Gold Confiscation Not A Possibility by Jim Sinclair

jsmineset. ^ | November 24, 2012, at 2:24 am | by Jim Sinclair

[dennisw]

Gold Confiscation Not A Possibility

Hi Jim,

I know you receive tons of emails, so I will get right down to the core of my question. In a note on kingworldnews.com today Richard Russell wrote:

“At any rate, I’m personally torn between putting all my assets into bullion gold coins or leaving half in gold and half of my assets in US dollars. In their demand to making Fed notes the only legal tender money, I believe the Fed (and the government) would stoop to any trick or law or machination to ensure that Americans must accept Fed notes as the only legal tender money. The government (Congress?) could pass a law outlawing any transactions in gold or silver or any precious metal.  The government could halt the trading of gold or gold ETFs.  Or there might be a dozen tricks that the government could use that would outlaw the use of gold as legal tender. Then, there are always taxes as a barrier to even owning or trading gold. So I dunno, hold all your assets in gold bullion coins?  Frankly, I’m afraid to.  The bankers demand that I use their rotten fiat notes as money, and believe me, the bankers (the Fed) run the country.”

What is your take on this possibility Jim? Do you think we would see warning signs before TPTB does anything on that? If you have already treated this issue in a previous post, please excuse me and feel free to forget about this email. Thanks for all you do so generously for all of us sheeple.

CIGA Michel

 

 

Dear Michel,

My respect for Richard Russell could not be higher. I will speak to this generically while recognizing "Richard the Good" stands along with "Dean Harry Schultz" as the only true two icons of gold. All others are but pretenders to the golden throne for some personal profit motive. Anyone seeking to dim another’s candle that theirs might shine brighter are as sociopathic as the banksters in our crowd for what they can get.

There was much to be gained by gold confiscation in the 1930s because we were on a gold standard. Without taking you into complicated explanations, please accept the true fact that gold in the 1930s was the only instruments of QE. It is not now nor will it be again in the future. There may be more to gain by a significant price of gold in the new reserve currency. There is no reason except some sort of fear of revenge to consider confiscation of gold, gold shares or the gold ETFs now. Those that worry so much about this do not really understand what gold was under a gold standard.

Why was energy not confiscated at $145 crude? Why not confiscate Apple at $750? Confiscation is NOT going to occur, nor will the gold bullion or gold share profits be confiscated via punitive taxation. It serves no monetary purpose and just might injure the efforts for a new reserve currency that is sure to come.

Respectfully,
Jim

[zagger]

The final Weimar hyperinflation lasted only a few months after years of up and down inflation and economic screwing around. The final and famous smashup lasted only three months or so. You can look at charts or you can read “When Money Dies”. You call 1923 “nonsensical” but it was the realization by the population that they were truly screwed that created the famous scenes with which we are all familiar. It made perfect sense for the people at the time.

Weimar history has years of dithering about followed by sudden realization and panic. It was not slow and people did not have time to do anything. What have you done?

[Freedom4US]

Oh, I get it - the FINAL, final hyperinflatiion only lasted a few months, after years of hyperinflation.

After all, I could have looked at a chart??? DANG! Why didn’t I THINK of that . Sheesh. It’s all so clear to me now, when I knew nothing about it before. I bow to your superior wisdom and understanding, etc. Begging your forgiveness...

[Navy Patriot]

Excellent and accurate, I didn't want to go into all that detail. This just about sums up the point I was trying to get across:

What Roosevelt did was worse than all this, because he repudiated contract law. As far as future monkey business in this area, someone would have to make the case that the US needs to return to the gold standard, so far that has decidedly not been the case. The immediate effect would be that the US would then lose all its remaining gold. People tend to forget just why it was Mr. Nixon felt compelled to renege on that last remaining link to gold and let currencies float.

The rule of law is so far gone in the US now that criminality is defined by political affiliation, if gold is criminalized again it will be OK for rich Democrats to flaunt tons of ingots, but a Republican will get life for his wedding ring.

It won't be long before everybody figures out who the criminals really are, that always happens in every Communist dictatorship.

[Freedom4US]

Perhaps - there may be a bit of that. The flip side to that argument I’ve noticed for some years now, I wonder if those who talk about confiscation don’t at least unconsciously want it to be so. It’s an extension of the rabid anti-gold folks - gold was ignored or derided for many years, and its adherents derided as cranks. Now that’s fine, everyone has their opinion, and they’re welcome to it.

But the People Who Really Hate Gold always seemed.. a bit more driven somehow, more motivated. The classic, really, is this nutcase on the Marketwatch comment boards who for several years derided “goldbugs” constantly, saying it was overpriced and due for a crash. Maybe. But kept at it when gold was $400... $500.. $600... My point is, nobody takes time out of their day every day to jump on some stock discussion board and start nagging on folks for buying Microsoft stock. No, with these folks it’s an OBSESSION. What was most interesting though, as the price of gold
continued to rise past $1800, after years of calling gold a “stupid thing” and all manner of specious arguments, this poster decided that the government should now steal it. Now, we all know that was the underlying sentiment all along - control freaks are, well, control freaks.

