What The Next Gold Confiscation Will Look Like

Tyler Durden's picture




 

Submitted by Nick Giambruno via Doug Casey's International Man blog,

You may be familiar with the story of how the US government confiscated gold bullion and then made owning it illegal back in 1933.

Actually this event is more accurately termed a nationalization. Americans were forced under harsh penalties to sell their gold at an artificially low “official price.” If it were an outright confiscation, the government would have just taken the gold without giving anything in return. But no matter how you label it, the end result was the same: the theft of purchasing power.

Many have speculated that the US government could once again turn to gold confiscation/nationalization if it became desperate enough. These fears are not unfounded given the abysmal financial situation of the US government that only continues to get worse, coupled with a total lack of political will to cut spending.

But would the US government really turn to a 1933-style grab again?

I would argue that they wouldn’t, but that doesn’t mean the threat to your gold has diminished. Quite the opposite.

More Likely Than Outright Confiscation

Today only a tiny fraction of the overall US population owns gold. That wasn’t the case back in 1933 when the US was still on a variation of the gold standard.

Heck, I’d bet most Americans today have never even seen a gold coin, much less appreciate its value.

This is why I think it’s unlikely we’ll see a repeat of the 1933 ripoff. It’s simply not worth the effort. If the government is looking to confiscate wealth, they’ll likely go for the low-hanging fruit… like financial accounts, which can be plundered with a few mouse clicks. Or they’ll continue to ramp up the inflationary money printing, which is a way to confiscate from savers.

But that doesn’t mean gold owners are in the clear.

Instead there will be a new scam. And that scam is likely to be a windfall profits tax on gold.

A windfall profits tax on gold would be much easier for the government to administer than what they did in 1933. And thanks to the system of citizenship-based taxation, a windfall profits tax on gold could be levied on Americans no matter where in the world they live.

There’s precedence for this, too. In 1980 the Congress passed the Crude Oil Windfall Profit Tax Act, which taxed up to 70% of what they deemed to be “windfall profits” of domestic oil producers.

If gold were to explode to the upside (another way of saying the dollar crashes), we shouldn’t be surprised to see a bill like the Fair Share Gold Windfall Profit Tax Act get passed, which would levy a 80%, 90%, or higher tax on gold.

Fortunately, there are some practical steps you can take to protect yourself from a windfall profits tax on gold, which I believe is the most likely form of future confiscation.

Keep Your Hands Off of My Gold!

One way you can avoid a windfall profits tax on gold is to become a resident of Puerto Rico - read more on that here. You could also preemptively divorce the US government by renouncing your citizenship.

But these are drastic measures and out of reach of most people.

There’s a far easier solution that can be done from your living room and without having to turn in your US passport. It’s to own gold in a Roth IRA, preferably offshore gold.

A Roth IRA is like a tax-free zone. It’s funded with after-tax savings, and any future capital gains or income derived from investments in a Roth IRA are not taxable—if you wait until the age of retirement to withdraw.

While we can never know 100% for sure what the US government will do, it would be unlikely that gold placed in the tax-free zone of a Roth IRA would be affected by a future tax increase. That is, of course, unless the politicians start monkeying with the IRA rules. But that would produce a lot of screaming from tens of millions of people, most of whom are voters. If I were a politician, I would stay away from IRAs.

This is not to say that the US government doesn’t have its eyes on the juicy target of retirement accounts. As we’ve seen with the myRA scam, they most certainly do.

However, if and when an executive order is issued to convert a portion of your retirement savings into unwanted Treasury securities, it will likely apply only to the most susceptible retirement assets—those being accounts with the large, traditional IRA custodians. These assets are soft targets for the government. They could be frozen, confiscated, or nationalized at the flip of a switch.

Physical gold held offshore in a Roth IRA would represent a significantly more complex challenge for them to confiscate. It probably wouldn’t be worth their effort either, as only a very tiny percentage of Americans hold their retirement assets in physical gold overseas. It makes much more sense that they’d go for the sitting ducks at the large custodians.

