Weighing The Future Of Oklahoma's Proposed State-Operated Bullion Depository

In Oklahoma, a fascinating development is underway as lawmakers consider establishing a state-operated bullion depository. This concept, reminiscent of the famed Fort Knox, aims to store gold and silver bullion. While it may not be a widespread dream for every Oklahoman, recent surveys indicate a significant interest in gold and silver ownership, with 10% to 12% of American adults owning these precious metals.

Legislative Proposals and National Trends

Two bills have been introduced in Oklahoma's upcoming legislative session to establish such a depository: Senate Bill 1351 by Sen. David Bullard and SB 1507 by Sen. Shane Jett. These bills align with a broader trend in conservative states exploring state-owned bullion depositories. However, similar bills in the past have seen little success, though there's a growing national push for states to enter the bullion business.

Bullion as a Safe Investment

Bullion, often in the form of gold or silver, is a high-purity precious metal stored as bars, ingots, or coins. It's a safe, long-term investment, gaining popularity during periods of high inflation and economic uncertainty.

Innovative Features of the Proposed Depository

A novel aspect of the proposed depository is allowing account owners to spend against their deposits, akin to a cashless bank or digital currency system. Sen. Bullard, despite not owning any bullion himself, believes that a state depository could boost investment in Oklahoma.

Details of the Bills

Bullard's bill requires the state treasurer to manage the depository, which would accept various precious metals, including platinum and palladium. Jett's bill suggests that the state keeps 10% of its assets in gold and silver. Unlike conventional trading platforms, these depositories would not engage in commodity or derivative trading.

Comparisons and Lessons from Texas

Texas set a precedent almost a decade ago by establishing a state bullion depository. However, it faced challenges, particularly regarding commodity exchange rules, leading to selling the bullion instead of transferring it. This example raises questions about the viability and success of such depositories.

Economic Implications and Debates

The debate over fiat currency versus commodity-backed currency is complex, with economists highlighting the historical prevalence of economic panics and bank failures under the gold and bimetal systems. Advocates of a bullion-backed system argue against the free-market interference of untethered currency. The proposed Oklahoma depository finds support among those favoring reduced federal government influence in monetary policy.

Tax Implications and Ongoing Discussions

Oklahoma exempted gold and silver bullion trades from state sales tax a decade ago, now subject to capital gains laws. The utilization of a depository debit card for transactions introduces new complexities in tax legislation, which are yet to be resolved.

Conclusion

As Oklahoma navigates the practical and philosophical arguments surrounding this initiative, the future of the proposed gold and silver depository remains a topic of keen interest and debate. The outcome will not only impact the state's economic landscape but also contribute to the ongoing national discourse on the role of precious metals in the economy.

By: Michael Figueroa