Confiscation

Doug
By Doug on Thu, Dec 13, 2012 - 10:28pm

http://www.financialsense.com/contributors/julian-phillips/confiscation-of-gold-then-what-part-one

Quote:
Several analysts and respected members of the gold community have stated that the confiscation of gold is unlikely because the conditions that precipitated it in 1933 don’t exist anymore. We agree wholeheartedly with that view. But we feel that the confiscation of gold is extremely likely for very different reasons.

For the last 40+ year, the world has used un-backed paper money and attempted to discredit gold. This system is entirely reliant on the confidence people have in governments and the central banks that issue money the money (at will). Over the 40 years of this experiment, gold has gone from $35 to $1,715, a rise of nearly 50 times. Since 2007 we’ve seen banking crises across the developed world leaving bankers borrowing money from central banks and lending it back to them, rather than lend it out into the general economies or in some cases to each other...

...With gold being of a value far in excess of its price in the monetary system –as seen in its use as collateral via the Bank of International Settlements currency/gold swaps of the last few years— and with gold soon to become a level 1 asset on bank balance sheets, the demand for physical gold from the banking system as well as from emerging world central banks is set to rise tremendously and soon. The Basel III discussions allow for this to happen any time between 1 January 2013 and 1 January 2015. If gold is re-rated to a level I asset, as is proposed by Basel III (U.S. bankers are in on the discussions) then there is not enough readily-available gold to provide both the central banks of the world and the banking system with sufficient for gold to play this role.

That’s why your gold may be confiscated.

The author of this is Julian Phillips who posts regularly on Financial Sense.  I don't know how much credence to give his dire warning, but it is notable that he is selling a service - holding your gold in Zurich in a structure that is supposedly safe from US attempts to confiscate.  Plus, I believe I read recently that Basel III is not making gold a level 1 asset, but the assertion that it is appears to be a largely internet meme.

Also, as I pointed out in another post on another thread  http://www.peakprosperity.com/insider/80172/last-nights-gold-manipulation-event  thread, two people with considerable PM experience have recently suggested getting PMs out of IRAs (Bob Fitzwilson and Don Stott of Colorado Gold).  No one responded at the time, but since this is a gold group, perhaps both topics could raise some interest.  I know I'm interested.

Doug

11 Comments

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 1876
Who knows?

Doug -

It's a fair question. I'm not knowledgable enough about Basel III to comment on what the central banks are thinking, but I'll share my perspective on the matter in general.

Personally, I only see confiscation risk if gold is remonetized. That doesn't mean that gold will be confiscated if we return to a gold standard, but I see the odds of confiscation as much lower if we don't.

If we do return to a gold standard, then confiscation will depend on several issues. Two important ones will be

  1. the degree of gold backing (100%? Or something less?)
  2. the true amount of gold the US holds (the US Treasury currently reports the US holds 261.5 million troy ounces, though there are parties that dispute we hold that much)

If the goverment decides it does not hold enough ounces to meet the new backing requirements, then confiscation (surely to be termed something nicer, like "voluntary remittance") becomes much more likely.

If this does come to pass, I see two outcomes as probable:

  1. the government will offer to pay current gold holders a premium to "remit" their gold
  2. the government will go after the larger concentrated pools of bullion first before pursuing holdings at the individual household level

The premium paid will most likely not be as high as whatever gold will be worth once a remonetized currency is issued, but it should be higher than the pre-monetization spot price. Translation: you'll still get a positive return on your current gold holdings. The bad news is you'll be holding paper - but you'll have more than those who didn't have gold to remit.

With the advent of custodian depositories for ETFs, hedge funds, IRAs, and other vehicles that didn't exist back during the 1934 confiscation, there are now a relatively small number of pools that hold a lot of gold at the retail level. It's going to be much more expedient, both logistically and politcally, to go after those piles of bullion than to start paying visits to citizen households. So there may be time for the individual bullion investor to take steps when the Feds are occupied shaking down these big players.

What should those steps be? That's a good topic for this group to discuss. One thing that sounds prudent to me, though, is you'll have more options if the gold is physically in your hands. The more degrees of separation between you and your bullion, the greater the risk you can't get to it once remonetization is announced.

A good friend is currently going through the process of having the coins he holds through his IRA delivered to him. He'll be taking a hefty hit with income taxes and the early withdrawal penalty, but with the certainty of higher future tax rates and his personal nervousness regarding confiscation, he's not second-guessing his decision.

And I'm not trying to talk him out of it.

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1844
Probability Versus Impact

Time to bring out the handy-dandy Probability/Impact Table that they use with taking action on climate change or picking up dog poop when neighbors might not be looking.

If you have gold, what is the Probability of confiscation, and what is the likely Impact of confiscation upon your family's financial well-being?

CONFISCATION Low Risk Medium Risk High Risk
Low Impact Flaunt Your Bling, Mofos! Hide In Closet Hide In Water Closet
Medium Impact Hide In Safe Bury Deep Bury Deeper
High Impact Bury Deeper Six Feet Under Not Deep Enough

Poet

robbie's picture
robbie
Status: Bronze Member (Offline)
Joined: Jul 16 2008
Posts: 91
Why not hold the coins in his

Why not hold the coins in his possession in an IRA:LLC? If confiscation occurs it won't matter whether personally held coins are in an IRA or not no?

adulik's picture
adulik
Status: Member (Offline)
Joined: Sep 26 2012
Posts: 1
Confiscation of Gold - Then What?

Interesting coverage of the potential of GDL confiscation on Kitco:

http://www.kitco.com/ind/AuthenticMoney/20121213.html

Following parts will make an attempt to answer the questions below.

