Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Seeker Weekly Wrap-Up: Gold and Silver Gain Over 1% and 2% on the Week
By: Chris Mullen, Gold Seeker Report

Ira Epstein's Metals Video 11 17 2017
By: Ira Epstein

Next-Generation Crazy: The Fed Plans For The Coming Recession
By: John Rubino

COT Gold, Silver and US Dollar Index Report - November 17, 2017
By: GoldSeek.com

Gold Miners’ Q3’17 Fundamentals
By: Adam Hamilton, CPA

Bonfire of the Absurdities
By: John Mauldin

The Social Security Inflation Lag Calendar - Partial Indexing Part 1
By: Daniel R. Amerman, CFA

Rob From The Middle Class Economics
By: Gary Christenson

GoldSeek Radio Nugget: John Williams and Chris Waltzek
By: radio.GoldSeek.com

The Metals Market Is A Mess And Will Likely Continue To Frustrate You
By: Avi Gilburt

 
Search

GoldSeek Web

 
Texas Gives Wall Street Bankers the Gold Finger


 -- Published: Monday, 15 June 2015 | Print  | Disqus 

By Clint Siegner

 

When Governor Greg Abbott signed House Bill Number 483 in his own hand this past Friday, Texas gave Wall Street a big gold “finger” and will soon bring $1 billion in gold bars back to the Lone Star State.

 

The University of Texas made headlines in 2010 by adding more than $500 million in gold to their endowment. The decision to plough half a billion dollars into gold was only the first chapter of the story. Perhaps the bigger news was the choice not to simply buy shares in a gold ETF or gold futures contracts. Custodians decided to buy physical bars instead – signaling a distinct lack of faith in paper gold.

 

Like most gold investors, they have seen very little to inspire confidence since. In fact, those with the fiduciary responsibility for managing the Texas gold are feeling less certain than ever. That’s why they convinced state officials to build a depository and move the gold bars home from Wall Street. Texas joins Germany, Venezuela, the Netherlands, and other governments that have lost trust in New York depositories for safeguarding their metal.

 

Who could blame them?

 

Gov. Abbott indicated on Friday in his signing statement that some of the Lone Star State’s gold is actually in the grubby hands of the New York Fed itself. And HSBC, the bank reported to be storing some of the gold, has been the subject of criminal investigations and lawsuits.

 

HSBC’s suspected activities range from manipulation of metals and currency markets to rigging LIBOR interest rates. And the bank avoided prosecution for laundering Mexican drug cartel money in 2012 by paying nearly $2 billion in fines instead.

 

Texas could have chosen to store with another bank. The problem is the alternatives aren’t much better. Virtually all of the major Wall Street banks appear to be engaged in some pretty unsavory activity – including ripping off their own customers. In recent years, banks have paid nearly $200 billion in fines.

 

Federal regulators and prosecutors may be investigating and levying some fines, but they aren’t planning to send a single one of the traders or executives implicated in these scandals to prison. That also weighs heavily on confidence. No one who is paying attention, including officials in Texas, should expect the Federal government to enforce the rule of law or property rights when it comes to the financial sector.

 

Investors tangled up with MF Global learned that lesson the hard way. The Federal bankruptcy trustee in charge froze all assets, including gold and silver bars stored in COMEX depositories – like HSBC’s. The owners of the bars had warehouse receipts proving they held title, but that didn’t prevent the trustee from liquidating their metal and putting them at the back of the line with the rest of the unsecured creditors.

 

You can be sure the Federal government’s own sorry history of confiscating gold and outlawing gold ownership was also a factor in the Texas decision. It is easy to imagine Federal officials and Wall Street banks cooperating to seize customer metal stored in New York depositories. It’s a lot harder to imagine Texas officials cooperating should the Feds lay claim to metal stored by a state-owned depository inside the Lone Star State.

 

The building location for the Texas depository is yet to be determined, and there is no word yet as to how long construction will take. Given the uncertainty over timing, it will be harder to gauge any reaction the metals markets have to the news. If other states or large organizations follow Texas’s lead it would likely be positive for prices, as demand for physical gold outside of the banking system rises.

 

The story will bear close watching as HSBC and the New York Fed prepare for Texas to take actual delivery down the road. Texas’ gold holdings are reported to now total $1 billion in value. If those gold bars have been surreptitiously leased out, pledged, hypothecated or even sold, then we could see a major scramble when the time comes.

 

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group.

 


| Digg This Article
 -- Published: Monday, 15 June 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.