Texas is a gold-digger.
Governor Greg Abbott signed a bill today that would bring its physical gold holdings – around 4,000 gold bars – stored beneath a bank in Manhattan back home to Texas. It’s not clear where the gold will be stored once they make it to the Lone Star state, and the repatriation of gold bars isn’t something that other states have tried before.
Brian Murphy, history professor at Baruch College City University of New York who writes about the intersection of money and politics, says the advantage of such a move would be if the financial system in the U.S. were vulnerable to some kind of collapse. Or if paper money printed out by the federal reserve bank were to suddenly lose its value.
“There are advantages in holding physical gold in that kind of apocalyptic scenario,” he says. “Owning physical gold for an entity that isn’t a bank or a sovereign state is a pretty unusual thing to have in a portfolio.”
Storing gold isn’t necessarily easy: Setting up a Fort Knox of Texas would cost the state roughly $14 million. The federal reserve bank in New York has a decades-old system for dealing with gold. The place currently holding Texas’ gold bars is a building that was built to have a bault in it, and it’s a bank that holds deposit accounts for a lot of different clients.
“There are good rational reasons to own gold in the portfolio,” says Murphy. “But to have a fund like that buy physical gold bars and then talk about it in this kind of repatriation term and toss around this anti-fed stuff, then we start to dip our toes pretty well into a pot of crazy.”
