Best of the Week
Most Popular
1.UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - Nadeem_Walayat
2.UK General Election 2015 Seats Forecast - Who Will Win? - - Nadeem_Walayat
3.Gold Price Downtrend Looks Set to Continue - Clive_Maund
4.Commodity Prices Set To Plunge Below 2008 Lows - Austin_Galt
5.New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - GoldCore
6.Gold and Silver Stocks or General Stock Market Indices? - Rambus_Chartology
7.“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown - GoldCore
8.UK House Prices Trend 2015 and the May General Election - Nadeem_Walayat
9.12 Reasons Why Barry Ritholtz and Many UK Experts Are Mistaken On Gold - GoldCore
10.Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - Mike_Shedlock
Last 5 days
How to Play the Big Broker Stocks When Interest Rates Rise - 5th Mar 15
Here's What Stock Market Bulls Might Be Overlooking - 5th Mar 15
U.S. Soaring Crude Oil Stocks - Cushing and Gulf Coast Storage Filling Up Fast - 5th Mar 15
Japan's Intelligence Reform Inches Forward - 5th Mar 15
Gold Miner Index Breadth Oscillator, Forward Reckoning® - 5th Mar 15
Gold Price Set To Plunge Below $600 - 5th Mar 15
UK General Election Forecast 2015 - Immigration Crisis, SNP Insurgency and Housing Mini-Boom - 5th Mar 15
Spock, Debt and the Kingdom of Denmark - 5th Mar 15
The Psychology of a Sideways Stock Market Trend - 5th Mar 15
Freedom from America - Getting Out Of Dodge - 5th Mar 15
What Top Hedge Fund Managers Really Think About Gold - 4th Mar 15
U.S. Dollar Strategic Backfire On U.S. Government Policy - 4th Mar 15
Canada’s Central Banks Orders End to ‘Spocking’ Of Canadian Dollar - Defacing Debasing Currencies - 4th Mar 15
Chicago's Only Possible Salvation: A Detroit-Like Bankruptcy - 4th Mar 15
Gold Price and Mining Stocks Decline Together - 3rd Mar 15
Financial Slaughter - The Silence of the Lambs - 3rd Mar 15
Bondholders “Bailed In” In Austria – New Banking Crisis? - 3rd Mar 15
How to Profit from the Coming Oil Price Crunch - 3rd Mar 15
Is Japan Zimbabwe? Could Japan go Hyperinflation? - 3rd Mar 15
Bill Gross Says Fed May Raise Rates 25 Basis Points in June - 3rd Mar 15
The Secret Behind My Hedge Fund Trade on U.S. Housing Market - 3rd Mar 15
BLS CPI Lie - How's That Dsflation Working Out for You? - 3rd Mar 15
Tesla Bonfire of the Money Printers’ Vanities - 3rd Mar 15
Gold Demand in UK, Europe and U.S. – Reuters Interview GoldCore - 2nd Mar 15
Watch the Skies... for Investor Profits - 2nd Mar 15
How Investors Can Identify the Best Small-Cap Stocks - 2nd Mar 15
Gold and Silver - What If the Precious Metal Stocks Bulls are Back - 2nd Mar 15
Students Getting a PhD in Subprime Debt - U.S. Debt Breaking Bad Part 3 - 2nd Mar 15
The Stock Market is in The Process of Major Top! - 2nd Mar 15
Stock Market Weakening Trend - 2nd Mar 15
Gold Price Glimmer of Hope - 1st Mar 15
Stock Markets Are Riding High on Thin Air - 1st Mar 15
Varoufakis vs. the Troika - Showdown in Athens - 1st Mar 15
Subprime Rising - U.S. Debt Breaking Bad Part 2 - 1st Mar 15
Gold CoT Improving, But ... - 1st Mar 15
UK General Election 2015 Seats Forecast - Who Will Win? - 28th Feb 15
UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - 28th Feb 15
Stocks Bull Market Continues - 28th Feb 15
U.S. Debt Breaking Bad - 28th Feb 15
NATO Frankenstein - When Centralization Scales Beyond Our Control - 28th Feb 15
Gold And Silver Insanity Prevails; Precious Metals Without Direction - 28th Feb 15
Fed Raising U.S. Interest Rates - Shovelin’ Schmitt Against the Tide - 28th Feb 15
Don't Let This Stock Market Myth Cost You Your Gains - 28th Feb 15
Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - 28th Feb 15
Stock Market Indexes Creeping Towards the Edge - 28th Feb 15
GGD Going for Mexican Gold - 27th Feb 15
Foreign Real Estate Is the New Swiss Bank Account - 27th Feb 15
10 Reasons Washington Has War Fever - 27th Feb 15
Gold and the Euro Tragedy, Iraq 3.0, Ukraine Conflict Three Ring Circus - 27th Feb 15
Deepak Chopra - New Age Genius or Bullshit Expert? - Video - 27th Feb 15 - Videos
New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - 27th Feb 15
Will Month Long Stocks Rally Continue? - 27th Feb 15
The Only Public Hedge Fund You Should Own - 27th Feb 15
UK House Prices Trend 2015 and the May General Election - 27th Feb 15
Why America is Ungovernable - The Republicans’ Civil War - 27th Feb 15
Gold vs Gold Stocks: Bullish Anomaly Developing? - 27th Feb 15
I Heart Capitalism, Nasdaq Stocks, Then And Now - 27th Feb 15
The Fed’s History of Assassination - 27th Feb 15 i
Gold Bull Market Forecast - Money Will Rotate Into These Dead Investments - 27th Feb 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The State of the Global Markets 2015

