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Guest Post: The Chess Game Of Capital Controls
Submitted by Jeff Clark of Casey Research,
The best indicator of a chess player's form is his ability to sense the climax of the game.
–Boris Spassky, World Chess Champion, 1969-1972
You've likely heard that the German central bank announced it will begin withdrawing part of its massive gold holdings from the United States as well as all its holdings from France. By 2020, Bundesbank says it wants half its gold reserves stored in its own vault in Germany.
Why would it want to physically move the metal from New York? It's not as if US vaults are not secure, and since Germany already owns the gold, does it really matter where it sits?
You may recall that Hugo Chávez did the same thing in late 2011, repatriating much of his country's gold reserves from London. However, this isn't a third-world dictatorship; Germany is a major ally of the US. So what's going on?
Pawn to A3
On the surface, it may seem innocuous for Germany to move some pallets of gold closer to home. Some observers note that since Russia isn't likely to be invading Germany anytime soon – one of the original reasons Germany had for storing its gold outside the country – the move is only natural and no big deal. But Germany's gold stash represents roughly 10% of the world's gold reserves, and the cost of moving it is not trivial, so we see greater import in the move.
The Bundesbank said the purpose of the move was to "build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold-trading centers abroad within a short space of time." It's just satisfying the worries of the commoners, in the mainstream view, as well as giving themselves the ability to complete transactions faster. As evidence that it's nothing more than this, Bundesbank points out that half of Germany's gold will remain in New York and London (the US portion of reserves will only be reduced from 45% to 37%).
Sounds reasonable. But these economists remind me of the analysts who every year claim the price of gold will fall – they can't see the bigger implications and frequently miss the forest for the trees.
Check
What your friendly government economist doesn't reveal and the mainstream journalist doesn't report (or doesn't understand) is that in the event of a US bankruptcy, euro implosion, or similar financial catastrophe, access to gold would almost certainly be limited. If Germany were to actually need its gold, regardless of the reason, any request for transfer or sale would be… difficult. There would be, at the very least, delays. At worst such requests could be denied, depending on the circumstances at the time. That's not just bad – it defeats the purpose of owning gold.
But this still doesn't capture the greater significance of this action. First, it reinforces the growing recognition that gold is money. Physical bullion isn't just a commodity, a day-trading vehicle, or even an investment. It's a store of value, a physical hedge against monetary dislocations. In the ultimate extreme, it's something you can use to pay for goods or services when all other means fail. It is precisely those who don't recognize this historical fact who stand to lose the most in an adverse monetary event. (Hello, government economist.)
Second, here's the quote that reveals the ultimate, backstop reason for the move: Bundesbank stated it is a "pre-emptive" measure "in case of a currency crisis."
Germany's central bank thinks a currency crisis is really possible. That's a very sobering fact.
We agree, of course: history is very clear on this. No fiat currency has lasted forever. Eventually they all fail. Whether the dollar goes to zero or merely becomes a second-class currency in the global arena, the root cause for failure is universal and inevitable: continual and perpetual dilution of the currency.
Some level of currency crisis is inescapable at this point because absolutely nothing has changed with worldwide debt levels, deficit spending, and currency printing, except that they all continue to increase. While many economists and politicians claim these actions are necessary and are leading us to recovery, it's clear we have yet to experience the fallout from spending more than we have and printing the difference. There will be serious and painful consequences, sooner or later of an inflationary nature, and the average person's standard of living will be greatly reduced.
And now there are rumblings that the Netherlands and Azerbaijan may move their gold back home. If this trend gathers steam, we could easily see a "gold run" in the same manner history has seen bank runs. Add in high inflation or a major currency event and a very ugly vicious cycle could ignite.
Checkmate
If other countries follow Germany's path or the mistrust between central bankers grows, the next logical step would be to clamp down on gold exports. It would be the beginning of the kind of stringent capital controls Doug Casey and a few others have warned about for years. Think about it: is it really so far-fetched to think politicians wouldn't somehow restrict the movement of gold if their currencies and/or economies were failing?
Remember, India keeps tinkering with ideas like this already.