In short, a Roth IRA with gold held offshore is the most practical way to protect yourself from the most likely forms of future confiscation—a windfall profits tax on gold and a forced conversion of retirement savings to Treasuries. It’s the ultimate retirement insurance policy and makes you a hard target.

It used to be very time consuming and difficult to own gold offshore in an IRA. For a lot of people, it simply wasn’t worth the effort.

Fortunately, that’s no longer the case—this solution is within reach of almost anyone.

All it takes is about 10 minutes to get set up, and it can all be done online without having to leave your living room. More details can be found here.

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Wed, 08/27/2014 - 19:53 | 5151823 maskone909
maskone909's picture

Isnt gold ownership here in the states at near record lows? Not much to confiscate

Wed, 08/27/2014 - 19:58 | 5151840 AlaricBalth
AlaricBalth's picture

Molon Labe

Wed, 08/27/2014 - 20:09 | 5151900 TheFourthStooge-ing
TheFourthStooge-ing's picture

What the next gold confiscation will end up looking like:

http://cassad-eng.livejournal.com/73392.html

Wed, 08/27/2014 - 20:14 | 5151915 nope-1004
nope-1004's picture

Can't grab what doesn't exist.  China sucked most of it up.

 

Wed, 08/27/2014 - 20:19 | 5151931 zaphod
zaphod's picture

Seriously, what good is issuing a gold confiscation act against a people who own practically zero gold. 

Now try to take my bitcoins, good luck with that.

Wed, 08/27/2014 - 20:52 | 5152032 TeethVillage88s
TeethVillage88s's picture

Nixon Shock was 1971... 43 years ago, you have to think they have a plan and have had a plan for 30 years.

Full faith and Credit of the Country, Future Labor of our Labor Force, Technical Expertise in Refining Petroleum Products, Chemical Expertise, Agricultural Expertise, Corporate Systems, Business Management Expertise, Financial Expertise, and Military Superpower who Guards the Ocean's Trade Routes, and the country the Exercises Power & Bullies other Smaller Countries into Compliance with Financial & Development Schemes...

- I must be missing something. We have a lot of land and resources that are undeveloped. We have Real Estate as a national value.

- The problem I see is other countries getting smarter... while the Fascist USA is getting dumber and not taking any action about it proving that it wants a large dumb population that will learn to do anything.

- This is a Class System. Not sure if you call it a Socialist-Fascist System, but that is close enough. The winners are picked and they are forced to keep their mouth shut about how corrupt the US Systems have become.

But I doubt they need to confiscate GOLD. think 30% loss of Value of USD in a collapse, then all nations considered valued under some new method... Hence nations buying gold.

But then again... the very rich don't have to worry about the USD,... so

How about Currency based on Population, Land Size, Petro Holdings, Gold, Silver, Technology to process Petroleum products & Chemicals, and Military Strength.

Wed, 08/27/2014 - 21:31 | 5152139 SafelyGraze
SafelyGraze's picture

"a far easier solution [is] to own gold in a Roth IRA."

because no act of congress and no executive order could ever change the rules of a Roth IRA.

the Roth IRA is sovereign and above any possibility of future bail-in.

also, the gold in the gold Roth IRA is absolutely secure and held in vaults that neither the US nor foreign gov can ever reach or know about, even though the custodian has registered itself with an EID, and its title to any storage property is on file. 

no one would ever research where it kept the gold. 

which is why it puts it somewhere even secret-er and safer-er and securer-er

hugs,
comex 

 

Wed, 08/27/2014 - 21:49 | 5152223 TeethVillage88s
TeethVillage88s's picture

Not sure of your point of view. No sarcasm here?

I would guess all IRAs are reported to Federal Government & IRS, so that taxes are withdrawn automatically. They also like to know where you get the money to fund them.

You might have more knowledge here. I don't think my IRS will let me buy Gold... so I guess I will have to transfer to a profession gold vault.

Bankers are sneeky bastards, look how they took university trust funds into Zombie Hedge Funds. Look how Pension funds and retirement funds are screwed. Look 2008 Crisis.

If you have a pot of money like MEDICARE OR SOCIAL SECURITY OR A GOLD IRA, you can bet the Bankers know about it and how to get at it.

