Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks Correct into Bitcoin Happy Thanks Halving - Earnings Season Buying Opps - 4th July 24
24 Hours Until Clown Rishi Sunak is Booted Out of Number 10 - UIK General Election 2024 - 4th July 24
Clown Rishi Delivers Tory Election Bloodbath, Labour 400+ Seat Landslide - 1st July 24
Bitcoin Happy Thanks Halving - Crypto's Exist Strategy - 30th June 24
Is a China-Taiwan Conflict Likely? Watch the Region's Stock Market Indexes - 30th June 24
Gold Mining Stocks Record Quarter - 30th June 24
Could Low PCE Inflation Take Gold to the Moon? - 30th June 24
UK General Election 2024 Result Forecast - 26th June 24
AI Stocks Portfolio Accumulate and Distribute - 26th June 24
Gold Stocks Reloading - 26th June 24
Gold Price Completely Unsurprising Reversal and Next Steps - 26th June 24
Inflation – How It Started And Where We Are Now - 26th June 24
Can Stock Market Bad Breadth Be Good? - 26th June 24
How to Capitalise on the Robots - 20th June 24
Bitcoin, Gold, and Copper Paint a Coherent Picture - 20th June 24
Why a Dow Stock Market Peak Will Boost Silver - 20th June 24
QI Group: Leading With Integrity and Impactful Initiatives - 20th June 24
Tesla Robo Taxis are Coming THIS YEAR! - 16th June 24
Will NVDA Crash the Market? - 16th June 24
Inflation Is Dead! Or Is It? - 16th June 24
Investors Are Forever Blowing Bubbles - 16th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How to Protect All of Your Assets (Including Gold) from Government Seizure

Commodities / Gold and Silver 2017 Nov 07, 2017 - 03:28 PM GMT

By: HAA

Commodities

Olivier Garret : On April 5, 1933, President Franklin D. Roosevelt issued an executive order making private ownership of gold illegal. The order forced Americans to sell their bullion to the Treasury at the then legal price of $20.32. 

Gold ownership remained illegal in the US until 1974. 

Failure to tender your gold could get you a maximum fine of $10,000 (492 ounces of gold or approximately $625,000 at today’s prices) and up to 10 years’ imprisonment. 


Franklin’s order was also followed by the Gold Reserve Act of 1934.  The act lifted the nominal price of gold from $20.67 to $35.

The penalties were exceptionally high to ensure compliance with what was a disguised 42% tax on savers. 

Is it possible that our indebted government could force similar measures on gold owners today? We can’t rule it out, but it’s less likely to happen today than it was in the 1930s.

Why the US Is Not Likely to Confiscate Gold Today

Desperate times call for desperate measures. Franklin’s order was justified as a measure to overcome the Great Depression.

Nobody knows how severe the next recession will be and what measures it may call for. However, gold will be less of a target for a few obvious reasons.

First, the US dollar is no longer backed by gold reserves.  Second, gold represents a tiny portion of today’s financial assets.  For this reason, it’s unlikely to be the prime target for taxation or seizure.

All the gold ever mined is worth about $7.5 trillion as of this writing.  Meanwhile, total financial assets make up $294 trillion globally.  Why would government focus on gold ownership when gold is a mere 2.5% of total assets today?

There is much larger fish to fry.

However, in times like these, nobody is safe. And there’s no guarantee that gold owners won’t become the targets of desperate governments. When things go sour, anyone who owns tangible assets is a potential target for any form of taxation or confiscation.

Why You Should Use Gold as a Hedge

What can investors do to protect all of their assets from the risk of government seizure?

First, you have to understand how government seizes assets from citizens—and what actions may not be politically acceptable even in desperate times.

Outright default on insolvent pension funds would be political suicide. No sane politician would ever campaign for that. However, a progressive default through debt monetization (e.g. quantitative easing) would be more likely.

This means that the dollar is almost certain to lose its value against hard assets like gold. 

There are more reasons why investing in precious metals is safer than hoarding cash.

Cash is convenient and essential, but holding large sums in cash exposes you to a bigger risk of seizure and devaluation.

Bail-ins of bank accounts with savings that exceed the FDIC insurance level ($250,000) will be more politically legitimate than taxing those who have no savings. Most voters simply won’t feel sorry for the rich.

That’s why gold is a much safer store of value in the long run despite the risk of seizure.

How to Minimize the Gold Seizure Risk

This risk can be minimized, too.

If it ever happens again, it will likely be focused on domestic holdings—as it was in 1933.

The untouchable billionaires and politicians have their assets tucked away in foreign trusts and will make sure they are kept safe there.  The US government will save itself the trouble and chase domestic holdings instead.

The middle class and small entrepreneurs will once again be the prime targets of government seizure and taxation.

To avoid this, I’d recommend investors storing their metals in a safe foreign jurisdiction like Switzerland or Singapore.

With your gold stored abroad, you may have some time to react.  

If you feel the threat is product specific, you can liquidate those products and diversify into other precious metals products. Another option would be to take delivery before such a legislation comes into effect.

However, no risk can be fully eliminated. There is no perfect solution. Nonetheless, diversification can be an essential element of an overall protection strategy against an increasingly uncertain future.

Learn how to make asset correlation work for you, how to buy metal (plus how much you need), and which type of gold makes for the safest investment. You’ll also get tips for finding a dealer you can trust and discover what professional storage offers that the banking system can’t.

It’s the definitive guide for investors new to the precious metals market. Get it now.

© 2017 Copyright Hard Assets Alliance - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable,


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in