What this means for you and me is that moving gold outside your country – especially if you're a US citizen – could be banned. Fuel would be added to the fire by blaming gold for the dollar's ongoing weakness. Don't think you need to store gold outside your country? The metal you attempt to buy, sell, or trade within your borders could be severely regulated, taxed, tracked, or even frozen in such a crisis environment. You'd have easier access to foreign-held bullion, depending on the country and the specific events.
None of this would take place in a vacuum. Transferring dollars internationally would certainly be tightly restricted as well. Moving almost any asset across borders could be declared illegal. Even your movement outside your country could come under increased scrutiny and restriction.
The hint that all this is about to take place would be when politicians publicly declare they would do no such a thing. You could quite literally have 24 hours to make a move. If your resources were not already in place, even the most nimble of us would have a very hard time making arrangements.
Once the door is closed, attempting to move restricted assets across international borders would come with serious penalties, almost certainly including jail time. In such a tense atmosphere, you could easily be labeled an enemy of the state just for trying to remove yourself from harm's way.
The message is clear: storing some gold outside your country of residence is critical at this point, and the window of time for doing so is getting smaller. Don't just hope for the best; do something about it while you still can. The minor effort made now could pay major dividends in the future. Besides, you won't be any worse off for having some precious metals stored elsewhere.
If you're moved to take action, know that you're not alone. It's critical that you take these first steps now, while you still can.
The best chess players in the world aren't that way because they can see the next move. They're champions because they can see the next 14 moves.
You only have to see the next two moves to "win" this game. I suggest making those moves now before your government declares checkmate.
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True that. de facto Capital controls. I've been around and around on this issue with the "Dept of Russian We Did Not Learn Anything Yet" over the last decade. There is no way in Hell I would be let out the USSA with my metallurgical assets or into any country without declaration. Fuck that. I would rather stay on my own turf anyway.
There is also always the chance that there might be one ZH'er out of every 100,000 douchebags.
Exactly.
I was looking into assets expatriation legal adviser and some sort of valuables logistics and transportation company.
I came to the conclusion that the best way is to sell - transfer the money and buy back.
+1 It's either that or stay and fight the fucks here on our mud. I'm sort of an ornery cuss on monetary issues but I think I am fair and am willing to admit when I am wrong. Sometimes it just boils down to what one is up against. I am up against the central banks and I ain't backing down. What the fuck? I never "elected" any of those assholes who approved the 1913 Federal Reserve Act. I entered no contract with anyone at birth.
I will stay and fight it out one fucking silver dime at a time if that is the way it needs to be resolved. And if I die, then I have a young son who will eventually know what the fuck is going on after he smashes up a couple of my cars. Got a little ways to go on that yet. :-/
One silver dime at a time.
Spot on, molon labe...
Use 20 foot cargo container http://www.cargo-experts.net/Shipping-to-Australia.aspx
I've done it. You carry it with you on your overseas flight. You just need to fill out the one page US Customs form declaring you are taking out 10,000 US dollars or more with you. That is the easy part. The difficult part is having a safe place to put it in a country that will always be safe.
I think the US government will make owning gold illegal someday. Trying to trade it will be like trying to trade opium. It is not something I want to try to do. Of course I could be wrong and gold will always be legal in the US. There is no use arguing about what will happen in the future. Time will tell.
Move your gold or cash to a foreign country.... What the hell kind of bad advice is that ? There is no guarantee that it will be any safer there, and besides we have been told SOOOO many times to not store your stuff with another party (i.e. foreign bank vault etc)..... best to use your own bank of Ball Mason in the backyard..... trust no one, EVEN FOREIGN REPOSITORIES.
Re: planning for a possible full-out crisis, I think a key issue is the individual needs to think through "What am I hoping to accomplish?" It's not always easy to think through this.
So you have bullion overseas, say stored via GoldMoney in the UK, Canada, Switzerland, or Singapore. Then SHTF. Then what? Your overseas precious metals account is connected to your U.S. bank account---and that's the only way to access it--unless you own enough to take physical delivery of bars. But where? Physical delivery to the U.S.? Or will you relocate overseas? Where? What will you do with your bars? If you sell some of your metal in your GM account the proceeds are transferred to your bank account. You liquidate directly into dollars.
Maybe you have gold in Perth. Then what? You fly to Perth and live there?
