By far, the question most asked by “worried” readers regards gold confiscation; in their minds, hanging over our heads like an albatross. After all, FDR decreed such in 1933 (under ENTIRELY different circumstances); and therefore, gold confiscation is GUARANTEED to occur today (facetious). I have written of this topic countless times before; but today, for the first time as a dedicated RANT topic.
The reason I’m addressing it now is in response to the latest “confiscation scare”; in this case, a pathetic bill, proposed by the pathetic Congress of a pathetic state…
According to this bill; and thus far, that’s all it is – a bill:
A person in the business of purchasing precious metal shall obtain a proof of ownership, create a record of the sale, and verify the identity of the seller. Also, he or she shall not pay in cash, shall record the method of payment, and shall keep a record of the sale for one year – or, if the purchase amount is over $500 – for five years.
In other words, registration of Precious Metal purchases; not unlike the Federal proposal (initially stuck within – of all places – the Obamacare bill) to mandate the registration of retail purchases above $600; not just for Precious Metals, but ALL retail transactions. That provision was eventually omitted; but at the time, generated the same “confiscation fears” as today.
Flaring the current wave of “CONFISCATION PROPAGANDA” is Julian Phillips – a PM newsletter writer who is generally one of the “good guys.” However, he has put many PM bulls in a tizzy with his recent articles, espousing the likelihood of gold confiscation…
David Schectman wrote an excellent article Friday Morning, titled “More on Gold Confiscation.” He, too, was responding to the Phillips articles – doing a fine job discussing both sides of the story. Miles Franklin does not have an “official position” on confiscation, but both David and I strongly agree it makes little sense. More importantly – as I have written countless times before – the ONLY way our reactive government would even consider gold confiscation would be if the dollar had already commenced its inevitable crash; at which point, I ask, would you rather have “PRICELESS PRECIOUS METALS OR WORTHLESS DOLLARS?”
Moreover, if they ever NEED gold to back a new monetary system – which they probably will, given the likely surreptitious sale, swap, an/or lease of most of the national reserves – do you really think their top priority would be tiny pockets of privately owned coins, located sparsely throughout the country?
How would they even locate these coins; let alone enforce their confiscation? Keep in mind that ZERO bullion was actually “confiscated” in 1933; and in today’s world of multiple transportation options, people can freely move their stashes at will; let alone, bullion held offshore – such as at Miles Franklin’s Brink’s vault in Montreal (where David Schectman, Andy Schectman, and myself hold most of our metal).
More likely, they’d acquire all they need by confiscating the GLD ETF; which supposedly is custodian to more than 1,200 tonnes – making it the sixth largest gold holder on Earth. GLD’s prospectus INTIMATES this may in fact occur; and thus, by owning GLD, you are not only risking that that its custodian (HSBC) has sold, swapped, or leased what it supposedly owns; but that the U.S. government will legally confiscate it…
My biggest issue with Phillips’ commentary is not his opinion; but that he – like so many misleading newsletter writers – discusses his views as if they were FACT. Julian Phillips has not the slightest clue how events will play out; nor does anyone else, for that matter. Jim Sinclair, for example, is FAR MORE credible than Julian Phillips; however, his staunch belief that gold confiscation is NOT POSSIBLE is no more rooted in truth than Phillips’ staunch belief that it WILL happen. Perhaps it will, and perhaps not; but even if such a decree is in fact ordered; that action – in and of itself – does not GUARANTEE the ultimate impact on your own personal holdings…
All we can do is consider the possibilities, and make our choices. Both David Schectman and I agree silver is a fantastic way to diversify one’s PM holdings; as silver confiscation is NEARLY IMPOSSIBLE, in our view, given its minute supply and indispensable industrial requirements. Platinum, too, is likely to be a decent PM diversifier; albeit with less certainty than silver, given its lack of monetary history.
Moreover, by holding some of your gold bullion outside the U.S., you are clearly making it more difficult to be confiscated. Could Julian Phillips be right; that the U.S. government will force offshore gold holders to transfer ownership to the government? Sure, I guess he could. But enforcing such an edict would entail quite a bit of government time and cost, just to acquire bit amounts. And if the government truly becomes that vigilant, I’ll take my Brink’s Canada option over holding it at home any day.
Hopefully, this RANT gives you some fodder to aid your personal due diligence into the topic. As I noted in “PROTECTION CONTINUUM,” each person must decide their optimal strategy for preparing for the inevitable currency collapse. No one KNOWS what will happen; so all we can do is “prepare for the worst, but hope for the best.”
PROTECT YOURSELF, and do it NOW!
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