These days, a “gold card” usually refers to a high-credit piece of plastic used to impress someone on a first date.
But if some Texas entrepreneurs get their way, the term could take on a more literal meaning.
Following a path opened by the Legislature last year, some Texas companies are hoping to get approval to establish a new precious metal depository in Texas — which could also open the door to creating an alternative financial system in which consumers would be able to pay for goods and services not with U.S. dollars, but with their gold.
The concept might seem far-fetched to some people, but many lawmakers and others in the business community believe it is legal and perfectly reasonable.
The Legislature last year passed a law calling for creation of the Texas Bullion Depository. The law’s main focus — and the part that got the most attention — was a call to return Texas’ gold to Texas, as it gives the University of Texas Investment Management Co., or UTIMCO, the option to pack up its 5,610 gold bars (worth about $715 million) that are being housed in a vault in Manhattan and bring them back to the state to be stored in existing vaults or in a yet-to-be-constructed Texas version of Fort Knox. Bruce Zimmerman, CEO of UTIMCO, has said he would be open to moving Texas’ precious metals if safety and security conditions were met.
The law, however, appears to do more than that. Eager entrepreneurs see the law as enabling the Texas Bullion Depository to house the first — and only — state-sanctioned, gold-based transaction system in the country. The law establishes that the depository would be an agency of the state under the Office of the Comptroller of Public Accounts.
The law’s author, state Rep. Giovanni Capriglione, R-Southlake, said that, when he first filed a version of the bill in 2013, he imagined a relatively simple bricks-and-mortar-type of plan to store Texas’ gold back in the state.
But now the idea has evolved into something “more complicated and more valuable,” Capriglione said.
“It’s not just about bringing gold back home,” he said. “It’s about an alternative form of making payments.”
‘Like any other bank’
Capriglione’s law calls for building a system in which depository account holders can conduct retail transactions with other depository account holders. Or in more simple terms: people who have gold stored with the depository could use that gold to trade with other people who have gold stored there.
The U.S. Constitution says that states cannot create their own currency, but it also says that citizens may use gold and silver to make payments, Capriglione said.
“You can treat it just like any other bank,” Capriglione said. “It’s a constitutionally protected alternative.”
Proponents of the exchange are tapping into a sentiment expressed by devotees of Texas’ former U.S. Rep. Ron Paul, cryptocurrency enthusiasts and early adopters of bitcoin technology. For many, the idea of using gold stems from distrust of the current system, commercial banks and the Federal Reserve.
The bill passed almost unanimously with only one “nay” vote.
Democratic state Rep. Celia Israel of Austin, the sole vote against the proposal last session to create the depository, hasn’t changed her opinion since 2015. Recently, she called it a “stupid bill.”
“It’s more of an example of misplaced priorities,” Israel said as she mentioned a list of other needs of the state, like easing traffic congestion and improving public education.
“It’s placating those who have a mistrust” of the government and financial system and those who want Texas to break from the union, she said.
In the future, Capriglione said, he would like the system to allow depository account holders to be able to make purchases with gold just like they would with cash — perhaps by using a “gold card,” or more to the point, a gold-backed debit card or something similar, Capriglione said.
There is no set date for the depository to be operational, but Capriglione said he is hopeful it will be soon. “I hope it’s available by the first day of the next session,” he said.
There will not be a cost to the state because private companies would be contracted to run the depository, Capriglione said. In fact, a system of revenue sharing and a possible transaction fee could allow the public-private partnership to provide a net gain for the state, Capriglione said.
Most of the specifics of how the depository will work are being worked out at the comptroller’s office, and an official request for proposals is expected soon from the office.
So far, interested companies have shown varying ideas about the plan.
A ‘Fort Knox’ in Shiner?
Texas Precious Metals, based in the Central Texas town of Shiner, has a clear idea for the depository: a sprawling building in the beer-brewing town — or maybe elsewhere, possibly Austin.
Executives with the company, which is part of a diverse family-owned corporation that makes metal goods, including Ranch Hand grill guards and other items, say they want to expand their precious metal business to hold the state’s gold and precious metals of private citizens.
The members of the Kaspar family — along with Tarek Saab, the chief operating officer of Kaspar Companies and an alumnus of the NBC show “The Apprentice” — envisions a building that will be a monument to Texas with state-of-the-art security and some of the most secure vaults in the world.
The Shiner company is dedicated to the idea of storing gold. However, Saab said he recognizes the importance of the commerce portion of Capriglione’s plan.
“Our plan is to serve as an enabler,” Saab said. He said he can envision a partnership with other companies to make gold-based transactions more readily available to a broad array of consumers.
Hedge funds, banks, corporations and other financial institutions all would be able to engage in “unique financial transactions” if everything comes together for the depository, Saab said.
Brinks Global Services USA and Loomis International each have suggested using their existing vaults to store Texas’ gold.
John Humphrey, executive vice president of Texas-based Dillon Gage, one the companies that wants to be part of the depository, said he believes the law is specifically about storing gold.
But Humphrey said his company would ready and willing to jump into transacting in gold, if the state wants to both store and trade in gold.
“We are very bullish on a depository in the state of Texas,” said Humphrey, whose company is an international precious metals wholesaler.
‘Gold is money’
Anthem Blanchard, a recent Austin transplant and CEO of the precious metal trading company Anthem Vault, said he sees the Texas Bullion Depository concept differently than the Kaspars and the vault companies. He is more interested in the transaction side.
Blanchard said he wants Anthem Vault, which already contracts with existing vaults, to focus on trade in gold.
“Gold is money,” he said.
Blanchard would like to spearhead the transactional side of Capriglione’s plan by figuring out a way to allow consumers to possibly pay with a gold-backed debit card, he suggested.
Cliff Baltzley, co-founder and CEO of Austin-based Stash Crypto LLC, said he also would like to see consumers being able buy and sell goods and services with gold-backed cards. They could deal in ounces or grams or gold’s worth in dollars. He said he could envision people engaging in gold-based transactions from their desktop computers and smartphones.
“Gold is true and real money,” he said. “It’s important because it is system that is based on real money.”