Wed, 08/27/2014 - 21:51 | 5152242 asdasmos
asdasmos's picture

They are increasing the cost to renounce US citizenship to $2,350 after record renunciations.

isaacbrocksociety.ca/2014/08/27/state-department-to-hike-renunciation-fees-to-us2350-says-no-public-benefit-in-respecting-human-right-to-change-nationality/

The amount of people renouncing are undercounted. Waiting times around the world do not add up as they can process many per day. In Toronto, Canada, the amount they can process in a year is just about the same as the official number of renunciants and relinquishments for the wolrd per year.

Wed, 08/27/2014 - 22:25 | 5152355 Socratic Dog
Socratic Dog's picture

This has to be about the most inane, ill-concieved article I've seen on the Hedge.  What the fuck is Tyler thinking?  Gold safe from the Feds in a Roth-IRA?  Jesus Christ.

Tyler, pull your head out of your bum.  Try reading these articles before you post them.  Don't post shite.  A good policy, that would make.  Don't post shite.

Wed, 08/27/2014 - 23:07 | 5152459 Jam Akin
Jam Akin's picture

This crock of shite brought in a handsome payday no doubt.  But it stinketh mightily indeed.

Thu, 08/28/2014 - 02:55 | 5152771 Drunk In Church
Drunk In Church's picture

The next gold confiscation?  Who wants the stuff?  It holds zero value.  I'm more worried about a potato confiscation.

Thu, 08/28/2014 - 07:41 | 5153023 SilverDOG
SilverDOG's picture

Potato confiscation will not occur.

Spraying fields with Monsanto's Round-Up or "new" agent orange; about to be approved.

Far more likely.

Conformity of all agriculrure; Monsanto's Rule.

Thu, 08/28/2014 - 09:10 | 5153302 N2OJoe
N2OJoe's picture

Politicians can easily strip away your god given rights enumerated in the constitution but not your gold >>as long as it's in a Roth IRA<<

Makes all the sense in the world...

That being said, I do agree that it will happen in the form of an absurd tax and not outright confiscation.

Solution? Black markets and poor freshwater navigation skills.

Thu, 08/28/2014 - 17:42 | 5155967 MagicHandPuppet
MagicHandPuppet's picture

I have a million dollar bottle of tequila for sale.  And, for some Random customer, you'll get a free "barbarous" gold coin relic.

Done!

Wed, 09/03/2014 - 03:48 | 5174619 vie
vie's picture

No Counter Party risk... isn't that what gold is all about.  IRA defeats purpose, no?

Thu, 08/28/2014 - 02:59 | 5152776 mc225
mc225's picture

really, man... 'it's safe in your roth/ira'... chortle guffaw

Fri, 08/29/2014 - 09:25 | 5157987 StandardDeviant
StandardDeviant's picture

Most countries which offer tax-advantaged savings plans (IRAs, SIPPs, RRSPs, etc.) have a set of rules as to what sorts of assets you can and cannot hold in these plans.  What's to stop the US government from simply changing the rules on Roth IRAs to say that you're not allowed to hold physical gold, silver, etc.?  Whether it's held at home or offshore, your trustee or custodian would be forced to sell it.

As the article itself points out, such a rule change would affect a very small percentage of IRA holders, and therefore should be expected to cause minimal political backlash.

Having said that, holding some gold in an IRA, SIPP, etc. as long as that is allowed may still be a perfectly good investment strategy, just not for the same reasons, the same threat model, as having some physical metal or coins in your possession (or your treacherous lake).

Wed, 09/03/2014 - 03:50 | 5174620 vie
vie's picture

WAIT, I HAVE THE SOLUTION!  GIVE ME ALL YOUR GOLD! 

Wed, 08/27/2014 - 22:39 | 5152394 SafelyGraze
SafelyGraze's picture

teethvillage says

"If you have a pot of money like MEDICARE OR SOCIAL SECURITY OR A GOLD IRA, you can bet the Bankers know about it and how to get at it."

frankly that seems rather hard to believe

they have a fiduciary duty to safeguard your account

http://en.wikipedia.org/wiki/Fiduciary

 

Wed, 08/27/2014 - 22:58 | 5152446 Bollixed
Bollixed's picture

Let's see... they'll send your kids off to be blown to pieces in illegal wars, create so many false flags you can't even count them anymore, but a "fiduciary duty" stops them dead in their tracks.

