Treasury Department Claims Power to Seize Gold, Silver--and Everything Else, GATA Says

MANCHESTER, Conn.--(BUSINESS WIRE)--Aug. 22, 2005--The U.S. Government has the authority to prohibit the private possession of gold and silver coin and bullion by U.S. citizens during wartime, and, during wartime and declared emergencies, to freeze their ownership of shares of mining companies, the Treasury Department has told the Gold Anti-Trust Action Committee.

But gold and silver owners aren't alone in such jeopardy. For the U.S. Government claims the authority in declared emergencies to seize or freeze just about everything else that might be considered a financial instrument.

The Treasury Department's assertions came in a letter to GATA dated August 12 and written by Sean M. Thornton, chief counsel for the department's Office of Foreign Assets Control, who replied to questions GATA posed to the department in January. It took GATA six months and some prodding to get answers from the Treasury, but the Treasury's reply, when it came, was remarkably comprehensive and candid.

The government's authority to interfere with the ownership of gold, silver, and mining shares arises, Thornton wrote, from the Trading With the Enemy Act, which became law in 1917 during World War I and applies during declared wars, and from 1977's International Emergency Economic Powers Act, which can be applied without declared wars.

While the Trading With the Enemy Act authorizes the government to interfere with the ownership of gold and silver particularly, it also applies to all forms of currency and all securities. So the Treasury official stressed in his letter to GATA that the act could be applied not just to shares of gold and silver mining companies but to the shares of all companies in which there is a foreign ownership interest.

Further, there is no requirement in the law that the targets of the government's interference must have some connection to the declared enemies of the United States, nor even some connection to foreign ownership. Anything that can be construed as a financial instrument, no matter how innocently it has been used, is subject to seizure under the Trading With the Enemy Act and the International Emergency Economic Powers Act.

Having just gone through a controversy about a Supreme Court decision about government's power of eminent domain, most Americans may be surprised to learn that the Trading With the Enemy Act and the International Emergency Economic Powers Act could expropriate them instantly and far more broadly without any of the due process extended to parties in eminent domain cases. All that is needed is a presidential proclamation of an emergency of some kind -- and of course Americans lately have been living in a state of perpetual emergency.

When the Trading With the Enemy Act was passed in 1917, gold and silver formed part of the official currency of the United States and were essential to ordinary commerce, so perhaps an argument could be made then against "hoarding," even if "hoarding" could not be well defined. That is no longer the case; the United States has officially disavowed gold and silver as money and they no longer have a meaningful role in commerce. (GATA is working on that.) So gold and silver investors may want to ask their members of Congress to seek repeal of the statutes that give the government the authority to interfere with the private ownership of gold and silver, emergencies or not.

And ordinary citizens with no particular interest in gold and silver may want to ask their members of Congress to reconsider these statutes simply for being wildly tyrannical.

GATA's correspondence with the Treasury Department is posted on the Internet here:

Were you mad when illegals won a ranch? Were you mad when Floria business owners properties came under jeopardy when a judge cited Kelo? Were you mad about Kelo v. New London? Will you be mad when you learn that those krugerrands, those canadian maple leaves, those Gold Eagles, that you acquired as insurance against economic catastrophe, or just because you like them, in the view of your government, you don't own them and you don't control them, except as far as the government will allow you? All those advertisments touting, "protect yourself with gold," well you can't because you can't own or exchange precious metals in peace or with confidence of your property right in the gold. If or when the time comes that such protection is needed, too bad, government will be there to make sure you cannot protect yourself. What is left? You can be ruined financially by your government, potentially, is what this article is saying. There is no place to hide your wealth. Would the founders of what was once a great republic call this freedom, when the government you elected can declare an emergency and separate you from your wealth, or declare war and demand all you have, not just a tax on profits? A person retaining gold after it has been declared illegal would be labeled a terrorist, an enemy of the state, and treated accordingly. How far we have come from the Magna Carta, the Declaration of Independence, the First Money Act of April 2, 1792, to the total communism of depreciated paper money (it was a plank of the communist manifesto) and state controlled wealth. Because it is gold, few citizens will know to be outraged, as they think Federal Reserve Notes (credits of the central bank) are money, and not gold.

