We have seen a great deal in the media about the best place to hold your gold, so would like to address the issue in real terms.
So many assumptions are made by investors holding gold and silver that are not based on either real experience or on an understanding of how the monetary authorities work, leaving precious metal investors wide open to losing their gold to their governments, despite what they thought were adequate steps to prevent such an eventuality. If hard-pressed, many of the storage schemes available will admit to their systems being inadequate to halt the various financial agencies from knowing who they are, what they hold, and to preventing these agencies from accessing this gold in ways used in the past.
So perhaps it is time to take a look at the situation, when push really does come to shove!
Actions Taken to Report Gold
At the moment in the U.S. and many other developed world nations, it’s not necessary to report gold holding owned by citizens and at the moment, it’s not necessary for gold dealers with branches in their jurisdiction to report the names of citizens holding gold in their systems.
But that is at the moment. It’s a small step for the authorities to change that and require gold owned by individuals and to require dealers and custodians to report who the gold they hold is owned by in any particular jurisdiction. It’s somewhat naïve of gold owners to think that the present system of non-reporting will continue if the situations changes. So gold investors should be fully aware of this and act on it if this will damage their interests.
The Way Authorities Take your Gold
Place the Onus on You
One of the most important factors in ensuring taxes are paid or assets are confiscated that the authorities consider when acting is to place the onus of delivery of those assets on you and not on them. The cost of chasing assets throughout the world is horrendous and may well fail in the end for one simple reason.
Governments cannot impose their laws on other countries. There have been instances in the past when officials attempting to do so have found themselves in prison for attempting to do so.
So all the countries that have attempted to source information, to confiscate assets, or to take any other action against their citizens, have followed the same path. They turn on the owners first and demand that they supply the required information on those assets first.
Secondly, they turn on banks or institutions, including foreign ones with branches in their jurisdictions and demand information on their citizens. As we’ve seen in the recent past, the U.S. IRS turned on the Swiss banks with branches in the U.S. and applied pressure to them to hand over information on their citizens.
Even though these foreign banks had their homes in other countries, they were made vulnerable by the fact that a good proportion of their business was done in the U.S. We have no doubt that the same tactics will be used in the future.
So if the bank, dealer or vaulting company has branches in the U.S., then they’ll be in danger of retribution if they don’t either supply the required information or actually hand over the targeted assets. They will place their business interests above their client’s security and why shouldn’t they?
What about direct confiscation of assets?
If the assets are held by you individually then, as we all know, the authorities can simply send their agencies round to you home and take them. If they’re held in an institution, then they tell that institution to hand them over to them sometimes without reference to you, simply on the basis of a court or other order.
For instance, if you own the shares of a gold Exchange Traded Fund, there’s no need to contact you. If the authorities are allowed, in law (newly passed) to confiscate gold held by anyone, they would inform institutions like HSBC that they are to hand over the gold held in custody by them. The bank would then inform the gold ETF, who in turn would inform you.
Gold dealers in the jurisdiction of the authorities confiscating gold would have to hand over their gold and probably the names of clients who bought gold from them in the past. That would effectively close down the gold market in that jurisdiction. Black market dealing would bring its own illegalities and distortions.
What about gold that is held in your name outside that jurisdiction? Would that be out of the reach of your authorities? As we said earlier, the authorities would place the onus on you to bring your gold home and take it from you there. If its ownership is transferable, then they would require you to transfer the ownership across to them and your gold would be gone.
In short, if the gold you have is directly owned by you or able to be brought home by you, then the authorities would force you to do so. If you didn’t, then you face either imprisonment of huge fines or both, as was the case in the 1933 confiscation of gold.
When in 1974 U.S. citizens were given the “privilege” of owning gold again (not right) between the lines was the implication that, that “privilege” could be withdrawn again.
In the light of the above stark realities, let’s look at the different locations that you could hold your gold. We’ll start with Canada.
Is Canada Safe?
We have heard from many commentators that they feel Canada is the safest place to store their gold out of the reach of the U.S. monetary authorities. We see storage schemes telling us that this is the safest place to hold their gold and silver, but is this really so?
Evidence from the recent past –1974, just before the ban on owning gold was lifted—shows that Canada did cooperate with the U.S. authorities, helping them gather information and taking U.S. citizens gold from Canada. They even had the cooperation of the Canadian police, RCMP, in doing so. The famous C.V. Myers of Myers Finance and Energy was actually raided by the RCMP, acting on behalf of the U.S. authorities in an attempt to force a repatriation of gold from Switzerland and to uncover all the information on its U.S. owners. Click here for that story. We are aware that so many U.S. citizens hold their gold there.
