Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
Will Turkey Drag NATO into War With Russia in Syria? - 25th Nov 15
George Osborne’s Autumn Statement and Spending Review Full Text - 25th Nov 15
Will Fresh QE From ECB Boost Gold? - 25th Nov 15
Sheffield, Yorkshire and Humberside House Prices Forecast 2016-2018 - 25th Nov 15
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15
Limits to Economic Growth - Challenge and Choices - 22nd Nov 15
Long Dollar Trade and Current Copper Price Below Cost of Production - 22nd Nov 15
UK Housing Market House Prices Affordability Crisis - Video - 21st Nov 15
The Fed Has Set the Stage for a Stock Market Crash - 21st Nov 15
Stock Market Primary V Wave Continues - 21st Nov 15
Gold And Silver - Value Of Knowing The Trend - 21st Nov 15
UK Footsie Bulls Set To Foot The Bill - 21st Nov 15
UK Housing Market Affordability, House Prices Momentum and Trend Forecast - 21st Nov 15
GDX Gold Miners’ Strong Q3 Results - 20th Nov 15
End of Schengen, Stock Market’s Technical Strength Grows - 20th Nov 15
Justice for All and The Curious Case of Zambia - 20th Nov 15
Paris, Sharm el-Sheikh, and the Resurrection of Old Europe - 20th Nov 15
Silver Prices and The Management of Perception - 20th Nov 15
Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - 20th Nov 15
Waiting for Goldot Again - 20th Nov 15
Michael Curran Goes Down-Market Shopping for Gold Stock Winners - 20th Nov 15
Why Isn’t This Incredibly Bearish Bond Market Development Making the News? - 19th Nov 15
SPX Appears to have Stopped its Rally - 19th Nov 15
The Great Fall Of China Started At Least 4 Years Ago - 19th Nov 15
Using Elliott Waves: As Simple As A-B-C - 19th Nov 15
Has Deflation Been Ddefeated? - 19th Nov 15
Dow Jones Stock Market Index is Not Going to Crash - 19th Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

Will the Government Confiscate Your Gold?

Commodities / Gold and Silver 2012 Dec 10, 2012 - 09:46 AM GMT

By: Money_Morning


Whenever I write about gold, I can be certain of two things.

First and foremost, I know that readership will be exceptionally high. The interest in gold, silver and other precious metals is as intense as I've ever seen.

And, second, I can be sure that, in the days that follow, I'll receive a slew of e-mails, phone calls and letters from folks asking some variation of the same three questions:

  • What are the chances that the federal government will confiscate my gold?
  • Can I put gold in my IRA?
  • And how much gold should I hold?
The bottom line is that a lot of folks are investing in gold for the first time.

To give those newcomers a unique (and informed) perspective on these questions, I picked up the phone and called industry colleague Rich Checkan at Asset Strategies International (ASI), a precious-metals and foreign-exchange dealer that operates out of Rockville, Maryland ... just down the highway from our own offices here in Baltimore.

ASI is a veteran player, having just celebrated its 30th anniversary, so I was certain that Rich and his staffers would have something of value to say on these topics.

On that point, I was right.

Here's an excerpt of my interview with ASI.

(Q): Rich, one of the questions I get asked most frequently has to do with confiscation - the Roosevelt Administration Executive Order of 1933 that required folks to turn over most of their gold coins, gold bullion and gold certificates in return for paper currency. There's a big concern that this will happen again - especially given the big deficits, massive debt load and challenges that Washington now has to deal with. What's your view on that?

Rich Checkan (A): It's very interesting Bill ... we just hosted our 30th Anniversary Seminar - which we titled "Finding Certainty in Uncertain Times." Despite the high attendance, nobody asked if gold, silver and other precious metals were going to appreciate in the months and years to come - that was a foregone conclusion because of the challenges you've just cited.

But the question of confiscation was very high on their list and, as you say, seems to be a very real concern of investors in general.

Now, I believe confiscation unlikely for a number of reasons.

First, the major economic concern in 1933 was deflation, not inflation, and the U.S. dollar was still tied to gold. We were not able to simply print more money to fund increased governmental spending, so the U.S. government took in the gold, handed you dollars and achieved the goal of increasing the monetary base.

A second reason I believe this is that the cost would also be enormous at this point. In 1933, the government had some control over the value of gold - in fact, if you study your history you'll see that the government actually raised the price of gold soon after taking it all in. Washington doesn't have that luxury ... that latitude ... today. If the federal government took every ounce of gold from every American, it would still be a traded commonality that might rise or fall.

Further, the amount of gold Americans hold would not be enough to be of any benefit either. If we took every ounce of gold from every American right now and put it in the U.S. Treasury, we wouldn't even put a dent in the current debt, which has resulted from decades of fiscal irresponsibility at the hands of both parties.

