This is a story about an elephant. A metal, metaphorical elephant that for two weeks grazed beside a dual highway next to the Pacific Ocean in an upscale neighbourhood of Los Angeles. It was created last month by Banksy, the elusive British street artist. And in a few short weeks, it has sparked fierce debate about such diverse topics as greed, homelessness, wealth, poverty, the genius of the man who made it and the sheer, unbridled insanity of the contemporary art market he (sort of) inhabits.

(3 February 2012: The most expensive wall painting ever?)

But first: that elephant. On the morning of 22 February, commuters driving along the Pacific Coast Highway that links LA's coastal suburbs of Santa Monica and Malibu noticed something unfamiliar. A derelict water tank, which had been sitting on a patch of wasteland for as long as anyone could remember, was jollified by a message stencilled in black paint. It said: "This looks a bit like an elephant."

Download the new Independent Premium app Sharing the full story, not just the headlines

A few hours later, photographs of the water tank appeared on the internet site www.banksy.co.uk. This is the forum through which the world's best-known graffiti artist showcases and authenticates his work. Fans, who already knew that Banksy was in town for the Oscars – his film Exit Through the Gift Shop was nominated for Best Documentary – began visiting the location, which swiftly became a minor tourist attraction. And most people agreed that in a strange way, it did look a bit like an elephant.

But in the fleeting world of street art, nothing lasts forever. On 3 March a group of workers with a large crane arrived at the scene. They severed the tank from its foundations, loaded it on the back of a lorry and disappeared. Since then, its fate has been shrouded in mystery. The piece has been offered for sale, anonymously, on the internet site www.banksyelephant.com. But its exact location, the identity of the new "owners" and their motives have remained unknown.

Until today. An investigation by The Independent has revealed that the so-called Banksy Elephant is located at a secure warehouse close to the San Fernando Valley. It is the property of an organisation called Mint Currency, whose four partners (three men and a woman) are hoping to find a buyer who will pay tens, if not hundreds, of thousands of dollars for it. The canny and (some say) underhanded manner in which they acquired the piece may spark a lawsuit.

Further inquiries show that the water tank has an extraordinary history stretching back almost two decades. For most of the past seven years, it has actually been someone's home, occupied by a vagrant called Tachowa Covington, who turned the interior into a comfortably furnished abode, complete with carpets, a stove and a television. He became so well-established that the US postal service began delivering mail to him, at the address 15145 Pacific Coast Highway.

In recent years, Mr Covington was the subject of two obscure documentaries, Something from Nothing, and Tachowa 2010. They are airing on YouTube and some Banksy enthusiasts now believe that the artist came up with the "this looks a bit like an elephant" slogan after watching them. "The Banksy Elephant", they believe, represents not just a one-trick punchline, but an ingenious bit of left-leaning political commentary.

"There's a real message behind this piece," Tavia D, one of the partners in Mint Currency, says. "It's about homelessness, and it's saying that homelessness is an elephant in the room."

Banksy has often used the large animal to represent poverty. At the opening of his Barely Legal exhibition in 2006, a live elephant was standing in the middle of the gallery. Visitors were handed a card telling them that there was "an elephant in the room, a problem we never talk about". It added that billions are living below the poverty line. Could the water tank be making a similar point?

Ms D believes so. As do her business partners Christian Anthony, who runs a design firm, and Jorge Fernandez and Steve Gallion, who have day jobs at a waste-disposal company called Waste Stream Solutions. In an interview, she said the message adds to the piece's significance, making it more important than ever that they ensure it is preserved for posterity.

Daily coronavirus briefing No hype, just the advice and analysis you need Enter your email address Continue Continue Please enter an email address Email address is invalid Fill out this field Email address is invalid Email already exists. Log in to update your newsletter preferences Register with your social account or click here to log in I would like to receive morning headlines Monday - Friday plus breaking news alerts by email Update newsletter preferences

"If you read some of the street-art blogs, people are saying that whoever removed the piece is just out to make money," she said. "But that's not true. We love art and did this because want to preserve it and inspire others with it. Ultimately, we want to see the elephant exhibited where it can inspire people, so we hope it goes to a gallery. This is actually a rescue mission." Ms D says that a portion of any profit from the elephant's sale (she estimated roughly 20 per cent) would go to a homeless organisation which would help provide permanent accommodation for its former resident.

And she fiercely denied rumours that her organisation had left Mr Covington without a home when they came to remove the water tank on 3 March.

