Posted on 09/23/2010 5:30:22 PM PDT by blam
Gold Bulls Needn't Fear Noise About Government Confiscating Gold
by: Jonathan Bernstein
September 23, 2010
Some influential commentators say that as the Government gets more desperate to shore up its finances, it will confiscate private gold holdings. Just like it did in 1933.
After all, the argument runs, the Feds already did this, so there is precedent. And if Fort Knox really is running on empty (Ron Paul among others wants an audit to find out), the U.S. needs money even more badly than it is willing to admit.
So, why wouldn’t the Feds go for the gold? First, I don’t think Obama wants to; I’ll explain why below. More importantly, Americans just don’t own a lot of gold, and so there isn’t much for the Government to confiscate.
Do US Private Citizens Own Enough Gold to Bother Confiscating?
To see why their isn’t much bullion in private U.S. hands (actual figures on U.S. private gold ownership are hard to come by) just look at how different things are from the way they were in 1933. Until that time, the U.S. gold coins circulated in the ordinary course of business.
Gold coins were used as money, along with silver coins, and yes, paper. But then the dollar really was good as gold. You could bring a $10 bill to the bank and emerge with a $10 gold piece if you cared to. When Roosevelt confiscated gold, he confiscated a form of money that lots of people used, every day. Of course there was plenty around.
These days money in the form of gold or silver is something Americans barely relate to. Some Americans bought precious metals during the price runup of the 1970s, but Paul Volcker seemingly restored the soundness of the dollar then, and gold fell off the investing public’s radar screen for a good twenty years.
Here’s another reason to suppose that if the Government came for citizens’ gold, it would have slim pickings. Gold dealers have reported to the press that they can get supply only from wholesale sources, such as official mints. Individuals are not selling it. And the few times that I have been in the market, I have heard the same thing. The dealers are getting buy orders from the public, but not offers to sell even at today’s record prices. So far, anyway.
Is this a reflection of low private holdings or a belief among bullion owners (as opposed to ETF holders, maybe) that metals are only heading higher? My guess, is some of both. So while ETFs like GLD, SGOL, and SLV have become popular, private bullion ownership has likely not become a mass phenomenon, yet.
Obama is Quite Investor Friendly
The second reason I don’t expect gold confiscation is that, despite his reputation, Obama governs as a moderate if not a Republican in drag. We’re all reading about how the current Republican tide has (or will) force President Obama to “move more to the center.” But in truth Obama already made his hard right turn, back in August 2008.
As Yves Smith graciously allowed me to note here, candidate Obama condoned the August 2008 amendments to the Foreign Intelligence Surveillance Act (FISA). The FISA amendments made it easier for the government to monitor citizens’ electronic communications without a warrant and even granted Bush-era wiretappers retroactive immunity from prosecution. Having bolstered his “anti terrorist” credentials, Obama then signed on to the TARP bill in September 2008. You can’t be more business friendly –or at least, investor and big bank friendly — than that.
...
Once in office Obama continued his moderate bent. His stimulus plan consisted mostly of Republican style tax cuts. Obama’s health plan will force citizens to buy insurance from private insurance companies – how “anti business” is that?
I can only assume that business keeps chanting the “Obama is a radical” mantra in order to keep Obama in line, to keep him from even thinking about “change,” and to gin up Republican campaign contributions. But is this man out to take your gold? Hardly. I don’t think his people even understand the stuff. Otherwise, why would they continue to debase the dollar, and ignore the message gold and silver prices are sending? Was anyone surprised that gold hit $1,298 after the Fed hinted at more possible QE September 21?
Advice for Investors
So I remain a long term dollar bear, and a bull on precious metals. If I’m right, it’s safe to store most of your bullion in the U.S., though maybe not all of that at a bank. The main worry here, is the outside chance that banks might close temporarily in the event of a run on the dollar. But in that case, you would still own your bullion. You would need, however, to have some real, non paper money in another safe place where you could get it in an emergency. Non-bank depositories such as First State of Delaware and Brink’s are now trying to fill such needs and might be worth a look. I have no connection with either.
Disclosure: Long GLD, SLV, gold bullion
I don’t think they would try Confiscating Gold again, my personal opinion is there isn’t that much gold out there, and my gut feeling is what most people are buying is paper that says they own Gold.
If you believe the goals of the banking cartel are somehow “Republican” in nature, then you will believe Obama is a Republican in drag. I think he’s just a puppet for certain powerful financial interests.
The real idiocy is the writer’s inability to distinguish between being “big bank friendly” and “investor friendly”. If they need to grab the gold to save the big banks, they will try and do it. And since the big banks have enormous exposure short gold and silver, Obama may once again become their little puppet.
I wouldn’t hazard a guess as to how much physical gold (and silver) private citizens hold. But if the government thinks it is worth the effort, it will try to get it.
As far as this guy’s analysis of Obama, he’s an idiot. I can make my own predictions and beat out this dim bulb. Serious non-logical reasoning leading to ridiculous conclusions.
The government has started monitoring bullion purchases in earnest. It’s not doing that for no reason.
The government has started monitoring bullion purchases in earnest. It’s not doing that for no reason.
*********************
I have seen others post that as well. I have not seen a source for that. I read a poster on ZeroHedge saying that if you buy over $3K, that is reported.
When did this start?
Is this just for gold, or silver too?
Any info is welcome.
Depends. Obama in drag corresponds pretty closely to most RINOs I can name. They're just as worthless as he is.
The retirement account balances are probably worth far more than the gold.
LOL...
My thoughts exactly. The writer does have a good point though - don't put your gold holdings in a bank. Banks were given orders to confiscate gold coins from safe deposit boxes under FDR - along with all other gold bullion, 'dust', ingots, foreign gold coins - AND jewelry.
Despite what the guy thinks, many of us do own gold coins - the right kind, that is. Which is high numismatic value collectibles - because the law states that these coins can NOT be confiscated by the Federal Government.
Who knew?
That has been my suspicion as well, based on the phone solicitations I have been getting for the last two years. No caller ever offered metal.
You know what that means.
The values of “collectible” anything, even numismatic coins, will collapse in an EOTWAWKI scenario. Bullion, both silver and gold, is a better bet, IMHO!!
This guy doesn’t seem to get beyond the most superficial of numbers at any point.
They won’t confiscate. They don’t have to.
The G-20 will fix a price ($42/oz) and ban sales above that price.
I collect lead
____________________________________________
Me too, lots of it. I have some silver too, with the lead around I should be able to hold on to my silver.
I wouldn't be surprised if lead will be worth a lot more than silver one day. Having enough to trade would be a good idea expecially when our good government outlaws the sale of lead. If you keep it dry it lasts a long time.
And just what will the G-20 do about the “Black market”???
That’s exactly what will happen.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.