Unbelievable...

 

Thu, 08/28/2014 - 01:13 | 5152663 zhandax
zhandax's picture

Everyone is overthinking this.  You don't owe windfall profit tax on something you don't sell.

Thu, 08/28/2014 - 01:49 | 5152713 caustixoid
caustixoid's picture

SafelyGraze, yes, yes you DO need to add a sarc tag apparently

Thu, 08/28/2014 - 01:59 | 5152731 maxblockm
Wed, 08/27/2014 - 20:55 | 5152038 sessinpo
sessinpo's picture

fairly simple. NSA already has backdoors on most electonic devices. Eventually it all has to converted to fiat to pay taxes, thus the seller you do business with will have to report it, thus linking to you.

Wed, 08/27/2014 - 21:42 | 5152201 Mr. Magoo
Mr. Magoo's picture

An internet kill switch or grid takedown would certainly be a problem for that

Wed, 08/27/2014 - 23:03 | 5152456 teslaberry
teslaberry's picture

no dickwad, they'll just use the metadata to shut off your internet connections , close your credit and debit cards and then you can enjoy going to starbucks to use the free wifi. 

Thu, 08/28/2014 - 20:26 | 5156494 Mr. Magoo
Mr. Magoo's picture

Sure, that sounds real secure. you go do that and get back to us asshead

Wed, 08/27/2014 - 20:25 | 5151957 SuperRay
SuperRay's picture

I like the ads with pictures better.

Wed, 08/27/2014 - 20:39 | 5151978 sixsigma cygnus...
sixsigma cygnusatratus's picture

If I am forced to surrender my gold, I will give them what they want.  What? It's all tungsten? How the hell did that happen?   OMG I was duped!

Wed, 08/27/2014 - 21:07 | 5152079 wee-weed up
wee-weed up's picture

But if gold were to shoot way up, then everybody and his shoe-shine boy will be buying it. That would mean lots more gold owners in the public. Then they too could scream-bloody murder if a confiscation/nationalization were suggested. The article tries to make the argument that the gov't would think twice about confiscation/nationalization (as with IRAs) if lots of people own it. I say that argument is bullshit... The gov't will do what ever the fuck it wants!

Wed, 08/27/2014 - 22:11 | 5152319 NoPension
NoPension's picture

if it shoots "way up" aint nobody gonna be buyin, cause aint nobody gonna be sellin!

Tits up and SHTF, you dont HAVE enough paper to pry gold from a gold owner. Maybe real estate. Or better, your 18 yo daughter. And then the "price" is going to be really steep. Like 1 ounce for 2 acres. 1/2 ounce for little precious.

Wed, 08/27/2014 - 22:53 | 5152430 willwork4food
willwork4food's picture

Totally agree, except if TSHTF then it won't be  your 18 yo daughter for 1/2 oz, it will be your 12 or 13 yo...for starters. You are just being PC.

Thu, 08/28/2014 - 09:32 | 5153376 Theosebes Goodfellow
Theosebes Goodfellow's picture

You asked for it. :)

 

http://youtu.be/0wCCBMlHnRM

Thu, 08/28/2014 - 00:26 | 5152605 Clowns on Acid
Clowns on Acid's picture

Tungsten = tax loss on gold purchase...

Wed, 08/27/2014 - 20:29 | 5151968 NoDebt
NoDebt's picture

An offshort gold IRA?  MAYBE the government wouldn't go after it while it's offshore (although the country where its held might), but... what happens when you try to withdrawal funds from it and you're a US citizen?  They still get you.

Wed, 08/27/2014 - 20:44 | 5152011 chubbar
chubbar's picture

The author is positing that the gov't won't fuck with IRA's and the rules they set up. Roth IRA holders have already paid taxes on the funds that are contained in the IRA. For the US gov't to retroactively change the IRA law AND change  the tax rate on the assets held in that IRA would be quite the leap. I don't suspect many folks would voluntarily comply with any such nonsense.

