The Texas Bullion Depository, sold as a gold mine for taxpayers, could end up costing millions

When state lawmakers decided in 2015 that Texas needed to be the only state to have its own precious metals depository, supporters said there were plenty of reasons the project would be a gold mine. The University of Texas/Texas A&M Investment Management Co., which handles the schools’ endowment, owned hundreds of millions of dollars-worth of gold as an investment, stored for a fee in a New York City vault. A state-owned depository “will repatriate $1 billion of gold bullion from the Federal Reserve in New York to Texas,” Gov. Greg Abbott said. Citizens, too, were clamoring for an independent-minded location they could trust with their valuables. “When I first presented this, to be honest with you, we got hundreds and hundreds of people from all over the world, really, who wanted to be able to put their gold in something that has the Texas banner above it,” said Rep. Giovanni Capriglione, R-Southlake, the bill’s author. “This doesn’t work in Wisconsin, it doesn’t work in Idaho.” Best of all, because the state would find a private partner to build and own the physical depository, it would cost taxpayers nothing. The enterprise would even reap a big profit for Texas. “We estimate that we could raise tens of millions of dollars in fees,” Capriglione testified.

More than three years after the depository opened, none of those things has happened. Yet earlier this year state lawmakers quietly voted to let the state borrow millions of dollars to bail out a project created to fix a problem that didn’t exist, and which they had vowed would cost nothing. “It’s ridiculous,” said Sen. Kel Seliger, R-Amarillo, one of only two senators to oppose the bill. “I don’t think the State of Texas should be in the commercial real estate business, or the gold bullion business.” The UT/A&M investment company liquidated its gold more than a year ago without moving any bullion back to Texas. A spokeswoman said the agency currently owns no precious metals and so has no need for storage. No other state entity has metal at the Texas depository. In the time since state leaders created the Texas facility, two large private competing depositories have also opened, in Shiner and Dallas. Officials said Texas Bullion Depository is currently less than 10 percent full. Taxpayers, meanwhile, have yet to see a penny from the enterprise. Worse, the state’s partner, Lone Star Tangible Assets, recently revealed it is looking to sell the new facility, placing the state at risk of losing control of the entire enterprise. In response, two months ago legislators gave Comptroller Glenn Hegar permission to borrow up to $20 million to buy it.