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Readers may not agree with
our conclusions on the confiscation of gold, but we emphasis this reality. If
we are wrong, then you will still own your gold; if we are right and you have
not taken the right steps to guard against confiscation and the personal
dangers to you individually, then you will lose your gold and possibly suffer
the penalties, which the “Gold Confiscation Order” may bring with
it.
As 2013 is upon us, we
point to a report by Sharps Pixley, the London Gold
Dealer that:
“In the Basel III, gold has been re-rated
from a Tier-3 asset to a Tier-1 asset, or "zero-risk" collateral.
This means that banks can decide to buy gold instead of sovereign bonds to
fulfill the rise in the Tier 1 asset requirement. The Shanghai Gold Exchange
has just started a trial on gold inter-bank trading in order to increase the
liquidity and flow of gold in China.”
This brings the concept of
the confiscation of gold, one step closer to a reality that will come upon us
as a surprise!
In a continuation of our
series on the confiscation of gold, we look at more critical questions that
gold investors should factor in when considering how best to own/store their
gold and prevent its possible confiscation.
Is it Sufficient to Hold your Gold
outside your Country?
The
vast majority of gold storage schemes outside of the U.S., whether in the
U.K. or in Switzerland, will confirm to their clients that they will not
report their gold holdings to their client’s Authorities. There is no
requirement for them to do so, but one would be naïve to believe that
this is sufficient to prevent the confiscation of their gold or ensure
client’s gold is secure outside their Jurisdiction.
Much
more is needed if that objective is to be achieved. Just as U.S. tax is
imposed on U.S. companies and U.S. passport holders outside the U.S., so a
‘Gold Confiscation Order’ would apply to gold held outside the
U.S.
We
would expect the order to contain a requirement for U.S. citizens to either
transfer ownership of their foreign held gold to the government or obey the
requirement to repatriate gold home and hand it to the government.
To
understand this fully, gold investors should understand how governments work
when they impose Capital Controls, in general. It is not the gold, per se,
that they target. Their prime route to the gold is through the gold owner and
gold dealers!
Clients
Attacked to Get to
the Gold
It
is a matter of history in all lands where controls over assets have been
imposed on their citizens, that governments directly target the owners of
those assets at home, when they do not comply with such controls.
For
instance in 1933, the U.S. threatened a fine of $10,000 (what would that be
today?) or a 10 year prison sentence or both against citizens who did not
comply with the "Gold Confiscation Order".
Today,
should such an order be imposed, the same tactics would be used. Keeping ones
gold in a foreign storage facility in one’s own name would not suffice
because continuing to own it would place you outside the laws of your country
and open to government retaliation on your soil (at home) irrespective of
where you hold your gold. Is that a position you would be comfortable with?
The authorities are very capable of discovering who is continuing to own
gold.
We
do appreciate that you may not have to report your gold ownership under the
current 1040 return, but we would expect that the financial conditions that
prompted the "Gold Confiscation Order" would come with a change in
other financial laws, such as what to report and include gold.
For
such orders to be effective, governments would need to ensure the laws are
directed to the new end so would have to change other laws that stood in the
way of such orders.
Gold
dealing companies (Gold dealers, Custodial banks) who have dealt in the name
of individuals or corporations, if required to do so by the authorities,
subsequent to such an order, are most likely to disclose their client’s
names, even if not required to do so now. To keep operating offshore, or in
the jurisdiction they are registered in would likely disclose this
information, particularly if the Jurisdiction they operate in and are registered
in, is an ally of the confiscating authority.
Switzerland
is the exception as it gained its reputation by refusing to comply with
foreign authorities draconian capital control laws. They need to keep this
reputation for their economy not to severely contract.
But
the key to owning gold outside a “Gold Confiscation Order” lies
in how to own the gold.
Julian D. W. Phillips
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@
No Gold
Standard or Money Supply Expander
Confiscation Nevertheless
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