This is a snippet from a recent issue of the Gold
Forecaster with Subscriber-only parts excluded.
As the fourth part of
this series we now look at this question: “What circumstances will the
world monetary system be in, in the event of the Confiscation of Gold by
The circumstances that led to the confiscation of gold in 1933 were
dire. Firstly, the time was
Post-Depression and the States had a huge need for the expansion of the money
supply. Secondly, the dark
clouds of war had started to gather, as Hitler took power. So the money supply had to be
expanded, yet be capable of holding its value, when the global scene would
have lead to simple un-backed paper money not being accepted. Gold however, was even accepted
between enemies, as it would be today.
What pushed government to take gold away from its citizens? It was seen as a time of
national need. It was
the need to reinforce the basic credibility of paper money! This was sufficient
justification to government necessitating the imposition of patriotic duty on
its citizens with regard to gold.
Where patriotism was not as strong as the personal need to preserve
one’s wealth, a threatened term in prison fortified those
And have no doubt that the same would be true today, were gold
confiscation to take place.
Today, most of individual wealth is held in Corporations, Funds,
banking institutions and other legal entities and not by the individuals
themselves as was the case in 1933. Today, corporations and Funds
would be threatened in the same way as they were then and with potential imprisonment
for the Officers of those legal entities. Few of these Officers would be
prepared to go to prison on client’s behalf! Experience in other parts of the
world shows us that these Officers would hand over the gold in their charge,
immediately, if such a law were passed, with little to no regard for the
Let’s stress that point; when it comes to money, a
nation’s interests sit heavily above those of its citizens. Holding gold is therefore a
privilege, not a right, in the eyes of government.
Today we live in a global market where U.S.
citizens are able to move their funds overseas without restraint. In 1933 only the wealthiest of
individuals could even contemplate moving funds out of the States. Now they can invest in any Stock
Exchange or other Financial Market in the world, without being held back by
the U.S. Government. The
concept of restraining U.S.
citizen’s foreign investments has not been on the page until now. Recently President Obama
indicated that U.S. Corporations operating overseas would have to pay U.S.
Tax on their overseas income.
The days of reinvesting profits in Capital Expenditure before
suffering U.S. Tax [payable on repatriated profits only] appear to be
numbered. President Obama made it
clear that his Administration sees a need for the U.S.
to benefit directly from overseas investments annually. He further feels that U.S.
citizens overall should benefit from these profits and not just the
corporation and those it employs overseas. No doubt, the concept of U.S.
Tax on overseas corporation profits will take a firmer hold irrespective of
the benefits of keeping profits as capital for development overseas. President Obama is certainly of
the opinion that U.S. owned
overseas assets should directly benefit U.S.
citizens at home, first!
This lays the ground for Capital / Exchange Controls if the $ declines
precipitously, or the U.S.
financial empire worldwide, declines, as it seems set to do so.
At worst, the U.S.
will see what the U.K.
saw, the splitting of the $ into two types, one for Trade transactions and
the other for Capital movements [at a discount to the Trade $]. In the U.K.
it was titled the “Dollar Premium”. Such a situation would see the U.S.
$ in retreat in terms of other currencies too. The role of gold in adding to
the credibility of the $ internationally at that point would be crucial. As the U.S. dollars returned
home from $ surplus holders [such as China]
there would be a dire need for local credibility to the currency to be
enhanced. This could
precipitate gold confiscation, again.
As it is, even U.S.
citizens living overseas have to declare to the U.S. Tax Authorities their
worldwide income. Even
where the individual U.S.
citizens held all their assets overseas, we would expect the Administration
of that day to attempt to coerce the repatriation of their gold home to the
States. If these
individuals had assets at home, these could be seized if they failed to
comply with the repatriation and confiscation of their gold. Where U.S.
based citizens held assets abroad they too could face home confiscation of
assets if they did not repatriate their gold.
As it is, through the I.R.S., foreign held assets are already reported
citizen’s world wide.
Hence, the reporting and control mechanisms to attack non-governmental
ownership of gold are fundamentally in place and can be extended without too
much difficulty, to control all who wish to remain U.S.
citizens. What price
That is why the gold
Exchange Traded Fund, The Ultimate Gold Fund has been designed to accommodate U.S.
gold owners, holding their gold in Switzerland,
to ensure that their gold cannot be confiscated!
More to come next
week – “For citizens of other countries”
– “Does the U.S.
have rights in other countries, over their citizen’s wealth?”
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Julian D. W. Phillips
Gold/Silver Forecaster – Global Watch
by Julian D. W. Phillips
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