The Texas state legislature recently voted to repatriate all of the state's gold for reasons that we can all speculate on, but apparently they stopped there.
The legislature voted to bring their gold home, but they did not devise a plan for storing or managing it. And that's not all.
They legislature also didn't vote to pay for any of this.
The law doesn't say where the depository would be or how it should be built or secured. No funding was provided for those purposes or for leasing space elsewhere. Further complicating matters is a provision allowing ordinary people to check their own gold or silver bullion into the facility.
Ordinary people are not allowed into the gold vault at Fort Knox or other similar facilities, but apparently Joe Sixpack will be allowed to waltz into the Fort Knox of Texas.
What could go wrong?
One immediate concern is the possible cost. When Fort Knox was completed in 1936 it cost $560,000 — or roughly $9.2 million in today's dollars. When [state Rep. Giovanni Capriglione] first introduced his bill in 2013 it had an estimated cost of $23 million.
But Capriglione now thinks private companies would bid to create a depository in exchange for charging storage and service fees.
If the legislature did not appropriate funding to build or secure the Fort Knox of Texas, should we assume they also did not appropriate funds to pay a private company to store the state's gold?
What advantage is there in paying a private company to store the state's gold while it is currently stored in facilities that are safe, secure, and already paid for?
The Fed declined comment on the new Texas depository, as did HSBC bank, which currently stores the gold bars in an underground vault in Manhattan.
Stacked together, the state's gold occupies about 20 square feet. It's unclear whether repatriating it could be done with an electronic transfer or would require a fleet of planes or armored cars.
I assume the state legislature also did not allocate the funding necessary for physically transporting their gold bars.
It seems clear to me that no level of logistical prowess or legislative prudence will prevent this from being a deeply wasteful program that serves no practical purpose. In any event, state taxpayers will be asked to pay for a completely unnecessary relocation of the state's gold reserve.
Given that the state currently has no plan for storing, managing, or transporting the gold, it's doubtful they will be able to secure it before the agents of Operation Jade Helm emerge from their Wal-Mart tunnels and usurp control of Texas.