International Forecaster Weekly

The Risk of Money Being Confiscated

Do you see now why I've been preaching that you should own physical gold and silver coins?  Cyprus was the empirical evidence that I needed to prove my point. See, if one day you woke up and turned on the news to find out that all 401K's and IRA's were on holiday for a week because the Government was taking 10% out of all of them... you'd have NO recourse.

Bob Rinear | March 27, 2013

         Our last letter was centered on Cyprus and what it means to us here in the US, along with our readers that happen to live throughout the Eurozone. What I wanted to accomplish was instilling into you the idea that the elites actually believe they have a right to YOUR cash. Down in New Zealand they've been coming up with a money-grabbing scheme similar to Cyprus as has Switzerland and a couple others. Do you think any of this is by accident? Of course it isn't.

My response to it all was to ask; "do you see now why I've been preaching that you should own physical gold and silver coins?"  Cyprus was the empirical evidence that I needed to prove my point. See, if one day you woke up and turned on the news to find out that all 401K's and IRA's were "on holiday" for a week because the Government was taking 10% out of all of'd have NO recourse. Sure you'd complain, and send emails and "tweets" to anyone that would listen, but when push comes to shove... you'd lose.  At least by having your bulk wealth in physical Gold, it would be considerably harder for them to get to it.

           Well as usual, I got a handful of emails telling me that my theory is flawed. They told me that here in the US they would NEVER confiscate our money. We're too big, we've got too many rules and laws, we're free people, and of course the classic "This is America, not some third world country in the middle of nowhere".  Well, let me inform you of something, Mr and Mrs know it all...THEY HAVE ALREADY DONE IT ONCE. It is in the history books. But maybe worse, THEY ARE STILL DOING IT!!  So let’s get down to some "chattin.”

The year was 1933. FDR was in a tough spot. The economy had ground to a halt and they wanted desperately to kick start it. It was indeed the "Great Depression". After much bickering, they decided that the best way to spur some form of growth was to expand the money supply. But they had a huge problem. See, in 1933 money was backed by gold. They couldn't just print up gobs of it like Bernanke does today, because back then dollars were loosely exchangeable for gold. To expand the money supply, they needed to have more gold on hand. Well the reason gold makes such good money is that it is pretty rare stuff. You don't just click your fingers or do the "Bewitched nose wiggle" and presto... gold appears. Nope, it has to be mined, refined, minted, etc. A lot of work.

But they knew that Americans had gold. They had coins and bullion, and they had gold certificates. If they forced the citizens to turn in their gold, the Government would then have a larger base of gold. So that is exactly what they did. On April 5 1933 the rule was established and everyone had to turn in their gold by May 1st of that year.  It was "Executive Order number 6102.

Executive Order 6102 required all persons to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve, in exchange for $20.67  per troy ounce. Under the Trading With the Enemy Act of 1917, as amended by the recently passed Emergency Banking Act of March 9, 1933, violation of the order was punishable by fine up to $10,000 or up to ten years in prison, or both.

But the American people in 1933 weren't like the American people of today. They were harder, tougher, and not as easily led by the nose as we are today. How were they going to sell to the public a reasonable explanation for why they were doing what they were doing?  Easy. They spread the lie that the reason the economy was stalled was because people were hoarding their gold. It had nothing to do with hoarding gold, it was all about Government needing more gold to print against. So, hundreds of thousands of folks trotted down to their local Federal reserve bank and traded in their coins and bullion for $20.67, the accepted "general price" of gold at the time.

But wait a second. If Gold was 20 bucks to the ounce, and they had printed all the dollars that they could print based on the amount of gold they had in storage, what good is buying thousands of ounces of it from the public and paying the 20 bucks? Isn't that a wash? It most certainly is. So what then was the use of it all? Simple. Once they attained all that gold, got it smelted, and refined into US bullion, they then came out and declared a NEW PRICE for gold. It would then on be priced at 35.00 the ounce.

Do you see what they did? By declaring that gold is now worth 35 the ounce instead of 20, they could print all the dollars necessary to bridge that value gap! They could expand the money supply by an enormous amount. How much? Oh about 70%.  And guess what? On the other side of the coin, what the net result was to the average person was a 70% currency devaluation and the inflation that brings with it. So, to all of you who say that Uncle Sam would "never just take our money", check your recent history books. He already has.

I also got email from people that knew Uncle Sam had once before confiscated our gold and they asked a good question. "Hey Bob, since our Government confiscated our gold in the 30's, won't they just do it again?"  Very good question. The answer is that they "might" in fact it is more probable than not. But there is a fly in the ointment. Back in the 30's they needed physical gold as the backing for which they could print more money.  Since 1971, they don't need anything to print more money. Just a laptop computer and a couple keystrokes. So they wouldn't do it because they can't print without it. They can. Secondly the average person simply doesn't own any.  While a handful of people like myself or Bob Chapman were screaming to buy gold coins ten, twelve years ago, most folks didn't. I can go to investment seminars and when I ask how many own gold coins; in a room of 45, maybe 6 hands go up. Now with the price at 1600 bucks, not too many regular folks can afford more than a few ounces. The bulk of the gold is already owned by Central banks and hedge funds.

Could they do it? Sure they could. They HATE anything that competes with their lousy paper dollars. They could come out tomorrow and declare that you have to turn in every once of Silver, Copper, Gold, and any other hard asset they think could be an alternate currency. But again, we have to look at the probabilities. Then there's the "dark" side of things. If you own physical coins that you've accumulated over the years, there's oft times no paper trail. No one knows that you might own some. If they were declared illegal, it is safe to assume that the black market would readily accept them. Ugly thoughts, but reality.

Look folks, I have stated time and time again that owning physical Gold and Silver isn't perfect. It isn't the "end all" of this situation. While I believe it is your best choice, especially when you look at what they just tried in Cyprus, or the "co mingling" that Corzine did and Sentinel Investments did...there are indeed still ugly possibilities. But when I look at the entire scope of choices that the AVERAGE American can make, Gold and silver coin still works better than most. Cash is fake. Stocks can be worth zero.  While it may sound romantic to have some little unknown Island somewhere like in the movie Castaway where you can just live off the resources of the land and get away from it all, unfortunately for 99.99% of all people that is just a fantasy. We live in the states with wives and kids and homes and cars and jobs, etc. Even if you are lucky enough to own a nice plot of land that you can grow your own goods on, and support yourself with game, really don't own your land. If you think you do, try not paying your property taxes for a few years, you'll come to find who really owns it. Sure it is still the "best" option, but again...millions don't have the ability, and unless you've done some really serious work, you're still dependent on the grid for power, ammo suppliers for bullets, etc.

We built a system of dependency and trust of the "system". Well the system is breaking down and they'll do anything they can to keep themselves in lavish riches and who cares about the little guy. Now we find we're so "stuck" in this system, that it's horrifying. I can't move to a private Island in the middle of nowhere. I have family. I have friends. So my next choice is some gold and silver, a little land, and a lot of prayer. I find that "better than cash" and I figure those who live in Cyprus do too. Think about it.