Wed, 08/27/2014 - 20:49 | 5152020 NoDebt
NoDebt's picture

No, they wouldn't pay income taxes.  I'm thinking through the author's scenario that the government institutes an 80-90% tax on "winfall profits" on gold.  The minute you sell some of that gold in your IRA to take a withdrawal, such a tax would be applied to the proceeds before you see the net of it as your distribution.

Wed, 08/27/2014 - 22:44 | 5152407 Fred Hayek
Fred Hayek's picture

Allow me to retort with but two more words:

Black Market

Thu, 08/28/2014 - 03:38 | 5152802 highly debtful
highly debtful's picture

Exactly, when push comes to shove, physical PM transactions will simply go dark. That means you'll always be eating. Though buying a house with some ounces of gold will be more challenging.  

But you'd be surprised how quickly people wil adapt to new circumstances when their own government goes rogue on them. A lot of European nations were occupied territory some 70 years ago and there are still plenty of grandparents around to explain how they coped back then. 

Thu, 08/28/2014 - 14:12 | 5154881 marathonman
marathonman's picture

The free market is the Black Market oddly enough.

Thu, 08/28/2014 - 00:53 | 5152637 TheReplacement
TheReplacement's picture

So one might conclude that this article was an attempt to shepherd the pseudo goldbugs into a nice gated community of pseudo gold holdings in order that they be more easily fleeced later on?

Tyler, care to rebutt the accusation he pseudo made through hypnotic suggestion?

Wed, 08/27/2014 - 23:46 | 5152547 BeanusCountus
BeanusCountus's picture

Confiscating gold in this day and age? Possible, but things would have to be really chaotic. Is he US going to tell the State of Texas to surrender their holdings? Extremely unlikely. There are way more avenues to solve gov problems that would happen first. One off wealth tax, mandatory treasury bond holding % by IRA's, etc, etc, will happen first. A lot of gun toting americans might stand in their way before they ever get to confiscating physical metal from a relatively small number of physical gold owners. I'll worry about it much later down the line. Black market for the metal will be way ahead of them anyway.

Thu, 08/28/2014 - 00:55 | 5152639 RichardParker
RichardParker's picture

Beanus:

I'd be willing to bet that firearm ownership among those who have physical gold is probably 5X higher than the national average in the US.  All of the other scenarios you mention are way easier for the gov.

Thu, 08/28/2014 - 09:42 | 5153410 Theosebes Goodfellow
Theosebes Goodfellow's picture

DING! DING!

Someone please hand Mister Parker a cigar. I consider it axiomatic that precious metals ownership, (of the physical variety), has its correspondingly high machined steel and brass/lead counterparts.

Something missing in the discussion is that when considering the overall percentage of PM ownership compared to the general populace, it just isn't worth the while to try to confiscate for reasons of negative press, associated costs and the fact that many elites also hold physical. That said, conficating or 80% taxing of paper gold may not garnish the government anything but...paper.

Thu, 08/28/2014 - 01:55 | 5152723 RaceToTheBottom
RaceToTheBottom's picture

Wonder how the certain states like Utah or perhaps Oklahoma that have said Gold is a special element and cannot be txed

Thu, 08/28/2014 - 00:06 | 5152572 wee-weed up
wee-weed up's picture

 

 

For the US gov't to retroactively change the IRA law AND change  the tax rate on the assets held in that IRA would be quite the leap.

Dream on... They'll leap what ever hurdles exist in order to stay in power...

Count on it!

Wed, 08/27/2014 - 20:57 | 5152045 Cap Matifou
Cap Matifou's picture

That unfortunate booting accident didn't help either.

Wed, 08/27/2014 - 22:23 | 5152350 KnuckleDragger-X
KnuckleDragger-X's picture

Lost mine when the car went over the cliff in the Yukon....

Wed, 08/27/2014 - 21:45 | 5152213 Mr. Magoo
Mr. Magoo's picture

Gold??? what Gold?? I have no idea what you are talking about. Oh you mean the gold that got lost in the last flood

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