U.S. Gold Bureau’s Parent Company to Operate Texas Bullion Depository

 For those unaware, I write occasional articles for Austin, Texasbased precious metals dealer, U.S. Gold Bureau, one of the largest such operations in the USA.  For non-US-based readers of this column the site – usgoldbureau.com  – has blocked access from non US ISPs as the company does not do business outside its home country – that is unless you use something like the Tor Browser (www.torbrowser.com ), which can be set up to make it appear you are based almost anywhere in the world, including the U.S.  While this saves U.S. Gold Bureau from the necessity of responding to queries from people it cannot do business with, it also means that people not located in the USA are also unable to access some interesting market commentary and articles on precious metals published on  the usgoldbureau site.

For this reason I am including this article, with permission, from usgoldbureau.com on the setting up of the Texas Bullion Depository – as the article notes the world’s first state (as opposed to country)-administered bullion depository which is to be run by U.S. Gold Bureau’s parent company, Lone Star Tangible Assets.  US-based readers of lawrieongold.com will, of course, be able to go directly to the usgoldbureau.com website and read it, and the other market commentary which appears on the site, directly.

The article on the Texas Bullion Depository follows:

Texas Comptroller Glenn Hegar has announced the selection of Lone Star Tangible Assets (LSTA) as the vendor that will partner with the Comptroller’s office to build and operate the Texas Bullion Depository – one of the first ever state-administered gold bullion depositories in the world (It has been pointed out to me that the Perth Mint in Western Autralia has a state-owned Gold Depository – Editor). LSTA is the parent company of the U.S. Gold Bureau, one of the nation’s leading tangible assets education and investment firms.

“Lone Star Tangible Assets brings the right combination of experience, financial stability and infrastructure necessary to make this depository a success,” said Hegar. “LSTA had a comprehensive vision for a safe and secure vaulting facility … and they addressed a lot of concerns we had relating to everything from transportation and security to customer service and IT infrastructure.”

Representatives from LSTA and the U.S. Gold Bureau were on hand at the announcement that took place at the Texas Capitol Building to provide more detail regarding existing facilities as well as next steps in the process. LSTA and the U.S. Gold Bureau are based in Texas and have been in the business of buying and selling precious metals since 2008. Their current vault facility is a highest rated Class 3 vault and will serve as the initial location for the depository as the company works to build a new vault facility for the Texas Bullion Depository.

“This is a great moment in the history of our state,” said Hegar. “The Texas Bullion Depository will be yet another example of why Texas is the greatest state in the nation and a leader when it comes to economic innovations. People will be able to sleep at night knowing the State of Texas is protecting their gold.”

“Lone Star Tangible Assets is honored and proud to have been selected for this incredible opportunity,” said Matt Ferris, chairman of LSTA and U.S. Gold Bureau. “We have already developed a fantastic collaborative relationship with the Comptroller’s office and we look forward to working with Comptroller Hegar and his staff as we make history together.”

The Comptroller’s office will provide ongoing oversight of the project to build out the depository and prepare for the opening. The Comptroller’s Criminal Investigation Division (CID) has already performed inspections of existing facilities and physical security measures, while the Information Technology and Information Security Divisions examined proposed software and digital security systems.

“Oh they were very thorough,” added Ferris. “But I think everyone involved in this process wants it to be done right rather than done fast. When you are asking people to trust you with their literal treasure, you need to make sure you’ve done your homework.”

The U.S. Gold Bureau and usgoldbureau.com will continue to operate as they have and will eventually offer secure metals storage at the Texas Bullion Depository, once the facility opens and the necessary details are worked through

 

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Credit Suisse on gold and gold equities. Decidedly bullish for a bank

Bank analysts tend to blow with the wind.  Not so long ago almost any bank you could care to name was predicting dire things for the gold price this year.  Now, three months into 2016 with gold up around 15%, most of the banks are falling over themselves to, at the very least, recant on last year’s year-end projections and see better price averages over the current year.

Swiss bank, Credit Suisse, was admittedly one which was not quite as bearish on gold in its research published mid-December last year but now, in bank terms, it has turned decidedly bullish seeing more price upside ahead.  In its latest analysis it sees gold reaching $1,300+ on continuing gold ETF buying and the perceived beginnings of a downturn in new mined supply. (We suspect however that any downturn this year won’t make any appreciable difference to supply/demand fundamentals, but might have an impact on perception, which is perhaps the most important factor of all in any positive gold price movement.)

Overall Credit Suisse has raised its average price forecast for the year by 10% to $1,270 per ounce and by 12% for 2017 to $1,313 an ounce.  For a conservative bank this year’s forecast is actually a pretty strong one given that gold has only so far briefly touched this level on the spot market and the average price to date is only around $1,180 an ounce with three strong months already behind us.  To reach the $1,270 average suggests that gold will likely have to sit in the $1,250-$1,350 range for most of the rest of the year, perhaps spiking higher at its peaks – maybe a tall order given the summer doldrums lie ahead.  But there’s little doubt gold has regained a certain amount of momentum this year, but can this continue?

(Interestingly fellow Swiss Bank, UBS, is not nearly so positive on gold this year.  Its prediction is for an average gold price for the year of only $1,225 which suggests no significant upwards price moves of any longevity lie ahead in the opinions of its analysts.)

Back to Credit Suisse though.  It points out that the combination of declining real interest rates, the Fed’s rate hike deferral, a weaker US dollar, and safe haven demand drove ETF holdings 9.9 million ounces (over 300 tonnes)  higher in Q1, from 47 million ounces to 56.9 million ounces, while the gold price rose from $1,054/ounce to peak at $1,272/ounce.  It doesn’t believe a return to the early year $1,150/ounce level is likely.  It also looks for continuing central bank purchases on the grounds that they have as good a reason as ever to diversify into fungible assets whose value cannot be printed away by other central banks.  This doesn’t seem to recognise, though, that the only central banks that really seem to be buying gold on any kind of regular basis so far are those of Russia, China and Kazakhstan, which represents a fairly small universe.  Whether others are in the process of following suite is certainly not apparent as yet.

On gold ETFs the Credit Suisse analysts feel that buying will continue given the imposition of negative and/or near zero interest rates which makes bonds no longer attractive and gold a potentially safer option.  One of the biggest arguments that the anti-gold proponents use is that it pays no interest.  But no interest in a relatively safe asset is better than paying banks to hold your cash!

On silver the bank is rather less positive in its opinion, obviously not believing in silver’s historical performance vis-a-vis gold where it usually rises at a faster rate in a rising precious metals price environment.  Indeed it reckons the gold:silver ratio could again rise, retesting recent highs, due to what it sees as stronger fundamentals in gold, lack of major drivers in silver fundamentals and a heightened geopolitical risk scenario which it feels favours gold over silver.  Silver, though tends to confound so that might be considered a risky prediction! In fact though, with a predicted average silver price for the year of $16.26, this represents a higher percentage increase over the current silver price in absolute terms than the predicted gold price average over and above the current gold price!

On gold equities, despite a 60% rise in gold stocks in Q1 it feels there is still upside ahead.  It points out that it has highlighted in its recent past research (July 2014 and Dec. 2015), that companies have spent three years reducing costs and are positioned for a period of margin expansion with a flat or rising gold price. It also points out that silver equities have rallied too – up 48% in Q1 and believes these will also trend higher over the year along with the silver price, but still underperform gold equities – much  in line with its metal price predictions.