Part 2

  1. What will happen to your gold if it is owned directly in your name?
  2. What if it is in a safe and hidden place at home?
  3. What if it is in a safe deposit box at the bank?
  4. What if it is unallocated and sitting in an E.T.F.?
  5. Does it help for your gold to be allocated?
  6. What if a bank holds it for you?

Part 3

  1. What will the Authorities do when they want your gold?
  2. How will you use your gold if it is illegal to own it?
  3. Will a ‘Black Market’ in gold work?
  4. Is it enough to hold your gold outside your country?
  5. What if the Authorities order you to repatriate it?
  6. What if the Authorities order you to transfer ownership of your gold to them?
  7. What if the Custodians banks of your gold E.T.F. are told to pass your gold to the Authorities?

Part 4

  1. The evidence of history on Confiscation and Exchange/Capital Controls.
  2. After U.B.S. is Switzerland really safe?
  3. Are Private Vaults safer?
  4. Will you be forced to sell your gold under a confiscation Order?
  5. How can you sell or use your gold if it is illegal to own it?
  6. Do you have time to wait before you act?
  7. How can S.M.A./U.G.T. overcome a Gold Confiscation Order?
KugsCheese's picture
KugsCheese
Status: Platinum Member (Offline)
Joined: Jan 2 2010
Posts: 708
Gold also gets confiscated in

Gold also gets confiscated in times of war.  Some questions:

Is gold safe in Switzerland during war?

Do insider power players store gold in Switzerland?  If so, will the insiders make Switzerland off limits for confiscation?

Can Switzerland fend off a physical attack, how practical is an attack in the mountains?

What is being taught in Switzerland schools with regards to personal sovereignty?

Are the Swiss like the French?  Or anti-French?

Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
You need a plan B

Adam Taggart wrote:

. snip...

So there may be time for the individual bullion investor to take steps when the Feds are occupied shaking down these big players.

What should those steps be? That's a good topic for this group to discuss. One thing that sounds prudent to me, though, is you'll have more options if the gold is physically in your hands.

...snip

I agree that confiscation is a low probablilty event because of many of the arguments that people here and elsewhere have provided. That does not mean that one should not have a contingency plan for such a low probability event. As Adam says you need to have possession to have alternatives.

I am sure resourceful people would be able to come up with a plan to circumvent confiscation.

It is always good to have a plan B

Ken

Magnum03's picture
Magnum03
Status: Bronze Member (Offline)
Joined: Dec 14 2012
Posts: 31
The swiss are the swiss. They

The swiss are the swiss. They are neither french, italian nor german. Switzerland is one of the most direct democracies in the World and every adult male is a member of the armed forces and is issued and required to have his weapon at home - no school shootings there.

What you need to think about is, how are you going to get to your gold, when you need it? Zürich is a 12 hour drive away from me, but if you afe in the US, how are you going to get to your gold? 

Do you think shipping is an option in a crisis? Do you think it will be safe?

Magnum

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2763
Thanks Adam

Quote:
With the advent of custodian depositories for ETFs, hedge funds, IRAs, and other vehicles that didn't exist back during the 1934 confiscation, there are now a relatively small number of pools that hold a lot of gold at the retail level. It's going to be much more expedient, both logistically and politcally, to go after those piles of bullion than to start paying visits to citizen households. So there may be time for the individual bullion investor to take steps when the Feds are occupied shaking down these big players.

It is good, and curiously refreshing, to remember that I'm a little guy in the greater scheme of things.  Maybe I'll be able to fly below the radar.

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
Carrots and Sticks

If confiscation happens, it will likely take a different tack from the olden days. There are so many more tools available to the elected than were available during the last confiscation. What if the government offered to buy PMs at a premium (carrot) and also made it illegal to use them for barter (stick)?

Government could legally require all websites to submit all transactions (like these posts ... along with your real name and payment information.) That may not be necessary. All posts have already been sniffed by others in cyberspace (when you hit the save button and send it on its merry cyberspace journey.) Profiles can be easily constructed from your posts, e-mails, etc. I'm amazed at the amount of personally identifiable information that is freely shared on various sites. Rest assured that it is already being scrutinized with the utmost level of automation.

Is there really any place to hide? Does it really matter?

As anonymously as possible,

Grover

Abu Hudhayfah's picture
Abu Hudhayfah
Status: Member (Offline)
Joined: Dec 28 2012
Posts: 8
Prepare for the worst, hope for the best

Does everyone remember what happened during Hitler's rule? People got their gold and silver fillings forcefully pulled from their mouths!!

F.D.R's time as president during the great depression, it became a crime to hold gold and you faced stiff penalties (i think hefty fines and imprisionment if Im not mistaken). Whose to say that the FED wont resort to even more diabolical aims to get its hands on your PM's??

Start looking for hiding places for your PM's and yourself for that matter! Like the crash course has taught those who have taken it--plan for the worst, should it actually happen,, you're well pre-pared and in the right position to deal with it. 

Abu Hudhayfah's picture
Abu Hudhayfah
Status: Member (Offline)
Joined: Dec 28 2012
Posts: 8
Does it really matter? Yes....

I agree with you that, it may seem like there is no place to hide (heard they can even track you down in real-time using drones) but like the old saying goes "if theres a will, theres a way"!!

Its at times like this where Preppers are starting to look like modern day Einstiens.

The only logical way I can see protecting your PM's from forceful confiscation via the carrot and stick method, is that you join well numbered, close-knit communities outside of major cities and invoke your right to bare arms. May seem a little extreme, but no one has the right to your personal property except YOU.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments