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Guest Post: Don’t Dismiss The Possibility Of Gold Confiscation
Submitted by Jeff Thomas via Casey Research,
If you hold precious metals in your portfolio, there is a good chance you fear hyperinflation and the crash of fiat currencies.
You probably distrust governments in general and believe they are self-serving and have no interest in your economic well-being. It is likely that your holdings in gold are your lifeline – your hope to get you through these times while holding on to your wealth.
But have you ever given any thought to the possibility of having this lifeline confiscated by the authorities?
In my conversations with friends and associates, I have often raised this question. The typical responses:
"They'd never do that."
"I'll deal with that if and when it happens."
"I just wouldn't give it to them."
I consider these "wishful thinking" responses.
It's an interesting thought that the greatest threat to gold and silver investment might not be the possibility of losing on the speculation, but the government taking it away from you. It's a thought that I've found few want to even think about, let alone discuss.
If you fall into this camp, you're in good company. Some of the forecasters whom I respect most highly also treat it either as unlikely or at best, "something we may need to look at in the future." To date, in conversing with top advisors worldwide, the two primary reasons they believe gold will not be confiscated are:
- "Confiscation would mean the government acknowledges the reality of the value of gold."
Yes, this is quite so. They would be changing their official view… which, of course, they do all the time. But I submit that all that they need to do is put the proper spin on it.
- "They would meet greater resistance than they did back in '33."
I expect that this is also true, but that a plan will be put in place to deal with that resistance.
We'll address both of these assertions in more detail shortly, but first, a bit of history.
In 1933, Franklin Roosevelt came into office and immediately created the Emergency Banking Act, which demanded that all those who held gold (other than personal jewelry) turn it in to approved banks. Holders were given less than a month to do this. The government then paid them $20.67 per ounce – the going rate at the time. Following confiscation, the government declared that the new value of gold was $35.00. In essence, they arbitrarily increased the value of their newly purchased asset by 69%. (This alone is reason enough to confiscate.)
Today, the US government is in much worse shape than it was in 1933, and it has much more to lose. The US dollar is the default currency of the world, but it's on the ropes, which means the US economic power over the rest of the world is on the ropes.
I think that readers will agree that they will do anything to keep from losing this all-important power.
The US government has essentially run out of options. At some point, the fiat currencies of the First World will collapse, and some other form of payment will be necessary. Yes, the IMF is hoping to create a new default currency, but that, too, is to be a fiat currency. If any country were to produce a gold-backed currency in sufficient supply, that currency would likely become the desired currency worldwide. Fractional backing would be expected.
As most readers will know, the Chinese, Indians, Russians, and others see the opportunity and are building up their gold reserves quickly and substantially. If these countries were to agree to introduce a new gold-backed currency, there can be little doubt that they would succeed in changing the balance of world trade.
That said, the US government is watching these countries just as we are, and they are aware of the threat of gold to them.
The US government ostensibly has approximately 8,200 tonnes of gold in Fort Knox, although this may well be partially or completely missing. Additionally, it ostensibly holds a further 5,000 tonnes of gold in the cellar of the New York Federal Reserve building. Again, there is no certainty that it is there. In general, the authorities don't seem to like independent audits.
In fact, there are rumors that the above vaults are nearly or completely empty and that the above quoted figures exist only on paper rather than in physical form. While there is no way to know this for sure, it's not out of the question.
Either way, if the US and the EU could come up with a large volume of gold quickly, they could issue a gold-backed currency themselves. It's a simple equation: The more gold they have = the more backed notes they can produce = the more power they continue to hold. By seizing upon the private supply of their citizens, they would increase their holdings substantially in short order.
Either that or they could just give up their dominance of world trade and power… What would you guess their choice would be?
It is entirely possible that the US government (and very likely the EU) has already made a decision to confiscate. They may have carefully laid out the plan and have set implementation to coincide with a specific gold price.
So how would this unfold? Let's imagine a fairly extreme scenario and ask ourselves if it could be pulled off effectively:
- The evening news programs announce that the economic recovery is being hampered by wealthy private investors who, by hoarding gold, are skewing the value of the dollar and threatening the middle and poorer classes. The little man is being made to suffer while the rich get richer. A press campaign to equate gold ownership with greed ensues.
- The government announces the Second Emergency Banking Act, advising the public that "the first EBA was instituted by FDR to solve this same problem during the Great Depression. This act was instrumental in helping the little man 'recover.'" (As the average man on the street doesn't know his history nor how wrong this statement is, he'll believe it. Besides, the announcement has a "feel-good" message, and that's all that matters.)
- Possessors of gold, who make up a small minority of the population, would become pariahs. It won't matter that the guy who owns two gold Maple Leafs is not exactly a greedy, rich man. No one will wish to be seen as resisting confiscation. Neither will they wish to go to prison for resisting, no matter how remote the possibility.
- The US pays for the gold in US dollars, which are rapidly headed south. Yes, the Fed will need to print more fiat dollars in order to pay them off, but this suits their purpose, as it inflates the dollar even more. Those who have turned in their gold will do whatever they can to unload the US dollars as quickly as possible and will need to find another investment at a time when there are very few trustworthy investments other than gold. The stock market would likely rise, showing the public how the gold confiscation program is "working."
- One last scary possibility: The government demands that gold is turned in immediately and that settlement will occur following confiscation. After confiscation, it announces that, as there has been such a large number of cases of rich people ripping off the little man, processing them all could take months, possibly even a year or more. A further announcement states that some investors have made an unreasonable profit on the backs of the poor and that they should not be granted this profit. This profit must be returned to the people. (You can almost hear the cheers of the people.) Then it sets about making assessments. The bureaucrats find that most investors do not have formal, acceptable receipts for every coin in their possession. So if you paid $1,200 for a Krugerrand a couple of years ago, you get paid $1,200. If you bought it at $250 in 1999, you get paid $250. But if you have no receipt in an acceptable form, you get a "fair," median payment, say, $500, regardless of when you bought it.
- Appeals: Each investor will be allowed up to one year to appeal the decision of the Treasury as to what is owed him. Of course, the investor knows that the dollar is sinking rapidly and that he would be wise to shut up and take what he is being offered.
Again, this hypothetical scenario is an extreme one. The reader is left to consider just how likely or unlikely this scenario is and what that would mean to his wealth.
But bear this in mind: If the above scenario were to take place soon, the average citizen would have mixed feelings. They would be glad that the "evil rich" had been taken down a peg, but they would worry about the idea of the government taking things by force, because they might be next. It would therefore be in the government's interests to implement confiscation only after the coming panic sets in – after the next crash in the market, after it becomes plain to the average citizen that this really is a depression and he really is in big trouble. Then he will be only too glad to see the "greedy rich" go down, and he won't care about the details.
As terrible as the thought is, it seems unlikely to me that the government will not confiscate gold, as they have little to lose and so much to gain.
Those who own gold would prefer to think that this cannot happen, but they have quite a lot riding on that hope and precious little evidence to support it.
It is entirely possible that this scenario will not take place, just as it is possible that confiscation will not take place. The purpose of this article is to spark some serious discussion – both for and against the possibility.
Investors are, by their very nature, planners. It may take a community of investors to develop a legal plan to deal with the above eventuality. Time to get started.
The government can't easily confiscate what's outside its own borders, which is why it's working night and day to make it as difficult as possible for you to protect your assets abroad. This sad reality means that you need to take action before it's too late. Your first step? Learn how to start internationally diversifying your wealth – and your life. From investing in international markets and opening offshore bank accounts to setting up an offshore LLC or annuity, Going Global 2013 will tell you how and where to expatriate your wealth. It also presents solid, up-to-date information on internationalizing your life, from getting a second passport to choosing a good place to live.
Don't allow yourself to be milked by your home government any more. Get started on internationalizing your life today... while it's still possible.
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it is for the good of society, the body, as a whole, individuals being considered as parts of that body. Some individuals/organs/bodyparts are more important for the survival of the whole body/society and other, well,less important, that the law of nature. Government would do something fair for the benefit of the whole society, it is a fact. It would probably be at the expense of some, it's another fact. This is why you should own your own land , have limited quantities of gold, silver, have ammo, but not everything stacked in gold. Balance = better odds of survival, better chances to adapt.
Let s not confuse a global cataclysm when everyone jumps at each other throat to insure his own survival, with no police or army forces , we re talking about a manageable human drama. People would still believe in some principles and rules and these rules would still be enforced by law and common sense.
Don't look down, diplodicus.
The current smash down IS the confiscation. All holders of physical in the last 2-3 yrs are now under water, while equities et al. are up like 40+ %. So if you give in and caugh up any phyzz now, thinking you can get back in at an even cheaper level... and at the same time, the sheeple and masses will surely stay out of the metals... mission accomplished. so I will hang in here, come hell or high water, and wait for the current down-draft to reverse, adding on as prices further decline.
What's coming is a global collapse. There will be nowhere to hide. By going to the trouble to get your shiny yellow physically farther from your presence (not a good idea, BTW) you will just be giving another government the opportunity to steal your blanket.
I cannot buy the whole"gold backed currency" schtick. We will never back a currency w gold. It would mean a continuing claim/drain on US gold reserves. Never going to happen. Instead it will be a new fiat regime. Of course, that doesn't mean a gold recall won't happen.
Won't have much choice if a non-US ally nation decides to make a gold-backed currency. Then you're pretty much fucked.