What you can tell your subscribers, Bill, is that a much more likely concern is exchange controls - a policy where the citizens of a country cannot purchase assets outside the country and assets in any other currency than their base, domestic currency. Why? Forcing citizens to invest in assets denominated in the domestic currency creates artificial demand, which can drive the currency up in the short term.

(Q): What can an investor do about that?

Rich Checkan (A): As we tell our clients: Do today what you may not be able to do tomorrow. In short, if you intend to establish a financial foothold offshore, the time to so do is before the opportunity vanishes.

(Q): Rich, another query I get quite frequently from my Private Briefing subscribers is: "Can I put gold in my IRA?" What's your response to that?

Rich Checkan (A): The answer - which is perhaps the biggest surprise to many of our clients, as well - is a resounding "Yes."

However, the truth is most IRA custodians just aren't able, or willing, to offer physical storage of precious metals. Instead, they often steer you towards options that maximize their own profit.

But here's the good news: There are many methods of investing your IRA into precious metals. Two that are particularly worth mentioning are the Perth Mint Certificate Program (PMCP) and Domestic Storage.

Let's take a look at them both.

The Perth Mint Certificate Program (PMCP) offers one of the safest, most cost-effective means to invest your IRA into precious metals and diversify it offshore at the same time. It's the oldest, continually operating mint in the world, and it has the benefit of being owned by the AAA-rated government of Western Australia.

One advantage is the low commission: 2.25% to buy and 1.25% to sell. Another advantage is free storage for gold or platinum. Silver does currently carry a low storage fee of 0.95% per year. The minimum purchase to open an account at the Perth Mint is $10,000 (USD), which can be divided between gold, silver and platinum. Metals stored at Perth are insured for 100% of their current market value at all times and are guaranteed by the government of Western Australia.

The Perth Mint also has a depository program (PMDP) with a minimum balance of $50,000 to open an account. However, the depository program is structured more like a statement of account, similar to a banking arrangement. It was designed for hedge funds and the like and is geared more toward institutional investors.

The certificate program, on the other hand, was designed from the start to be a retail program - geared to individual investors both large and small.

(Q): What about domestic storage?

Rich Checkan (A): If you are more comfortable storing your metals closer to home, you can choose domestic storage through your IRA custodian at an approved depository. Keep in mind, however, that there are some restrictions. You will need to purchase specific coins or bars, which meet criteria put in place to ensure quality. In general, IRAs will only hold pure or near-pure precious metals. You can even choose to take delivery of your physical metal as a distribution at any time, to include when you reach the age where Required Minimum Distributions (RMDs) are required.

(Q): The last question we get here a lot is pretty straightforward: Investors ask us what percentage of their portfolios should be focused on gold. What's your view on that?

Rich Checkan (A): As you know, Bill, we here at ASI are not financial advisors. That said, the three decades we've spent in this industry does give us a unique view. For instance, the World Gold Council (WGC) will tell you that, statistically speaking, "portfolios containing gold are generally more robust and less volatile than those that do not." WGC research has demonstrated - and many advisors agree - that holding around 10% of your entire net worth in gold - as "insurance" - smooths out volatility and protects your holdings from the worst periods in the overall market.

In addition to your "core holdings" or wealth insurance, many advisors suggest an additional 10% to 15% of investible assets with a for-profit motive as a hedge against the current market conditions - thanks to low interest rates, the threat of rising inflation and [Fed Chairman] Ben Bernanke printing as much money as he can as fast as he can.

As to how much should be invested in each specific metal, the answer is really best left to the individual investor ... their emotional makeup and their tolerance for risk. In other words, they need to create the mix that lets them best sleep at night.

For wealth insurance, that mix is typically either all gold or mostly gold with some 90% (purity) U.S. silver coins for divisibility.

For the appreciation-oriented precious-metals allocation, many investors are very comfortable with a mix ASI has long favored: 40% in gold, 40% in silver and 20% in platinum. In the past few years, palladium has become an increasingly interesting story and may serve a portfolio as well within that 20% platinum allocation.

Why the variety? One simple adage will answer that: Don't put all of your eggs in one basket. That's why ASI has long been saying not to put all of your money in one currency, one country or one asset class.

(Q): Any final thoughts?

Rich Checkan (A): More than ever - given the Fed's QE proclivity for printing, the anemic interest rates investors face, and the impending fiscal cliff - gold and other precious metals figure to play a role in successful portfolios like they never have before.

[Editor's Note: Our thanks to Rich Checkan at Asset Strategies International for taking the time to talk with us. I thought this was the best interview we've done all year. It just goes to show you how far Bill will go to get to the bottom of the story. If you'd like to learn more about Bill's Private Briefing click here. It's always a fabulous and profitable read]

Source :

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History