My contention is that even some gold bugs want “confiscation”, probably because they associate such notions with FDR, Ft. Knox, a relatively secure childhood or stories of same, and a period of economic stability that no longer exists. Somebody to “take care” of things. Uncle Sugar, why, he’s good for it - gubbmint has all that money! See where I’m going with that?

[Attention Surplus Disorder]

I don’t write off JS as a kook, though he definitely has some “tout” (to put it into a single word) characteristics. Indeed, he is eminently qualified to speak to gold and its various whatevers, having written about gold from long ago and far away. He’s been an advocate (not a permabull) for many, many years. More importantly, he has called the major moves in the gold market for at least 40 years. Including the massive dump post-1980, which he said (at the time) would take 15 years to play out (it took 20) He’s been the CEO of several companies (now: Tan Range Gold in Tanzania) and has been head of several trading and market making firms. Should you study the gold (or silver) market you’ll find there are maybe 20 guys who are the acknowledged gurus and he’s one of them.

this article may give you a better idea of where he comes from than the snippet originally posted.

http://www.futuresmag.com/2012/05/01/jim-sinclair-has-something-to-say?t=regulations&page=2

Anyway, I’ve been into precious metals for many, many years and have more often than not thought that the stack of dumb metal piled up in the corner is smarter than the smartest smarties there are. One either buys the metal and holds it for time indefinite, or not. The type of broad-brush, all encompassing “this will never happen” statement covering 4 distinct aspects (possible confiscation of physical, the taxation of phys sales, the taxation of stock (GLD) sales, the potential reinstatement of a gold standard) all of which are large if not giant topics, I am not comfortable with.

But...he’s been in the gold market decades longer than I have.

[Freedom4US]

Maybe Mr. Sinclair is correct - look at this way.

Leaving aside (for the moment) the “unfunded” obligations of Social Security and Medicaire, estimated somwhere between 120 and 220 Trillion, there is currently (that we know about, anyway) 16 Trillion dollar debt that is owed.

How much would that be in gold? Well, a lot. I’m not the best at math, but if I recall correctly, gold is measured in Troy ounces, not avoirdupois. So, a “ton of gold” would be, or pretty close to 32,150 Troy ounces.

Now, since we’re buying in quantity - we get a discount to current spot price @ $1750 smooth, - and so the current national debt as it stands now is approx. equal to 284,381 tons of gold. Current stock of US Monetary gold stands at around 8,000 tons, so we’ve got a bit of work ahead of us.

Then we can get serious about Social Security, and Medicaire, and Obamacaire, and Carbon Tax.. etc.

[catfish1957]

I am more concerned with Obama and his marxist minions planning to steal everyones IRA’s and 401K’s, and putting them into a national federally run retirement system.

[Attention Surplus Disorder]

There are several ways to calculate what the POG “should be” or “where it will go”-—and that’s one, and arguably one of the better ones. That argument has the tacit assumption that somehow the US debt should be denominated in gold, and if it was....

But, there is worldwide market in gold, not just in terms of native, organic demand, but actual markets. Chinese and Russians can actually buy (and of course sell) gold.

So there are massively more potential investors in gold. And gold represents a miniscule percentage of current investmnet vehicles, something like < 1%, and it would be less except for the rise in the price of gold over the last say 5 years.
This is not meant as a permabull justification...after all, if so many investors can buy, so can many more investors sell.

I for one am not the biggest fan of a gold standard. After all, if it were so, who do you think would be the greatest manipulators of same? JPM? Goldman? Count on it.

I myself kind of try to steer clear of grandiose macro theories on gold. As I said, most of the time, I think a dumb stack of metal piled up in the corner is smarter than the so-called gurus. I *do* think the monetary authorities have disdain for gold and disdain the idea of standardizing on it as a backing for currency.

In the Sinclair interview I posted, there are two subtle things he said that I tend to agree with:

1: China has bought massive amounts of natural resources around the world BUT THEY BOUGHT THEM (and the future streams of them) IN DOLLARS which means that a massive devaluation in the USD would in effect hedge them very nicely *and* keep them in the minerals etc; they project they need (clever, huh?)

2: The monetary authorities (the Fed, the IMF, the ECB) are more concerned with a parabolic price rise in gold, not so much as its absolute level. This makes sense to me, because in my mind, those authorities deal far more with expectations than realities. So if the POG rockets skyward, this sends a signal of massive debasement (which is going on, to be sure) but as long as this occurs at a modest, sort of controlled rate, it’s going to be “OK”. Just whom it is OK with is another question, but it’s OK with them, and you and I pay our taxes to them so that is controlling.

