In part one of ‘Precious Metals Investing for the Cautious Modern Retiree’, we touched on a number of issues that bear repeating:
- The 5000+ year tradition of cultures using Gold and Silver to barter for goods and services.
- China’s populace painful lesson on the ponzi-scheme nature of paper assets bubbles
- The financial and criminal fallout of the 2008 NYSE market crash, and it’s living legacy
- Basic background about purchasing precious metals – and storage considerations thereof
- The misnomer that is a ‘Safety Deposit Box’ in terms of their usefulness for Precious Metals
We’ll pick up on a common denominator that ties into all 5 of the above precious metals categories; the gold confiscation that directly resulted from the 1929 stock market crash which led to the depression.
The Gold confiscation act of 1933: Executive Order 6102
The complete act can be read at the following link: http://www.knology.net/~bilrum/goldconfiscation1933.htm
Sadly but instructively, it’s important to note that the United States government has established a ‘tradition’ of relieving its citizens of their valuable precious metal holdings in times of crisis. The government hatched just such a scheme in 1933 under FDR. And what was the governments rational for this piracy? PMs were needed to help combat the depression caused by hot money (the combination of the roaring 20’s and World War 1; vast overprinting of dollars). The FED needed real money, gold, to back Federal Reserve notes (paper money) that desparatly needed to be printed.
Unlike todays (unbacked-by-precious-metals) fiat currency, 1933 laws required the U.S. treasury to ‘back’ their depression era Fed note dollars with actual physical gold. In 1933, 40% of a dollars value had to be backed by FED vaulted gold. Today’s endless printing of dollars thru QE wasn’t a legal tactic the U.S. Treasury could employ to fight the depression. So what exactly was the justification for PM confiscation under E.O. 6102? Without physical gold in government possession, institutional tactics and controls the U.S. Treasury needed to combat the Depression were insufficient.
Limited gold holdings for U.S. citizens: The government did allow U.S. citizens to ‘keep’ 5 troy ounces of gold during the enforced confiscation. For today’s middle class investors, than amount might sound sufficient. Who should have the right to issue such edicts regarding the PMs of private citizens? Jewelers, dentists, and other tradesmen were allowed to keep more gold beyond this 5 ounce limit.
IMPORTANT TO NOTE: Citizens who held their gold/silver in ‘rare coin collections’ were exempt from this governmental gold theft/confiscation. All other people who turned in their gold received printed fiat money/dollars for their precious metal – at the hugely discounted exchange rate of $20.67 an ounce. Upon completion of the gold transfer from their customers, banks audaciously reconverted the $20/ounce citizen collected gold and it resold it BACK to the government for $35/ounce! That’s type of confiscation, followed up by an outrageous mark-up, defines pure chutzpah!
The 1933 FED Arbitrage: That $20 to $35 markup represented a 75% markup on a per gold ounce basis. A $15 price difference doesn’t sound like much, until you consider it involved upwards of 8000 tons of gold. Historians argue the amount: Did Banks walk off with BILLIONS or possibly even TRILLIONS of unearned depression era profits for their collection efforts? The answer regarding that bank bonanza depends on how the event is specifically defined. The 1933 U.S. Treasury gold confiscation act was/remains a national disgrace of historic proportions – an outright act of theft. 🙁
The FED – Protectors of the nations 8K ton gold treasure?
The FED: The unconstitutional Federal Reserve private banking cartel was voted into law by the treasonous 63rd congress of 1913. The facts state that this vote took place late in the evening during a very poorly attended Christmas session; a mere 43 to 25 vote in the Senate. It didn’t hurt that a number of those congressman opposed to the act died aboard the Titanic in April of 1912? Got conspiracy ?!?
This act of manipulation on a vast scale was lamented by a remorseful Woodrow Wilson, who publicly stated he had ‘ruined his country’ by signing off on this scam legislation. A banker compliant press hailed the legislation as ‘a Christmas present for the nation’. The powerful Federal Reserve, run by a group of unelected bureaucrats and privately owned by the most powerful people in the world, has indeed become ‘the 4th branch’ of the United States government – the most dominant branch at that.
