AUSTIN, Texas (Nov. 25, 2024) – A bill filed in the Texas House would require the state to hold precious metal reserves. This would create a foundation for the Lone Star State to achieve more financial independence and take a small step toward undermining the Federal Reserve’s monopoly on money.
Rep. Mark Dorazio filed House Bill 1062 (HB1062). The proposed law would require the state comptroller to purchase $4 billion in gold bullion and $1 billion in silver bullion during the biennium beginning Sept. 1, 2024, and appropriate funds for the purchase. The gold and silver would be held in the Texas Bullion Depository.
Holding funds in gold and silver would protect the state’s cash reserves from the ravages of inflation caused by the rapidly depreciating value of Federal Reserve notes. Since 2020, the purchasing power of the dollar has dropped by nearly 20 percent. In that same period, the price of both gold and silver skyrocketed, reflecting the devaluation of the dollar.
Adding gold and silver in reserve could also create a pathway for Texas to maintain financial independence should the U.S. dollar collapse, a very real possibility as the world moves away from the greenback as its reserve currency.
In fact, central banks around the world have been buying gold to limit their dependence on the U.S. dollar. According to the World Gold Council (WGC), central banks’ net gold purchases totaled 1,037 tons in 2023. It was the second straight year central banks around the world added more than 1,000 tons to their total reserves. According to the WGC, there are two main drivers behind central bank gold buying — its performance during times of crisis and its role as a long-term store of value.
It’s hardly surprising then that in a year scarred by geopolitical uncertainty and rampant inflation, central banks opted to continue adding gold to their coffers and at an accelerated pace.”
These factors are as relevant to Texas as they are to any country.
When Texas opened its gold depository in 2018, University of Houston political science professor Brandon Rottinghaus made a similar point.
“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”
Tennessee authorized gold and silver reserves in 2023 and Utah did the same during the last legislative session.
BACKGROUND
The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” But currently, most debts and taxes in most states are either paid with Federal Reserve Notes (dollars) authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.
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