Down here on the ground, we mere mortals cannot know any of this with any sort of certainty. We can only place some bets here and some bets there so that we don’t get killed if the needle slams all the way to one side. Things to me lean towards inflation but not out-of-control inflation. Cocktail party talk of dollar weakness is belied by a glance at a ^DXY chart. If gold skys, then oil should sky. If oil skys, then the world economy grinds to a lower level of activity and there is less interest and ability to stuff excess cash into (dead) gold and more interest in liquidating gold. There will, IMO, be a point where green cash might very well be able to buy assets at distressed enough prices so that odds better favor appreciation in those assets vs gold. This is not crazy talk, if you bought common stocks circa March or April 2009, you have a 6x in Dow Chemical and a 4x in Caterpillar and etc etc. To do that, you needed cash, then. So, gotta have some of both. And arms and ammo, too. That there’s my definiton of diversity!

[qam1]

It’s still amazing to me that men like my father obeyed such a decree. Today my only response would not be printable on a site like this one.

Back then people trusted the government and (even the Republicans) felt "If President Roosevelt feels that turning in my gold will help get America going again then by golly I will turn in my gold"

Today, not even the most harden Democrats would feel that way about Obama if he were to ever issue such an order.

Which is why I don't think it would ever happen again, because it would probably costs more trying to enforce such an order than they would get back in confiscated gold.

[SkyPilot]

Very informative - thank you. I was not familiar with him, but you enlightened me some. Also, your actions are very prudent. You are type of smart individual that is not motivated by the idiot box, the rabble, or the radio ads that loudly scream at you.

Because of this, I can pretty much guarantee that you and people like you were not standing in line Thanksgiving night in a cold parking lot, elbowing others, waiting to save $35.00 off a pair of sneakers.

[SkyPilot]

My point is, nobody takes time out of their day every day to jump on some stock discussion board and start nagging on folks for buying Microsoft stock. No, with these folks it’s an OBSESSION. What was most interesting though, as the price of gold continued to rise past $1800, after years of calling gold a “stupid thing” and all manner of specious arguments, this poster decided that the government should now steal it.

Exactly. That was a good point about Microsoft stocks by comparison: no one would dare deride you for buying them, but precious metals are a different category all together.

Why?

Because all stocks are based on the same premise that paper currency is based upon: faith.

Faith that the system will work, and pay you back in real assets someday (such as homes, real estate, cars, clothes, food, etc) - in exchange for that paper that you hold (whether it be currency or stock certificates).

The fear that "faith" will collapse is very real. That is why many in the financial realm sometimes sound like cult leaders rather than sage givers of sound advice. They want to convince themselves as much as they want to convince you as well as everyone else.

My contention is that even some gold bugs want “confiscation”, probably because they associate such notions with FDR, Ft. Knox, a relatively secure childhood or stories of same, and a period of economic stability that no longer exists. Somebody to “take care” of things. Uncle Sugar, why, he’s good for it - gubbmint has all that money! See where I’m going with that?

Once again, excellent point. I made the military a career (I am retired now), but there was an old saying that makes good sense even today:

"Bad Generals are always preparing to fight the last war; good Generals are preparing for the next war."

So many people think that the next Great Collapse will be a replay of 1932.

Ya, right.

[zagger]

Why not settle down and have a polite discussion?

I have used the common definition that inflation reaches the hyperinflation level at about 50% per MONTH or roughly 13,000% per year. Based on this, Weimar Germany spent many years with inflation sitting well below the hyperinflation levels that hit at the end. From the middle of 1914 to the middle of 1922 the total inflation over 8 years in Weimar Germany was about 6,000%. Then inflation took off and finally reached 29,500% per MONTH, or nearly 21% per DAY. Although Weimar Germany became famous for inflation, it was nothing compared to Zimbabwe’s peak inflation of 79,000,000,000% per MONTH.

[Attention Surplus Disorder]

“you were not standing in line Thanksgiving night in a cold parking lot, elbowing others, waiting to save $35.00 off a pair of sneakers.”

LOL. No, wouldn’t catch me dead in that exercise. And if I saved $35 on a pair of sneaks the store would be paying ME money to buy them. OTOH, I may stay up late at night to catch an overnight 28 cent dump in silver!

[dennisw]

All you have to do is see the movie “Treasure of The Sierra Madre” to know that gold has a magnetic attraction to people with a common sense brain. This movie came out in 1948 when Americans were living closer to the bone. We had just finished WW2. Back then a lot more Americans had good instincts and knew that (indeed) gold is real money. This gets more obscured each year with the explosion in credit card use and soon iPhones/smartphones will be swipable at point of sale. Not to mention that most US money now exists on hard drives (with some paper backup and accounting so they say) We love to get further away from hard tangible money each year. Your paper FRNs are very very tangible compared to money’s other forms these days

Guess who and what? Immigrants here will defy all gold confiscation. They operate on a more elemental level than spoiled Americans