Criticism: One GIANT mistake GATA made when corresponding with Treasury is asking if they still had the authority to confiscate gold. STUPID!

Free Advice: Think for yourself GATA! They can't have this authority! It is a complete ursurpation and abuse of state power. It is pure corruption. It violates even the commandment against stealing! After you have understood it for yourself, inform them they don't have this authority. Learn to cite legal maxims, principles, and cases having force since time immemorial to support your position! Then let them try to justify their position based on ancient legal jurisprudence, they can't because it doesn't back them. Don't ask the friggin wolf if he has the authority to eat the lamb! You would know the answer you'll get when you do that. You have fundamentally surrendered your rights to them by asking, you consented to hear and accept their decision on the matter. Now you are obligated to follow it, congratulations geniuses. People like you are why Aristotle thought that some people are just born to be slaves. The gold owning community is not benefited at all by having weaklings like you represinting them, and I can assure you that you don't represent me.

Sorry for the bad writing I was in a hurry to get this out.

From Michael Kosares, Centennial Precious Metals, Denver:

That the government retains the power to confiscate gold has been well-known to clients of this firm for some time. Gold ownership in the United States is a privilege, not a right, and as distasteful as that might seem, confiscation is a potential reality, like it or not, so all prudent gold owners should incorporate into their thinking.

Most of us who own gold do so for asset preservation purposes in the event of a financial or economic crash. I would estimate that a good 75 percent of the physical gold owned in the United States is held for this purpose. A confiscation, if there is one, will not come when the economy is humming along on all cylinders. It won't even come when the economy is bad. It will come when the economy is horrible; when the gold owner needs his or her gold the most -- in the early phases of a major currency collapse; when investors are fleeing the banking system and Wall Street and looking for a safe haven for their money.

Then, as was the case during the early Roosevelt years, the government could react with primitive barbarism against gold and gold owners. When it happens, gold confiscation won't be the only atavistic act perpetrated by government. Curreny controls, market closures, rigged asset and derivative pricing, bank shutdowns, the suspension of brokerage functions, the freezing of financial accounts -- all these and more will be on the table should an economic breakdown become a reality.

Why do I believe that the U.S. government might react in this fashion?

I believe this most invasive of reactions is possible because of the way the government has reacted under similar circumstances in the distant past as well as in the immediate past when markets were closed, when currency controls were put into place, when derivatives settlements were rigged, when banks were shut down, when gold was confiscated ... and so on.

Let's face it. In his recent letter to GATA, the Treasury Department's chief counsel for the Office of Foreign Assets Control could have said, "We see this as a remote possibility," but he didn't. Instead he essentially told us that the confiscation option is alive and well at the Treasury Department, based on the same national emergency protocols employed in the past. As one client put it this afternoon in a telephone conservation: "It almost sounds like they've been talking about it."

The letter GATA has received from the Treasury Department does not surprise me in itself. Confiscation is an option few administrations would be willing to take off the table in lieu of the serious problems confronting the international economy and monetary system. What surprises is me how willing the Treasury counsel was to publicly state the policy and thus admit the bureaucratic mind-set we have warned about for years here at USAGold-Centennial Precious Metals. This should be viewed by gold owners as a profound warning because it could amount to nothing less than the first volley in the economic battle to come.

But before any of us should lose hope, I hasten to point out that there is a way everyone who wishes to own gold can implement an effective, low-cost, low-profile strategy within the current rules of the game that greatly elevates the chances of surviving a potential gold confiscation.

The most comprehensive, educative, and reliable work done on gold confiscation was compiled by George Cooper (an attorney and client representative at USAGold-Centennial Precious Metals). I played a role in this study as co-author/content editor and by advising on the structure of the monograph, but the legal research was largely developed by Cooper, who has sustained a long-time interest in constitutional issues as they relate to finance and economics.

For the most part, Cooper picks up where Ayn Rand's attorney, Henry Mark Holzer, left off on this issue in the early 1980s. In the monograph "How You Can Survive a Potential Gold Confiscation," Cooper republishes Holzer's original legal chronology and then brings it current.

