We all know the cliché: ‘Don’t mess with Texas.’
Well, a new piece of legislation is being proposed to send that message to Washington, when it comes to protecting Texas’ gold.
A lawmaker has proposed a bill to create a Texas Bullion Depository, which would allow the state and its citizens to store gold bullion in its own facility in Texas, with the protection of the state.
If passed, the Texas bill would tell Washington to “shove off” under the 10th amendment power given the states, if we ever saw the kind of currency craziness we saw during the Great Depression when President Franklin D. Roosevelt mandated citizens hand over most of their gold.
Texas isn't the first state to think about hedging its monetary destiny with precious metals.
Citing concerns over the value of the U.S. dollar, Arizona lawmakers are the latest to pursue legislation that would declare privately minted gold and silver coins legal tender. In 2011, Utah became the first state in the country to legalize these precious metal coins as currency. Lawmakers in states including Minnesota, North Carolina, Idaho, South Carolina, and Colorado have debated similar laws.
As for the Texas proposal, Jim Rickards, senior managing director of Tangent Capital Partners and author of Currency Wars, tells The Daily Ticker you can think of it like the “Fort Knox of Texas.”
And on the legal side Rickards says, “you’ve got the state of Texas standing up for you if the federal government tries to do what they tried to do in 1933, which is take the people’s gold." Rickards is also a lawyer and has read the legislation.
So, is Texas making preparations to start hoarding gold?
“It may end up that way,” Rickards says. “Personally, I think this is a game changer in terms of the way institutional investors are going to look at gold.”
That’s because large Texas pension funds haven’t been allowed to invest in physical gold, but Rickards explains this law would change that.
Gold is considered a hedge against inflation. And while inflation is currently low in the U.S. right now by official figures, Rickards doesn’t expect that to remain the case, projecting an uptick to come later this year or early next year.
If people were to lose faith in the dollar, Rickards concedes Texas could have the foundation for its own currency, of sorts.
Which could come in handy if they, say, push forward in trying to secede.
You may recall, more than 100,000 people signed an online petition calling on the Obama administration to allow Texas to secede from the U.S., according to New York Times. In January, the White House declined but the secession movement has pressed on.