On Friday, Texas Governor Greg Abbott approved a law creating the Texas Bullion Depository – the first state-level precious metals depository in the United States. The bill also calls for Texas to repatriate $1 billion of gold from the New York Federal Reserve back into the state. The law will go into effect immediately, though it is still unknown exactly where and when the Depository will be built.

In passing this law, Texas joins the ranks of major global economies that want to bring their gold home from New York. Germany, Austria, the Netherlands, and other European nations have already begun to repatriate gold from the New York Fed or have proposed to begin doing so.

In the midst of uncertain currency wars, countries want to bring this essential reserve asset back home in case of financial emergencies. Some analysts also see it as a sign of distrust of the Fed and an indication that the Fed may not hold as much bullion as it claims.

The Texas Bullion Depository will accept deposits from businesses, state government agencies, and – most importantly – individual citizens. Governor Abbott said that establishing this Depository means Texas will be, “increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for frees to store gold in facilities outside our state.”

However, the bill goes beyond that by laying the groundwork for transactions to occur in gold and silver. The bill includes the following language:

a depository account holder may transfer any portion of the balance of the holder’s depository account by check, draft, or digital electronic instruction to another depository account holder or to a person who at the time the transfer is initiated is not a depository account holder.”

That last clause is key — account holders in the Texas Bullion Depository may eventually be able to cut checks or even use debit cards to draw funds directly from their physical gold holdings.

The Tenth Amendment Center wrote an excellent article exploring the long-term repercussions of Texas’ historic law:

In short, a person will be able to deposit gold or silver – and pay other people through electronic means or checks – in sound money. Doing so has the potential to open the market to sounds money in day-to-day transactions.
By making gold and silver available for regular, daily transactions by the general public, the new law has the potential for wide-reaching effect. Professor William Greene is an expert on constitutional tender and said in a paper for the Mises Institute that when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.”