I think the right approach is not just leaping to have PMs overseas but doing the hard work of thinking through what it is you want to accomplish.
Sigh ... just when it looked like ZeroHedge was going to become ... 'interesting' ... like maybe FT Alphaville or SmartPlanet.com or 'the Slog' ... here is this Peter Schiff-ish blithering:
Yes, Jeff, if you were paying attention just last week the German establishment just signed off on a CURRENCY CRISIS! They would certainly know about it, wouldn't they?
Inf fact, no currency at all has lasted forever, humans have not lasted forever, planet Earth will not last forever. Good grief!
Wrong. Most currencies fail because of wars lost and political changes, not problems inherent to currency. Guess what? Currencies are always replaced by ... other currencies! Who could have guessed?
What currency printing? I guess you missed where the EU just delevered Cyprus into the trash can. Tres deflation, dude.
The problem is caused by centuries of resource waste for zero returns. What is left to show for the trillion- tons of coal burned since Newcomen's steam engine? For the trillion barrels of oil since Henry Ford? We have potholed 'highways', empty Chinese cities, wasteland suburbs and some used cars ... we have bankrupt nations and smog. And you are worried about ... currencies?
Inflation ... half the people around here whining that the government is going to steal their bank accounts from under their noses. Meanwhile, the monster at the ends of their driveways is stealing their bank accounts ... tankfuls of gas at a time. Serious and painful consequences, indeed.
Yeah, and those damn electric lights. The sooner they go off the better.
hurry, let's all move into caves...
Just talked with the locals that work at the Ammo plant, they advised that the DHS order was a bitch but it should be finished before mid summer and then ammo will go back down. it will back to normal prices by fall.
In other words, we missed the boat on the big mark up of ammo, will have to stock up on the big dip, then wait it out till the TSHTF whick should be late next winter.
Gold till then then unload for gold, you may have to shoot your way into another country!
1985 to present Gold chart. Do you see the breakout point?
http://www.kitco.com/LFgif/au85-pres.gif
http://www.kitco.com/charts/historicalgold.html
If you think that governments tracking down people who bought gold and took physical delivery won't happen, you are in for a very unpleasant surprise.
If you buy gold, for God's sake don't let there be a paper trail.
How would you buy it w/out a paper trail?
"How would you buy it w/out a paper trail?"
And, don't you think only "legal" (i.e. registered with proper paper trail) gold is going to be able to be sold in counties with desperate governments?
How else is the "windfall profits tax" going to be enforced?
pawn shop ... cash only please...
its called cold cash
Here's Sinclair's short GOOD (get out of dodge) list:
Dear CIGAs,
We will expand on this over time, but you are “out of the system” if:
1. Your equities are held in certificate form.
2. You have no Federal retirement funds.
3. You have no CDs and investments in bonds.
4. You have modest money deposited among selected BRICs countries.
5. You store your own precious metals.
6. You have no mortgage obligations.
7. You keep cash on hand for 6 months expenses.
8. You have no consumer debt at all.
9. You have a small hobby farm for protein and veggies outside of where you are living with no mortgage debt, set up green.
10. You have a gas, diesel or electric car with high fuel mileage for the farm.
11. You have a generator with large fuel capacity for the farm.
12. You do not live in a major metropolitan area.
And for the little guy, in addition to the usual bullets, beans, bullion, I would add LED headlamps and mopeds, bitchezz.
Better than a moped is the Honda CT110, Trail 110 or "Postie" still sold new in Australia.
http://en.wikipedia.org/wiki/Honda_CT_series
'..."storing some gold outside your country of residence is critical at this point, and the window of time for doing so is getting smaller.
Where would you store it?
how much would you store?
What makes you think you could get it out of a 3rd country if the US and Europe are in a lock down mode?
And since theUS did it before. http://en.wikipedia.org/wiki/Executive_Order_6102 what did people do then?
What makes you think you would want to get it out of the 3rd country if US and Europe are in lock down mode? If the 3rd country still lets you freely possess it, it might be better to just move there.
When the U.S. did this shit before in 1933, most of the sheep traded their double eagles for fiat paper 20s. Good deal, eh?