There is about five levels of government trying to steal everything I have as it is. So whats new?
The government can attempt to do anything. It can try to confiscate gold. It can try to prohibit the use of alcohol and marijuana. It can try to prohibit prostitution. History has proven that these efforts tend to fall short of their goal when there is large scale interest in circumventing the prohibition. Life finds a way.
I think any attempt by the government to confiscate gold will backfire. I guess I just don’t buy the author’s argument that Joey the shylock or Terrance the cocaine distributor will give a rats ass about their social status of a pariah or their risk of going to jail when there is even more money to be made dealing in gold. Confiscation will cause people to immediately see it as an admission by the government that its fiat currency has failed. A black market will emerge in gold that pays a higher price for it than the government does. Attempting to prohibit and limit the supply of gold through confiscation when there is natural demand for it, particularly when that demand is ultimately from external sources, only makes the price in the black market go up. The same economic forces were at play as we saw demand for physical gold increase when prices recently fell. To the extent that price decline was orchestrated by the central bank attempting to discourage gold ownership (as some speculate) that effort may have already failed miserably too.
"they will do anything to keep from losing this all-important power" - true, but the conclusions are quite false.
There was a reason that US willingly left the Gold standard, and the simple reason is that there is not enough gold to grantee such standard in a CONSUMPTION oriented economy, so came the age of the petro-dollars.
So they will be quite dummy in order to try reerect again this idea, especially when all of the other players already know what is the end of such a game.
For those of you interested in preserving your gold, you can do it in many ways (just learn some chemistry) that is guaranteed to survive over several decades, although, to be realistic, I think we have to worry for the next 5 - 10 years, for after that the system will rebalance and will be somehow more or less established for long time to come, generally depending on the ERORI on the new, or I would say old ( mostly forgotten ) technologies.
Any ZHer who wants to play in my husband's sculpture studio turning their PMs into some form of art would likely be welcome. He has all sorts of machines and tools that would keep one occupied for days.
Personal expression, bitchez!
By the time the goverment goes after gold or silver, I would be more worried food, water, crime, war... That's going to be the last leg of civilization after they've wiped out savings, pensions, 401ks, 403bs, mines, agricultural lands, and every other item or commodity or asset class worth confiscating. It would be a full-fledged martial law police state by then if not civil war or some collapse of the federal government. By the time, you're worried about your gold or silver getting confiscated, that's going to be the least of your worries, bc it's lord of the flies, systemic collapse at that time. But what else can you do?? Nothing's fully safe, but at least it's safer than everything else I can think of... I do think storing your assets overseas is probably just as risky for a whole of host of other geopolitical reasons. Better just go bury it like a pirate and draw a good map.
I'm sure coming Monday Gold will drop another $20 when ZHers are talking about hiding golds in the weekend.
Make some secret compartmets in your car and put in your PMs which will travel with you and ready when you need them.
A Mexican might steal your car. Then what?
BUT REMEMBER x-ray back-scattering can see that. Angle the coins so they fit in with other things by side-view. It will be side-scanning not vertical scanning so you want the edge-on view for the coins.
Or if you must have the coins buried in with other coins that have no such value.
Yet another reason to have GOLD coins rather than SILVER coins because if you want so many thousands in gold moved it's just a few coins but it's HEAPS of silver.
Not easy to hide.
Maybe they are trying to keep gold and silver suppressed to bankrupt the Mines, so they can then move in and buy them up pennies on the dollar.
Besides jewelry gold coins "having rare and unusual value", investment grade coins, were not confiscated. Anyone who thinks this is not possible is incorrect. Fort Knox was last audited in 1953!
I am Tuco Benedicto Pacifico Juan Maria Ramirez and I say, "Death to the New World Order" and all the traitors who do their bidding. Gol long rope. We will need a lot of it!
Tuco
The truth is US gov agents at all levels from lowly SWAT pig to Congress overblessed by their corporate sponsors will all confiscate EVERYTHING. Gold, food, water, land, jobs, income, all of it, bartered & sold to the highest bidder. Your goods, their acquisition. This will look, in the end, just like Stalin sweeping the Ukraine.
You can't just hide assets outside the USA, you need to leave until the overthrow is complete and revolution succeeds. If it doesn't succeed you never return.
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The government would have no F*****G idea of the resistance they would face.
Git Yer Guns!
•J•
V-V
The government will "confiscate" the gold via federal income taxes. It is too difficult and too dangerous for them to try to take the gold physically because so many targets are already armed.
If there is a record of your purchase, no fancy strategies such as a boating accident will hold any water. They will just make up a set of numbers to calculate the taxable gain and send you a bill.
If you have a significant amount of gold then you should have at least some of it outside the banking system and in another country--even Canada.