As you are all aware the Canadian economy is dovetailed into that of the U.S., so that if Canada did not have access to U.S. markets, their economy would almost die. That dependence is a good part of the reason why Canada will cooperate on any issues that the U.S. would need them to. And it is this dependence that is critical in assessing the safety of any particular nation as a place to hold your assets.
We now look at Dubai, with some very modern vaults and storage systems. The low cost of storage is touted as a main reason why you should hold your gold there. But this can be overstated too.
When you consider just how dependent those nations on the west side of the Persian Gulf are on the U.S. for their security and often current structures, you quickly see how their national interests will override the relatively minor considerations of commercial enterprises. You can see how quickly even Dubai will succumb to pressure on U.S. citizen’s assets held there.
Some may feel that the use of another country with a totally foreign culture will offer protection. Yes, it may well do so, from developed nations, but that nation itself may find itself tempted to take the gold inside its borders if the needs of the nation demanded it, when push comes to shove. Small nations in particular are more vulnerable to this need.
Singapore is a nation that has grown tremendously since 1970 and some consider an ideal place to store their gold. We are told that it is not so important to the economy or government as some may think. It was broadcast that there is no Depository Bond agreement in place for vaulting companies. It is a small island and we consider it to have no advantages over other foreign locations for holding assets of foreigners.
Hong Kong does have a long history of professionalism, independence and integrity, but that is vulnerable to change in the light of recent history. It remains, in our opinion, probably more vulnerable than Singapore to outside pressure.
When Britain’s lease on Hong Kong ran out, the nation was handed back to China. It is part of China. At the moment it suits the Chinese to keep Hong Kong and a key commercial outlet to the West. It suits the Chinese, currently, to allow Hong Kong the degree of independence it now has. But if this changes, and it doesn’t suit China to do so, Hong Kong can become completely Chinese almost overnight.
This will affect the integrity of foreign assets held there. It may not suit the Chinese to continue to allow such policies to continue. Gold investors should take this into consideration and not look solely at the present, for they buy gold to preserve their wealth in stormy days too.
Switzerland in our opinion is the best nation to hold your assets, simply because protecting foreign assets is not only an integral part of their economy, but also because they have a proven track record of over 300 years. Switzerland has been neutral in all wars for all that time too, including the two World Wars. They are so fierce in guarding this neutrality that they have a constant army, including reservists of over 1 million men at all times. They’ve their bridges and tunnels mined ready to close down the nation in the case of attempted invasion. Should the Swiss decide, then their nation is virtually impenetrable!
Cuckoo clocks and chocolate are no longer key features of their economy but the banking industry is. The trouble is that the banks turnover including foreign branches is 5 times the Swiss GDP. Hence, the vulnerability of any Swiss business with branches outside Switzerland.
Even vaults and security/logistics companies with large branches outside Switzerland are vulnerable to attack. That’s why Via Mat has rejected U.S. Taxpayers as clients of theirs. And that’s why Brinks may follow the same line even with their vaults outside the U.S. no matter where they have them.
But businesses with their activities inside Switzerland lose their vulnerability to such pressures. We consider Switzerland the safest of places to hold foreign assets because of their history, when push really did come to shove!
As we pointed out at the beginning of this article, where you hold your assets is not that important. Even if you held them in Timbuktu, the authorities of your jurisdiction can force you to repatriate them under severe threats. So what is the answer? One has to be able to continue to hold gold in a way that complies with the laws of your land even under a draconian order to hand your precious metal to the government. After all, we must have a system now in place, ahead of such orders to retain your gold even when push comes to shove! So it boils down to “how” as well as “where” you hold your assets that helps you to achieve your goal.
Where gold is held on behalf of the investor, where its ownership remains yours and its ownership is not transferable is the way to go. Additionally, Switzerland remains an effective location for this in our view. Your gold in Switzerland in this way ensures gold remains in your beneficial ownership.
Quickest, Easiest, Cheapest Way to Move and Secure Gold in Switzerland
A re-look at how you hold your gold and act prudently, without inciting the angst of your government ahead of the problem is the wise way to go. To find out how best to do this look at www.UltimatGoldTrust.com & www.Stockbridgemgmt.com then contact admin@StockbridgeMgMt.com
Stockbridge Management Alliance Ltd, under the guardianship of the Ultimate Gold Trust S.A. accepts the transfer of the gold you own already. So for those private customers with a potential U.S. tax liability, the quickest, easiest and cheapest way of moving their gold is to transfer it under the wing of Stockbridge Management Alliance Ltd, and incur no shipping or insurance costs when moving your gold. The gold will remain in Switzerland, as before, but more securely and protected from other dangers and appropriation.
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.