"People who do not know the real story are saying that we evicted this man. It's just not true. He's not lived there since September. In fact, he came down to see us when we were there moving the tank, and told us that he was now living in a cave in the canyon just above it. We now want to find a way to provide some temporary housing for the guy, to get him on his feet again."

Regardless of what now transpires, it was a strange course of events which originally allowed Mr Covington to take up residence at 15145 Pacific Coast Highway, a scenic site close to some of America's priciest pieces of real estate. The water tank that became his home was originally installed in the early 1990s, when Los Angeles hired Calex to turn the area known as Portrero Canyon into a park.

After almost a decade of landscape work, during which water from the tank was sprayed on the site to prevent dust from billowing into nearby properties, the city ran out of money to complete the project. In 2004, Calex duly decided to abandon its site. Since the firm appears to have not paid a fee to properly clean up the mess it had created, it left the water tank behind.

Mr Covington moved in shortly afterwards. An eccentric individual, he took to parading around the area in a golden crown, declaring himself the "King" of Portrero Canyon. Rules were posted on signs, forbidding other homeless people from staying in the area for more than 24 hours. The tank was filled with salvaged artwork and furniture. On summer evenings, he would barbecue sausages outdoors.

Naturally, Mr Covington's lifestyle met with a stern reaction from neighbours in nearby Pacific Palisades, which is home to some of America's wealthiest Nimbys. In 2005, a local residents' association, together with the council, began campaigning for his removal. But since the water tank remained the legal property of Calex, the City of Los Angeles said it was powerless to intervene.

In September last year, Mr Covington's home was destroyed in a mysterious fire, said to have been started by another homeless man. Shortly afterwards, he moved to his current residence, in a nearby cave.

But the water tank remained on site. The irony of the eyesore finally being removed thanks to Banksy's act of vandalism is not lost on locals. "I've been trying to get that piece of junk removed for seven years," Stuart Muller, a local council member, told The Independent.

"The funny thing is that a piece of junk was suddenly turned into a valuable thing, overnight, because of this guy Banksy.

"Art has solved a problem. It's a great story. In fact, I'm now a big fan of his work. He's a very clever and funny man."

One group of people that is not laughing at recent events is the management of Calex. It was apparently unaware that the water tank had been turned into a hugely valuable artwork when it agreed to sell it to Mint Currency, for a relative pittance.

The firm did not respond to The Independent's inquiries about the sale, but is now understood to be investigating the possibility of suing to regain possession of the elephant.

Other dark theories about the elephant are also doing the rounds. Some Banksy experts wonder if he was asked to put his stencilled slogan on the water tank by a local. "Whatever he puts his name to is highly likely to be removed," Greg Linton, who runs the Melrose & Fairfax street-art blog.

"So I wouldn't mind finding out if one of the people who financed Exit Through the Gift Shop lives in the Palisades. They could have asked him to do the piece as a favour, so the tank would disappear."

Meanwhile, others wonder if such speculation credits Banksy with more intelligence than he deserves. "I'm a huge fan, but when Banksy does political stuff, he normally makes the message pretty obvious," Sebastian Buck, who runs the website Unurth, says.

"If this piece is indeed a comment on homelessness, then it's quite a hidden one. The art world will always look for layers of meaning. But sometimes, you have to remember that Banksy just likes to crack a joke."

Banksy's hot properties

Sunset Boulevard, LA

The Bristol-born artist caused excitement across the pond when his artworks started popping up around Los Angeles last month. However, not everyone was a fan. One of his pieces depicting Mickey Mouse on a risque billboard was removed by local authorities a day after it first appeared, despite owners of a nearby petrol station offering $10,000 for it. It was not carefully preserved. The workers who removed the artwork reportedly screwed it up into a ball before loading it on to a truck.

Paddington, London

A mural of a rat bouncing a ball under a 'No Ball Games' sign was one of Banksy's earliest pieces, and a much-loved feature of a wall in Gloucester Gardens in Paddington, London. Or it was, until thieves used an angle grinderto cut out the area of wall and sell it on eBay for £20,000.

Local resident Marion Lau-Mackaay said: "My six-year-old son loved it so much he did a painting of it after he heard it had gone and sent it to Banksy with a letter saying 'I hope this makes you feel better'.

The Whitehouse pub, Liverpool

A 20 foot tall mural of a rat brandishing a gun, which was stencilled on to the side of a derelict Georgian pub in Liverpool's Chinatown district, was initially covered up because it was regarded as an eyesore by local authorities. But the Banksy artwork was soon uncovered when a local estate agent declared that it could more than double the pub's original value, taking the asking price from £495,000to £1million for the Grade II listed building.