Here’s a quick preview of the Fed for those interested in learning a bit more about the history of this all-pervasive financial institution that runs the U.S.: https://www.youtube.com/watch?v=j282JKnmeVo
How Does ‘The FED’ relate to gold and you? The private owners of ‘The Fed’ refuse to let our (who’s?) government audit the gold we’re told is held at Fort Knox. Why is that we can’t audit the gold supply at Fort Knox currently being managed by ‘The Fed’? My guess: where there’s secrecy there’s shame. Maybe the gold conspiracy crowd is on to something? Is there any Gold left at Fort Knox ?!
The last physical gold audit occurred decades ago, when former general Dwight D. Eisenhower was the U.S. President. This type of audit-free ‘Fed’ secrecy doesn’t exactly inspire confidence, but is instructive concerning gold’s ultimate economic value. Gold is more than just money, its control.
Gold and silver are real money; always have been, always will be. As such, the prudent questions that needs to be asked is this: Do you own any precious metals? Are your PMs safely stored?
The Time to audit the Gold at Fort Knox is LONG overdue
All that gold confiscated from ordinary citizens in the 1930’s by the U.S. government – 8,000 tons (!) – was smelted into the legendary supply ‘at’ Fort Knox. 80+ years later it’s unclear as to whether or not that gold treasure is still being held there. Conspiracy theorists suggest shill tungsten bars, covered by a thin veneer of gold, have mysteriously replaced many of the original gold bar stock inside the fort. A simple bandsaw test, cutting straight through a randomly selected gold bar, could determine if there is any validity to this claim. Are some/many/most of the Fort’s gold bars – all stamped with serial numbers – actually mainly tungsten bars, or is this merely an urban legend? An audit would restore or end trust.
Good luck getting any type of bandsaw test done on a single bar of gold held (claimed to be held?) at Fort Knox! The FED vehemently stands in the way of any such gold bar testing from being performed inside Fort Knox. Congressional hearings to conduct even the a simple physical audit of the Gold supply have been repeatedly rebuffed by the power the FED extolls. It’s pretty clear the bankers are in charge, not ‘our’ elected public officials, regarding the gold being held or not held in Fort Knox.
The violent of the theft of our gold assets (i.e. jewelry, coins) that occurred in 1933 echoes on! Like the dust bowl from the 30’s, that tragic confiscation event has not died out in the folklore histories of many hardworking American families. Our grandparents were left holding the bag for the vulgarity and excesses of the monied class and their poor choices – especially the completely unnecessary but hugely profitable ‘Great War’! Not turning in gold to authorities back then meant facing possible 10 years prison time – and a fine for good measure.
Can or should we expect a similar scenario given our countries $20 trillion debt? Stay tuned as world events continue to unfold, but also stay protected with a careful selection of intelligently stored PM’s!
The question begs repeating: Is our countries gold, 8000+ tons … approximately 5% of the worlds gold, still truly being stored in Fort Knox? Many conspiracy buffs like to talk about strange late night rumblings of trucks in 1968 around the Forts’ Louisville, Kentucky locale. Would LBJ really have allowed the rumored transfer of America’s treasure to his bankster bosses in London under the guise of a short term gold loan/lease? Considering the extent that the Johnson administration lied about every aspects of the Vietnam War, why would anybody trust that our country’s gold is truly secure?
The larger point is this: if it’s unclear that the country’s gold supply is safe at Fort Knox (no audit in decades!), why would you trust your ‘Too Big to Fail’ banker with precious metals to hold in their safety deposit boxes? You are responsible to know your precious metals holding rights regarding what’s safe from confiscation… assuming any safety exists for storing PM’s anywhere in the banking system. Fortunately, there are vast resources on the net to help your research concerning (lack-of ?!?) safety deposit boxes, and a myriad of other private storage options – both domestic and foreign.
Collectable PM coins or Wall Street ‘casino house money’ ?
One of my favorite parts of the movie ‘Casino’ was at the end, when Robert DeNiro’s drugged out wife (played by Sharon Stone) was found dead in a run-down Vegas motel. All that was left with her at the time of death were rare collectable gold coins – precariously out of place, instead of being stored ‘in relative’ safely in a PRE-debt-America bank. The movie script set-up took place in the 1970’s, before the country amassed trillions of dollars in debt. Is it still safe to keep a rare coin collection in a U.S. bank, with a multitute of counterparty claims on $20 trillion of growing governmental debt?!?