Government Gold Confiscation 2013

Commodities / Gold and Silver 2013 Jan 04, 2013 - 12:48 PM GMT

By: Julian_DW_Phillips

Commodities

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. (For more information e-mail: admin@StockbridgeMgMt.com)

Nations Colluding to Impose Confiscation Orders?

Capital and Exchange Controls are usually considered illegal outside the country in which they are imposed; however, as a "Gold Confiscation Order" would have as its purpose to shore up the banking system internationally, some countries may cooperate to some extent on this matter.

  • In the Eurozone -- now that there is going to be a banking union -- individual countries would be required to comply with an E.U. decision on gold confiscation. (Switzerland would remain outside this.)
  • If the Order were enforced in the U.S., then it is likely that the U.K. would cooperate with the U.S. in imposing this on gold owners and gold dealers or custodians. (Again Switzerland would be outside this.)

Just how far this would go is difficult to gauge, but we must remember that the banking system overall would be supportive as the amount of gold that would become available in a confiscation, may enable the banking system to function much better. It's in all their interests to support such confiscation orders. We believe that a private vault outside the banking system would remain a safe place to hold gold, provided it was in Switzerland and nowhere else.

We know of no other gold storage scheme that effectively blocks the confiscation of gold and the threats to the individuals (from government) that beneficially own the allocated gold, except the twin scheme of Stockbridge Management Alliance Ltd. under the guardianship of the Ultimate Gold Trust S.A., a Swiss company. (For more information contact admin@StockbridgeMgMt.com)

Is there really a danger of gold being confiscated? We believe that there is! This is part of what we said in the Introduction to this series:

"Importantly, Central Banks and the Authorities possibly will not wait for the monetary system to crash before acting to ensure they have enough gold to keep the monetary system working. They will act well ahead of that time to make sure they avoid a collapse and attempt to engineer the event so as to catch gold investors by surprise, removing their chances of making any contingency plans. With their prime objective being to shore up confidence in the monetary and banking system, they could not afford to signal the market about their intentions beforehand. We are not just talking about the U.S.A. but many other countries that may precede or follow the U.S. in these acts. The trouble is that the gold they 'acquire' maybe yours. Wisdom demands that the crises seen since 2007 do not happen again because this time around, they may collapse. Prudence demands that investors don't take that risk but act before it's too late. The risks of not guarding against this eventuality are enormous; the rewards of guarding against it are massive. If it doesn't happen you will lose little if anything; if confiscation does happen, then you lose a lot - a matter of risk/reward!

We believe that the confiscation of gold for this purpose is a very real and present danger and have organized a way to protect against that eventuality."

Gold Forecaster regularly covers all fundamental and Technical aspects of the gold price in the weekly newsletter. To subscribe, please visit www.GoldForecaster.com

By Julian D. W. Phillips
Gold-Authentic Money

Copyright 2012 Authentic Money. All Rights Reserved.
Julian Phillips - was receiving his qualifications to join the London Stock Exchange. He was already deeply immersed in the currency turmoil engulfing world in 1970 and the Institutional Gold Markets, and writing for magazines such as "Accountancy" and the "International Currency Review" He still writes for the ICR.

What is Gold-Authentic Money all about ? Our business is GOLD! Whether it be trends, charts, reports or other factors that have bearing on the price of gold, our aim is to enable you to understand and profit from the Gold Market.

Disclaimer - This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold-Authentic Money / Julian D. W. Phillips, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold-Authentic Money / Julian D. W. Phillips make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold-Authentic Money / Julian D. W. Phillips only and are subject to change without notice.

Julian DW Phillips Archive

© 2005-2015 http://www.MarketOracle.co.uk - 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

Free Report - Financial Markets 2014