Just like the old days. http://www.history.ucsb.edu/faculty/marcuse/projects/currency.htm
Yes, I, too, always like to maintain my ability to exchange gold for foreign currencies at gold-trading centers abroad within a short space of time.
Really...that's why I have my gold with me...here...and not...elsewhere.
Really...I meant that, sincerely...
(...think they bought it?...)
How would you have easier access to foreign-held bullion? Once capital controls are in place, you would have an easier time smuggling 10 oz. of hashish through Heathrow than you would 12 oz of gold. And if youre caught, you will loose more than your gold. Its probably a little safer these days to have your gold in jewelry than in bullion.
I think more and more, this fact will be recognized, and this alone will begin to drive down the price of gold as people look to roll their gold investments over to other things that store value well. Maybe not as portable, but less of a target. I'm trying to figure that angle out for myself right now.
Certain collectib;les do the job of storing value well. Mine have outpaced gold the last 5 years.
The Day of The Bankster is ending... Simon & Garfunkel - The Sound of Silence - YouTube
classic...
Everybody say it with me: BITCOIN USERS NOT AFFECTED.
BITCOIN USERS NOT AFFECTED.
.. that is, until the internet 'kill switch' is thrown.
And try using bitcoin at the farmers market to buy food when there is no cell network. How did that work out?
Oh you will cash it all into local currency/PMs first. Ok, and there will be no oversight of that ever? You believe there will be capital controls but no data network controls? You think 4G LTE will be up and working on your iPhone when the currency goes parabolic?
Bitcoin WILL be affected in that at some point it will be harder to get network access than in the present digital utopia we've got going.
Another ZH poster suggested BTC was best for short term use, to transfer capital across controlled borders and the like. I tend to agree. It will not be reliable for long term daily store of value and transacting. Not your whole nut anyway. Plus look at the recent volatility, nothing goes up forever, right? It feels good now, but how well is your value stored when the backside of that wave hits the chart eventually? BTC is one tool among many, not the complete solution.
You can store precious metals outside the US. I've done it.
Google Safewealth. They are located in Montreux, Switzerland. I have been dealing with them for years. They can introduce you to a safe bank. There are only two in Switzerland--one in Zurich, the other in Basel. You can store metal and cash currency notes completely outside the banking system.
This is something that you need to do soon--time's running out.
jmk, I've got a boat sunk in the 'Sea of Carpenteria'. Storing metal is the easy part. Moving the metal is the hard part.
42.85 pounds shouldn't be very hard to get out in a boat no matter what the situation. I say keep the gold until you need to move it. Most people aren't aware that currently government arrests all kinds of people for things and the fear of some jail time because you are moving your own property should not be a concern. All US citizens are enemies of the government and can be disappeared if the goovernment chooses. Nobody is safe from the government at this point. So as a matter of practicality the article doesn't make sense to me other pointing out what the FED banksters are going to do.
History rhymes. Bankrupt regimes will steal. They always did, and they always will. That smiley face smiles with sharks teeth.
Buy gold, silver, land as insurance policy.
.gov hates you.
BIG scandal out of Cyprus brewing.... spread this all around...
http://greece.greekreporter.com/2013/03/29/cypriot-politicians-loans-wri...
With banks confiscating up to 80 percent of uninsured deposits over 100,000 euros ($130,000) and the country facing a deep economic crisis, Cyprus has forgiven loans to politicians and companies while others are generally being required to pay in full, media reports said, setting off fury on the island country.
The Greek newspaper Ethnos and the website 24h.com.cy said that loans to Members of Parliament from the three major political parties and other officials in the public administration from the Bank of Cyprus and Cyprus Popular Bank (Laiki) will be written down or off.
The list includes former and current politicians, wives and relatives whose debt will be excused while the banks chase others to pay their loans. It was not said whether the government or bank officials drew up the list of those who will be given preferential treatment and who won’t have to pay, essentially having received free money they can keep or spend as they wish.
If no one gets the chair after this... no one will.
Brewing? Look at the dates the loans were written off, 2012, 2011, 2007... Not right that they are being written off, but hardly a current brewing scandal...
I see this as actually positive news. Makes for a better chance that one of the "chosen" MPs or connected people will be shot on sight by an outraged, busted, former businessman, thus triggering (sorry for the unintended pun) a movement elsewhere to do the same.