Like Holzer, Cooper does not deny the government's ability to confiscate gold, nor does he sanction it. Instead, he confronts the legal issues and then outlines a course of action that puts the gold owner in the most favorable position should the government decide to yank gold ownership as a portfolio alternative.

We would like to add GATA's recent findings to both the chronology and the monograph's addendum. Holtzer's original research was published under the title "How Americans Lost Their Right to Own Gold and Became Criminals in the Process." Holtzer's work was forwarded to me many years ago by the widely-respected Elizabeth Currier of the Committee for Monetary Research and Education. As you know, James Turk and John Rubino recommend "How You Can Survive a Potential Gold Confiscation" in their important book, "The Coming Collapse of the Dollar and How to Profit from It."

The original confiscation executive order was issued by President Franklin Delano Roosevelt as one of his initial acts as president to turn around the Great Depression. The order went hand-in-hand with the closing of the national banks (also directed by executive order). Roosevelt derived the authority for this action under the Trading with the Enemy Act. Roosevelt in essence declared a national emergency and used that as legal leverage to confiscate gold. All of this is covered in detail in the "confiscation" memo.

I believe that any future confiscation will be preceded by a banking and international monetary crisis. It will come as a means to keep the public from fleeing the currency for gold. If there is no monetary crisis, it is unlikely that there will be any gold confiscation.

Gold confiscation will not occur because "the government needs the money," as many have proferred over the years, but to eliminate gold as an avenue of escape. Once you incorporate that concept into your thinking, you understand why a government might confiscate gold. It boils down to politicians acting in what they believe to be a reasonable fashion when faced with a breakdown of the financial system.

I am sure that if Roosevelt were questioned today on gold's quarantine in 1933, he would respond that it was "in the public interest" and "for the greater good" of all the American people. I am not defending Roosevelt's actions; I am speculating as to how he might defend his actions. That's why the privilege to own gold has not become a right.

GATA is to be commended for its determination in bringing this issue forward and getting an answer out of the Treasury Department. But investors should not lose heart in response to your findings. There is an alternative and a reasonable course of action that will put gold owners in the best position to weather potential government action.

I know that this is an controversial subject among gold owners and one some would rather bury out in the back yard along with a coffee can full of gold coins. But, in my view, the better course of action would be to become fully informed on the subject, form your own opinion, and act accordingly. As George Cooper says eloquently and succinctly, "Don't get mad; get even."

If you look at the Trading with the Enemy Act before the 1933 changes implemented by Roosevelt you will see that US citizens were specifically excluded in the definition of an "enemy". After the changes (recommended by the Federal Reserve to Hoover who said he would not support this unconstitutional piece of legislation) were made, US citizens became included as enemies to the United States.

Senate Report 93-549, War and Emergency Powers Acts, Executive Orders
Introduction to Senate Report 93-549 (93rd Congress, 1st Session, 1973)

"A majority of the people of the United States have lived all of their lives under emergency rule. For 40 years, freedoms and governmental procedures guaranteed by the Constitution have, in varying degrees, been abridged by laws brought into force by states of national emergency. The problem of how a constitutional democracy reacts to great crises, however, far antedates the Great Depression. As a philosophical issue, its origins reach back to the Greek city-states and the Roman Republic. And, in the United States, actions taken by the Government in times of great crises have - from, at least, the Civil War - in important ways, shaped the present phenomenon of a permanent state of national emergency."

Some interpretation from a poster at another site:

12 USC 95(b) refers to the authority granted in the Act of October 6, 1917 (a/k/a The Trading with the Enemy Act or War Powers Act) which was "An Act to define, regulate, and punish trading with the enemy, and for other purposes". This Act originally excluded citizens of the United States, but in the Act of March 9, 1933, Section 2 amended this to include "any person within the United States or any place subject to the jurisdiction thereof". It was here that every American citizen literally became an enemy to the United States government under declaration. According to the current “Memorandum of American Cases and Recent English Cases on The Law of Trading With the Enemy”, we have no personal Rights at law in any court, and all Rights of an enemy (all American citizens are all declared enemies) to sue in the courts are suspended, whereby the public good must prevail over private gain. This also provides for the taking over of enemy private property. Now we know why we no longer receive allodial freehold title to our land... as enemies, our property is no longer ours to have.

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