A large plurality of Gold Bugs consider the most dangerous place to ‘hold’ your precious metals is in ETF funds packaged and sold by large Wall Street brokerage houses. According to many highly vocal Gold bugs bloggers and PM chat room commentators, ETF style ‘Paper Gold’ or ‘Paper Silver’ give the illusion of metal ownership … but it’s just that – an illusion. What exactly backs these paper claims in terms of physical metal? As the saying goes, talk is cheap.
Many PM investigative journalists estimate that there are upwards of 250+ people with claims for every 1 ounce of gold being ‘held’ in London or NYC vaults by collectively by these paper metal funds. The PM ETF situation reminds me of another gangster movie, ‘Bugsy’, where Warren Beatty is shown selling issue after issue of stock – far in excess of 100% – into ownership of the original Sands Hotel in Las Vegas. Investment swindles in the form of CONfidence schemes have to be relearned by each generation. The history of banking was built on the very idea of holding only 10% of overall gold deposits, and lending 90% at a given time. Who’s to say/know if the leverage ratio on vaulted PMs has hit 200 to 1, or even 300 to 1 ?!?
GLD and SLV funds represent PM’s biggest ETF’s, and receive the bulk of the blogger scrutiny and skepticism. Are these paper ETF Gold and Silver funds being offered through Wall Street iconic firms actually legalistically ‘safe’ but morally ‘irresponsible’ in terms of their metals management policies?
It’s a safe bet most of the investing public is ignorant in terms of the inner workings of fractional reserve holdings. Have GLD or SLV investors actually read the contracts’ small print?? To what extent are these precious metals being held in fractional amounts; what’s the minimum PM vaulted ratio? Where’s the transparency on these matters? ‘Where there’s smoke there’s fire’ is the old adage. Time will tell if these PM reporters concerns regarding ridiculously over-leveraged ETF funds are true. With so many people chiming in concerns, and so many other options available, why take ETF risks?
Lastly – the whole issue of Precious Metals Futures styles contracts is beyond this beginning analysis. There are stories of high-end Futures investors demanding ownership of scarce (undeliverable?) metals held(?) in the London exchange vaults. Is it true these financiers being paid not-so-small fortunes of fiat money quietly for metals that are not present in vaults? We live in interesting financial times indeed.
Owning Precious Metals offshore in Foreign Countries
Many astute large investors set-up metals accounts in foreign countries like Switzerland, or Singapore (very popular today amongst ‘Gold Bugs’). These and other locales are far away from Uncle Sam and his IRS long arm reach. Visitors are allowed to view their precious metals allocations in private rooms without U.S. confiscation worry. Most middle class Americans can only dream of this type of protection for their modest supply of precious metals. Large minimum deposit amounts make these type of institutionalized protections cost prohibitive for people who work for a living.
In today’s global marketplace, you can ‘buy’ silver in Australia that is literally held in the ground – at the massive Perth Silver mine. On the surface, that sounds like a safe idea (puns intended)! Unlike the United States, Australia has no history of PM confiscation to date, but it does carry large debts to the international banking cabal. BUYER BEWARE! Do you really want Aussie issued currency for your Silver claim when the financial system changes overnight? Aussie dollars might only be useful as toilet paper if the situation gets too out of hand. Hope for the best, but plan for the worst, if/when the sh*t hits the fan.
Canada’s CEF fund has been popular with PM investors from the 1960’s for the great lengths they go to protect precious metals in a secure Alberta facility. Canada is a Crown entity, and the British are famous for the legal strengths of their property rights laws. On the other hand, who’s to say the Gold and Silver held in the the Alberta funds vaults might not belong to the Queen if push came to shove? The same can be said of the United States in general, which has been legally ‘held’ by the Crown corporation since 1871. A true Gold Bug takes no human contract for granted for any history that has yet to be written.
Singapore has done the most over the recent past to win the approval of the Precious Metals crowd. Canada’s CEF fund is universally recognized as a firm with a strong record for solid metals protection and governance. Sprott Resources also gets high marks, particularly from Silver Bugs, when it comes to protecting metals inventory. Novice investors can begin their own metals with these things in mind.
