Readers may not agree with our conclusions on the confiscation of gold, but we emphasis this reality. If we are wrong 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, you will lose your gold if not suffer the penalties the “Gold Confiscation Order” brings with it.
What if the Authorities order you to repatriate it?
Consistent with the desire of the authorities to reap as much gold from their citizens as possible, a “Gold Confiscation Order” is likely to require citizens to disclose their ownership of gold as well as require gold dealers, custodians and the like to disclose their client’s names and amounts of gold owned under threat of penalties. Once they have these details, they will record who owns gold outside their Jurisdiction, but is a citizen of the country. With little effort citizens who own gold offshore will become transparent to them.
Inevitably they will require its repatriation back home or the transfer of its ownership to the state.
So what does one do? If it is owned directly in your name and stored overseas, there is nothing you can do except repatriate the gold. Failure to do so will open you up to penalties such as came with the “Gold Confiscation Order” in 1933 [10 years in prison and or $10,000 [in 1933] in fines].
Some may expect to be forced to sell their gold, but this would make the exercise pointless, because the authorities can print as much money as they like through Quantitative Easing. No, they will want just gold, at that time.
That’s why you should own your gold in a way that ensures it cannot be repatriated or transferred, even if you were under pressure from your government. But more than that you must be able to assure your government that you cannot repatriate it or transfer it to them in a way that does not leave you culpable. [There is a way. Contact admin@StockbridgeMgMt.com for information]. Ideally this means if owning gold should continue, you’d able to sell it when you want in the quantities you want, whenever you want.
What if the Custodians banks of your gold ETF are told to pass your gold to the Authorities?
The first question an investor should ask when he believes he owns gold in an E.T. F. is does he own that gold or is it owned by the E.T.F.? The E.T.F. issues shares against the gold it owns. It is ‘unallocated gold’ so cannot be directly linked to an individual investor. In fact, should the E.T.F. for some government inspired reason go into liquidation, the investors who own shares representing gold in the E.T.F. will be unsecured creditors of the E.T.F.
The Custodian [the largest of which is the bank H.S.B.C.] bank will without hesitation hand the gold it holds for the E.T.F. over to the government or freeze it until the E.T.F. agrees to hand it to the government in compliance with a “Gold Confiscation Order”. The shareholders are likely to be compensated with government Treasuries, or the like in payment, at market related prices, at the time. The prices of those Treasuries are likely to be falling at the time.
The bottom line is that you do not own gold held by a gold E.T.F. Consequently you will be powerless to claim the gold that your shares represent.
We know of no other gold storage system that effectively blocks the confiscation of gold and the threats to the individuals, from government, that beneficially own the allocated gold, as does 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?
Sharps Pixley a London Gold dealer has reported 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! So, 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 banking crises we have seen since 2007 don’t happen again, because this time round they may well collapse. Prudence demands that investors don’t take that risk but act before they can’t. The risks of not guarding against this eventuality are enormous and 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. It’s a matter of risk and 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.
Legal Notice / 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 Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina 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 Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina only and are subject to change without notice. Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report.
This article is contributed by Gold Forecaster and does not represent the views or opinions of International Business Times.