Since gold does not entail credit or counterparty risks, it serves as a source of trust in a country and in all economic environments, making it one of the most important reserve assets in the world, along with government bonds. A second reason why central banks hold gold is to balance their portfolios. For example, Asian central banks have enormous reserves in assets denominated in dollars. If the value of the dollar falls, the value of its reserves falls along with it.
It's best to diversify by distributing your reserves among other assets. Gold has been the preferred asset of central bankers as an alternative to the dollar and today, when the dollar falls, gold tends to rise. The Federal Reserve does not own gold. Government Gold Reserve A program of the Office of the Tax Service This A-Z index lists all the content of the Tax Service.
The gold reserve held by the Department of the Treasury is partially offset by the obligation of gold certificates issued to Federal Reserve banks at the legal rate, which the Treasury can exchange at any time. Recent changes in political climates and economies, both in the U.S. UU. And abroad, they have made many investors uncomfortable.
Some are making investments in precious metals, hoping that they can maintain or increase their value during times of uncertainty. And the Texans who do so are looking for a secure, nearby facility to store these assets. The timing of the Texas bullion deposit couldn't be better. Humans have sought and preserved precious metals since ancient times, appreciating gold in particular for its beauty and its immutable character, since it does not rust or corrode.
Archaeologists believe that gold has been used in jewelry for at least 8,000 years, while the oldest known gold coins date from around 600 BC. C. According to the World Gold Council, mankind has mined no more than 175,000 metric tons (about 193,000 United States tons). Tons) of the Earth since the beginning of civilization.
The US dollar, like all modern currencies, is no longer backed by gold, but the metal continues to play an important role in international finance as a means of supporting transactions between nations and affecting currency exchange rates. It is the largest holder of gold reserves in the world, with almost 8,134 metric tons of this shiny metal (Annex. But of course, companies and individuals also hold gold and other precious metals. And that's where the Texas Bullion Depository comes in.
Then, a two-year process began for a team of Comptroller employees who recorded countless hours of research, developed and executed a Request for Proposals (RFP), and then evaluated proposals from six companies that responded before selecting a finalist. The results of the RFP process were revealed two days later. Comptroller Hegar announced that Austin-based Lone Star Tangible Assets (LSTA), a firm that stores and markets precious metals, would operate the Texas ingot deposit. The initial contract with LSTA is for five years, with two one-year extension options.
Tom Smelker, director of the Treasury Operations Division of the Texas Comptroller's Office Other countries, such as Germany, Austria and the Netherlands, have recently repatriated large parts of their gold reserves from foreign banks, due in part to a decline in their confidence in the value of the euro. The shift to solid assets has created something of a boom in vault construction in Europe, as savers buy gold and need places to store it safely. So what are the advantages of having a depositary in Texas? Smelker says that state legislators considered that individuals and businesses, both inside and outside of Texas, deserved an alternative to warehouses located primarily in and around New York City, and supported the creation of a safe and fully insured storage facility for precious metals in our state. UTIMCO could be a depositary customer from Texas, but it has imposed two conditions to bring its shares to Texas.
First, storing gold in Texas should not cost more than in New York; and second, the depositary must be a member of COMEX, a metal exchange with standards that guarantee the quality of all gold transferred between accounts. However, used by merchants around the world, COMEX currently licenses eight vault installations, all within a 150-mile radius of New York City. The London Bullion Market Association is similar to the COMEX and generally manages more international transactions. There is also the smallest International Commodity Exchange in the U.S.
. Smelker adds that the absence of a COMEX membership should not be a stumbling block. Who could form the customer base of the Texas Depositary? And it's not just high-powered investors who could use the depositary. However, as envisaged, the existing facility is only an interim measure.
The company is exploring locations in the Austin area to build a new, purpose-built 35,000 to 75,000 square foot facility. Once these phases are completed, the depositary expects to include advanced offers, such as storage for international customers, including foreign governments. Stay up to date on the progress of the Texas bullion deposit on their website. The gold reserve held by the Treasury Department is partially offset by the obligation for gold certificates issued to Federal Reserve banks at the legal rate, which the Treasury can exchange at any time.
The Treasury Annual Report provides information on gold and gold certificates in the table United States Central Summary: United States General Ledger Account Balances. Table 3.13 indicates the book value of gold deposited with the Federal Reserve Bank of New York for foreign and international accounts charged for specific purposes. A year ago, when news broke in the market that Cyprus may be forced to sell its gold reserves to deal with the debt crisis, world gold prices plummeted. The Gold Reserve Act of 1934 required that the Federal Reserve System transfer ownership of all of its gold to the Department of the Treasury.