Article: Gold Confiscation 2.0

While the familial infighting of free marketers continues to rage over inflation and deflation - most of the time, about as intelligibly as a wet newspaper, I might add - a more pressing issue with gold buyers is that of gold confiscation. For bullion investors, the value of gold will matter little if it is confiscated again.

So, will the government confiscate gold? It is probably more likely than unlikely. BHO has shown himself to be the new FDR, and the present administration is intent on socializing every facet of our country and our government. Conveniently, our economic crisis almost perfectly mirrors the Great Depression, giving newsworthy cause to the populus for "change." It is no longer unthinkable that the Fed would repeat the heist of 1933 with the POTUS as its puppet.

The Gold Confiscation Act of April 5, 1933

Q. What was the pretext for the 1933 gold confiscation? A national emergency. By now, we are all pretty familiar with that phrase. It is hardly unthinkable that confiscating gold might be packaged by the national media as "patriotic." The following introduction, beginning with the words, "I, Barack H. Obama, . . . " are easily conceivable streaming through today's "national teleprompter."

"I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist."

Q. To whom was the gold delivered - the Treasury Office? Nope. Surprise, surprise, it was delivered to the privately-owned Federal Reserve Bank; the same bank Ben Bernanke faults for causing the national emergency in the first place! (see: Bernanke Speech).

"Section 2. All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership."

Q. Who was responsible for delivering the gold? Individuals, partnerships, associations and corporations; also ALL member banks of the FDIC. For those storing gold in bank vaults, take warning.

"Section 5. Member banks shall deliver all gold coin, gold bullion, and gold certificates owned or received by them (other than as exempted under the provisions of Section 2) to the Federal reserve banks of their respective districts and receive credit or payment thereof."

Q. Who pays for the safe delivery and transport of the gold - The Federal Reserve? Of course not. You do.

"Section 6. The Secretary of the Treasury, out of the sum made available to the President . . . will in all proper cases pay the reasonable costs of transportation of gold coin, gold bullion, and gold certificates delivered to a member bank or Federal reserve bank in accordance with Sections 2, 3, or 5 hereof, including the cost of insurance, protection, and such other incidental costs."

Q. What if I do not cooperate? Resistance is futile.

"Section 9. Whoever willfully violates any provision of this Executive Order or these regulation or of any rule, regulation or license issued there under may be fined not more than $10,000 (ed note: in 1933, that was a fortune), or, if a natural person may be imprisoned for not more than ten years or both; and any officer, director, or agent of any corporation who knowingly participates in any such violation may be punished by a like fine, imprisonment, or both."

So is gold a good investment? Well, by definition, gold is not an investment. Gold is money. Gold does not create new value; it is a store of wealth, a safe haven in rising and falling markets.

Nevertheless, I do believe it is imperative to buy and hold gold in your possession. During inflationary times gold is a hedge against rising prices, and in a deflationary environment it appreciates against all other commodities due its intrinsic monetary qualities. But we must hold gold with a certain measure of awareness. If and when a similar measure is enforced, akin to the Act of 1933, it will be time to shift your wealth into alternative assets or to silver bullion, which as yet has never been confiscated. (And, by the way, if you think storing your gold bullion overseas provides greater protection, think again. Foreign exchange controls are coming, along with the potential for repatriation of overseas monetary assets. Even now, the law states that you must report the existence of all "foreign bank, securities or "other' financial accounts" if the aggregate value of those accounts exceeded US$10,000 at any time during the preceding year.)

In the coming weeks I will further examine foreign exchange controls along with alternatives for protecting your assets overseas. If confiscation is coming, it is time to begin planning your next move.

Til next time, that's my Saab Story.