I have steadfastly maintained that nothing will change until a connected bankster or politicians is killed as an economic rationale. Once that happens, as they say, "it's on like donkey-kong."
the germans want their gold back because the americans have already sold it-its not there!they have to buy it on the market and give back to germany over the next few years
the germans wised upto this-so did chavez.article sounds like trolling for the status quo.....
Per Basel 3 gold is on Jan 1, 2013 a "First Class Asset" meaning it can be used at current spot price as 100% collateral.
However, my take, is that other bankers will only consider that you have the gold, is if you have the gold, not a paper promoise that you have the gold, esp from another country.
Hence the repatriation.
Pawn A3 is a classic prophylactic move & [generally] weak-ass.
Good Chess players do 'nothing'.
It's how they win games, even at GM level. They simply make moves waiting for their opponent to think of some 'novelty' and then react against it.
It's is a strange fact that the first chess player to think of something to do usually loses.
Ideas break the balance of the position. They upset the stability, the rhythm.
The gold move looks like a prophylactic, but is a novelty also: so not only weak, but to be refuted.
game on.
Fischer : F 3 was awesome tongue in cheek red flag as black. But defense does dominate offense today; the Nadals the Federers.
Kasparov : white D4 was a flrecracker gambit and he was no wait n see player; he was style and substance like no strategist since Napoleon. When he lost it was not for want of an idea but 'cos he wanted to cross a bridge too far; I'll grant you that.
Position player and blitzkrieger he was unmatchable; lets see if M Carlsen, his protege, outdoes him.
Dont just think Gold but also Bitcoin, this fiat shit storm of $ debasing will require novel global and state promoted solutions; both monetary and financial in terms of restructuring and regulating banks.
I'm not a big fan of storing gold overseas. Everyone bitches about not having something tangible and you want it 1000's of miles away? Not only that in the event when shtf, which is what the gold is for, exactly how are you planning on getting it and who says it's safe from the criminals on the other end?
I have no doubts they will confiscate again. Or try to. Better to learn how to identify gold and perhaps start buying it in the form of jewelry etc where most of it's not traceable. Of course a lot of good it would do if they imposed the death penalty for being caught using it.
They'll come up with some crazy ass stupid shit they always do. Rather or not it's enforceable I don't know.
This article speaks to very few people. I for one do not have thousands of ounces of gold that I would need to have half of it parked somewhere half way around the world. I have enough to be comfortable that I could barter if I need to, silver also. Besides, no one has a crystal ball that can tell with any degree of certainty which country will be "safe". We're headed for a global fucking collapse. Good luck escaping to some remote island that only you, in this modern age of communication, know about...
This article speaks to very few people.
***********
Exactly-so why bother confiscating at this point and spooking everyone-a bull market doesn't end until the masses participate-so why not wait until they do and then pull the trigger when the price goes crazy and all that mattress money comes out into the open?
Those who got/get in early should be selling into the frenzy and moving into something that's not on the government/banker radar such as real estate-
I agree. I guess if you live in a border town and already have a passport etc or work visa that allow you to come and go freely than it could make sense.
I would think most people are better off owning and self storing some silver coinage.
I'm so glad I'm not a US citizen, those poor bastards are rapidly running out of options and places to hide from their government.
Good article with lotsa logical advice.
But I see problems (in fairness some are already mentioned in the article):
- storing PMs overseas sounds great but WHERE? How do you know the govts of those overseas territories won't fold under US pressure to provide lists of PM depositors or beneficial owners?
- storing PMs domestically; but how to trade it if private trading becomes illegal?
- owning PMs may be problematic if audit trails of your purchases are retained and govt decrees it must be surrendered.
- of course, trying to export it thru regular channels (air/sea ports & by road) risks confiscation.
It all gets very difficult....
Zhou Tonged Does it Again. This One's Going Viral!
Zhou Tonged – Cyprus Anthem (Swedish House Mafia – Don’t You Worry Child)
Just when the Cypriots were losing faith
That’s when I learned about the block chain
I still remember how it all changed
Satoshi said:
Don’t you worry, don’t you worry, child
Bitcoin has got a plan for you
Don’t you worry, don’t you worry now
http://www.thebitcoinchannel.com/
Gold bugs are getting annihilated...
http://www.sprott.com/prices-and-performance/performance/
The next "Markets at a Glance" will be called "Do Investors in our Finds Have Any Money Left part III ?"
