would hunt!

  9. Barry says

    btw- (APMEX)Random year 1 oz. AGE proof is currently $ 270.00 below the mint’s price for the current year coin. The mint is competing with it’s own products at a much lower price. This is why they need to at least change the design periodically. They also need to bend the ear of Congress to loosen restrictions on their operations.

  10. Erik H says

    The reverse of the 2020 NA Dollar is nice. I can’t wait to pick it up in the Enhanced Proof. I really like this year’s NA Dollar reverse too.

  11. says

    Appears the APE will show up at $1,300 on Thursday

    Platinum has been sucking hard these last few years.., seems as if Palladium is the new ‘other white meat,’ oops I mean metal

  12. KML in KY says

    KCSO – My unc gold NPS coins ended at different times. The first ones went for more money. I like commems and pretty much buy them all but I will be buying fewer of them in the future. I have always bought extras and sold them to help finance my hobby but that doesn’t work too well at present in most cases. There are certain exceptions with commems like I’m sure the Apollo 11 coins will be.

    Cagcrisp -I would like to get more than enough from the “S” ASE’s to get a tube of the next 5 oz ATB’s. Great Collections has not got them listed yet. There are a lot of big dealers unloading these right now. While they will probably do alright I am not expecting to get what they were going for at first. I will get the ATB’s regardless. I have been buying at least 1 tube of each as they come out since 2011 and will continue to do so as long as I can afford it. Due to the low mintages and varied designs it’s my favorite way to buy silver bullion.

  13. cagcrisp says

    @KML in KY, Thanks for the Reply.

    I think you have Honestly summed up the Chalenges of modern coinage…

  14. earthling says

    1-800-QUICKEN ?

    No joke, I think any day now, there will be Numismortgages offered to all the silly geese wanting to load up on PM Products from the US Mint. The only requirement? You store your purchases in the Quicken Vaults in Texas.

    This is probably going to make loads of money for someone, really soon.

    😉

  15. earthling says

    johnaz

    If you were to offer such a thing I think it would succeed. Look at those crazy Title Loan places, Payday Loans, all that BS , they actually do business.

    Makes no sense at all to a dunce like me.

  16. KML in KY says

    KCSO – If the US Mint sold the platinum proof for $977 I might buy one. I have usually bought the US platinum coins and many of them were winners but I think I’m going to hold off this year. It’s a shame the best they could do for the 20th anniversary is the same reverse they have used on bullion coins for the past 20 years. If the mintage was 5000 I might consider it although low mintages don’t seem to mean to much at the present time. I’m sitting on a bunch of low mintage modern coins that I would make little to no money on if I sold them now. That goes for the certified 70’s I would be guaranteed to lose money on the 69’s.

  17. Dustyroads says

    KML in KY, What I have sen in my experience during my relatively recent abduction into modern numismatics is that there are only a handfull of moderns that should hold values well enough, all the others have been no more than flashes in the pan. That’s not a bad thing for us who realize what is happening however. I don’t consider myself a flipper, but I have bought and sold many times for the purpose of legitimizing buying an other wise expensive, but desirable coin.
    I’ve expressed some ideas here before about what could be the reason for such lethargic enthusiasm for lows, but they are only opinions.
    cagcrisp laid down some good ideas about where the Mint is headed and I’m inclined to agree. We will know more about whether those ideas are correct or not with the announcement of pricing and packaging for the proposed fractional $10.00 .9999 gold HR Liberty coins. If the USM does in deed raise the price and attempt to draw us in with bigger and fancier packaging, then we all should know the USM is taking ques from the Australian Mint, RCM and others, ie boutique. Not to worry though, there will be some awesome issues coming down the pike.

  18. johnaz says

    I hear at a coin show that ngc is going to make a Miles Standish holer for his head shaved at ana show a small photo on holer. How much will that cost.

  19. earthling says

    Whatever happened to the POGS Market? This was a strange fad born of Hawaiian Bottle Caps. It was hyped and promoted into just a push of circular Cardboard merchandise. Values on this fluff was created like so much crypto currency. How high did this junk go? I’m not really sure, I never really paid attention to it. I think POGS are totally dead but to be honest, I wouldn’t want to waste any time finding out.

    It’s really sad but Coins are looking like POGS lately. There’s a flood comming from every direction, exactly like POGS at their highpoint. The attention once directed to Coins , is fading fast. Mintages are comming down like an avalanche. Look out below. Get caught up in an avalanche, you can get hurt really bad.

  20. Dustyroads says

    earthling, I eventually got around to thinking like coin guy at some point. I think I’m on the right track being cautious of the lessor know issues which will inevitably have a smaller drawing than the more main stream classic like issues. I know there are so many people around who gravitate towards rounds like Privateers and Zombucks, but even those, though they are fairly cool, seem to go the way “of out of sight , out of mind”. Right now the tribute coins are struggling, but they are cool coins which will be collected in the future. Don’t count everything gold and silver out just yet. If coin collecting has been around for thousands of years, I can’t believe it’s going to just go the way of some silly bottle cap collecting fad. While the coin collecting hobby undergoes what I believe to be a few adjustments, we of course are going to be challenged, but if you look at the history of coin collecting, it’s never been a straight line. I’m in it till I die, be it today, or later, I enjoy it.

  21. Buzz Killington says

    Pogs were pushed, very briefly, but I don’t think they ever caught on.

    They were borne of the baseball card boom. where valuable collectible items could quite literally be printed at will.

    The same is now true of coins. Some private mints are making beautiful designs on silver & gold tokens that previously would have required the resources of a government to finance. Although it can be fun to collect the designs, what we are really buying is the expensive canvas on which the designs are minted.

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