Until the manipulation stops gold and silver are wealth preservation mediums not investments unless you are playing long term.
Meant to type "funds" not "finds"
Paleface gringos can go to Svalbard or Iceland or -- if it is too cold for some there -- have a Depar(t a)dieu moment and move to Sochi...
--
Benny's dance
This article is a dud. It is based on the presumtion that there is someplace that you can run to and preserve your liberty and your assets. That shangri-la where you, the paleface gringo, will be welcome and fed and protected not fleeced.
Dream on.
Go long on submarines, illegal aliens and shovels.
Could they say in any a louder voice that gold is money ?
Of course, if you are a member of the elite then the ban will not apply to you.
what i get out of this is if you have to leave your country with PM's it's alot easier to hoop 20 oz's of gold than 1000 oz's of silver .
: "storing some gold outside your country of residence is critical at this point, and the window of time for doing so is getting smaller."
Central banks don't trust each other, and I am supposed to trust someone outside of America with my gold?
Why anyone would want to have gold any farther away than there back yard defeats the purpose of having it to start with.
I saw this video on youtube about a year ago where this guy tried to trade a 1oz. gold eagle for $20. on some street in the USA. There were no takers. In the end he couldnt even trade it for a cup of coffee.
Things are really going to have to change big-time before gold becomes a medium of exchange. I do hold gold ..at home. Also I can't imagine gold being a good medium of exchange in a prolonged crisis situation as in if the shit comes down in a serious way and stays that way, as in knocking us back to a horse and buggy scenario. For big transactions, sure, like buying said horse and buggy maybe, but for buying a bushel of apples or corn? That's obviously where Silver dollars come in, or the pre 1964 junk silver coins.
For a store of value, gold can't be beat.
For quality of life and security a small hobby-farm in a rural community just about anywhere in the world with a good source of water, a 250 gallon fuel-tank, and a well-stocked larder and a bit of live-stock, would seem to be the ticket.
Establish your stronghold wherever you are, and most of all, keep your karma clean. That is of foremost importance. We will all expire, but the wheels we set in motion with our actions will keep turning and have their inevitable consequences to be faced.
one ounce silver eagles or maples are possibly more practical though great post
0.1 oz gold coins and silver eagles/leafs, but yeah the perception of what it's really worth has to change. "that can't be worth $170"
see reggie middleton above.... that the cdn govt could psrticipate in this very obviously premeditated bail in stunt as stated in the cdn budget of mar 21 knocked me flat on my grizzly old ass i would not have imagined that in a fucking million years
this means its war on its underway god help us all.
Let's say you had gold and silver stored in Canada and Canada (instead of the US - or possibly both Candada and the US ) imposed capital controls and/or special restrictions on the sale, posession or movement of precious metals? How would having gold and silver stored in Canada help you in this situation? I think it's probably a good idea to distribute your wealth but I'm not sure it will really help if things get desperate - in fact it might just mean that you are more likely to get some portion of your wealth involved in some type of capital control or confiscation issue. The entire system is so big, so interconnected and the rules can be changed in an instant at the behest of a few that knowing how to effectively protect yourself with any high degree of certainty is very questionable from my perspective.
Oh where, oh where is my gold? Did my gold price girl take it? http://www.goldpricegirls.com
Capital controls are certainly coming to the US. You can already see it in all the Patriot Act bullshit that it forces businesses to follow. File suspicious activity reports on citizens.....and the law is so vague, it leaves the gov't the opportunity to prosecute the business owner for almost any reason.
The problem is not one of gold or currencies. It is one of alliances. The NATO bloc is under pressure because US' allies are sick and tired of the corruption. See http://arxiv.org/PS_cache/arxiv/pdf/1107/1107.5728v2.pdf To learn what the real chess game is about try reading http://citation.allacademic.com//meta/p_mla_apa_research_citation/0/7/4/...
Best advice:
Store your assets outside the USSA.
Then store yourself outside the USSA.