The weakest link in the foreign ownership process often involves the Bank intermediary firms which conduct/hold metal transactions on client the behalf of middle class Americans. Some Banks play been accused of playing loose with PM contract terms and conditions, specifically default and confiscation clauses, by Gold Bugs in metals forums and in chat rooms. Be careful whom you work with and buy your PM’s from. Google search any intermediary firms for any history of problems.
Gold and Silver: Real Money as defined by our constitution
Our United States dollar is a currency that acts as a stand-in for the real money that is comprised of Gold and Silver. Until the creation of the unconstitutional Federal Reserve banking system/cartel, a citizen could ‘exchange’ his paper dollars for physical metal. Look carefully at the top of your dollars – they are really ‘Federal Reserve Notes’ masquerading as constitutional money – ‘dollars’ that should be (aren’t!) redeemable into Silver or Gold per our constitution. Good luck trying to turn in today’s fiat paper money for metals! Silver certificates of the past were just that – a claim on physical silver. The British pound’s value was based in a mathematical denomination proportional an actually pound of physical silvers value. On the flip side, Federal Reserve Notes are valued by the government’s ability to collect taxes on your labor – essentially a type of enforced intimidation, backed up by institutionalized thuggery.
When the music that symbolically is the economy stops, and the non-existent strong market is exposed as the fraud that it is, everyone will ‘grab a seat’. Those who are holding a portion of their wealth in the form of precious metals stand a better chance to ‘get grounded’, to be safe. Those who are fully invested in the lies of fiat money as represented by Federal Reserve notes (masquerading as dollars), be it in the form of stocks or bonds, had better be prepared to take a 40-60% – or worse – portfolio valuation hit.
Precious metals have a 5000+ year tradition as a solid medium to barter in exchange for goods and services. There isn’t a single government issued ‘fiat’ or ‘decree’ currency that hasn’t found its way into Ronald Reagan’s infamous dustbin of history. The dollar will NOT prove to be a historical anomaly to this trend. Its replacement has already been designed, if not implemented, by the International Monetary Fund. The IMF has already created SDR’s; Special Drawing Rights, if you are interested in researching them. A derivative product of these SDR’s, designed for eventual commoner use as a dollar replacement has been discussed for years at economic conferences and throughout the financial press.
The suffering the American populace will endure when the international banksters finally do pull the rug on the dollar, and replace it with their new world-reserve IMF currency, will crush the unsuspecting and the unprepared. The question is not if but when. No fiat currency (currency unrooted in metals that backstop the paper bills) has ever survived. It’s likely to be a slow transition; still, be ahead of the curve!
The English pound suffered a devastating fate after WW2. The sun never set on the British empire – until it did – and the dollar took over as the world’s reserve (paper) currency. International bankers, the people who ‘own’ the majority of the world’s wealth, feel no long-term obligation to the U.S. dollar. But weren’t their wealthy parents very lives and vast fortunes saved by G.I. Joe?
Precious metals, in comparison to paper bills, offer relative safety from the machinations of the banking system. PM’s are assets that are not dependent on human loyalties or ponzi-style scheme institutions, many of which primary serve as trickle-up wealth transfer mechanisms.
Gold and Silver: Real Money recognized as such worldwide
Precious metal coins and/or bars, be they gold or silver, risk no such undermining planned paper value destruction from your friendly International bankers. On the contrary, those financial gangsters will be looking for every possible ways to separate productive citizens from their precious metals – just like they successfully did in the 1933 confiscation act under FDR – when the powerful U.S. economy grounded to a near halt. PM’s currently being trashed in the financial media will be held in high esteem when that eventful ‘black whichever’ weekday arrives. That’s a PM scenario is something you can truly bank on!
Since their inception in 1914, Federal Reserve Notes masquerading as United States dollars (i.e. – currency exchangeable for constitutional money … gold or silver) have lost over 98% of their purchasing value. An ounce of gold and silver, however, has continued to hold and protect their value. These metals can still purchase equivalent amounts of food and clothing as they did in the days of Rome. Think about the implications of that fact for a minute! That’s why I give gold or silver coins to kids to help celebrate special occasions. In comparison, my parents generation was found of giving now-discredited FED bonds. Do they even promote ‘U.S. Savings Bonds’ programs anymore ?!? These bonds had television commercials regularly on the air. Oh how the times have changed!
Lastly – please note that every U.S. pilot flies with a basic emergency kit of supplies in the event his aircraft has to crash land. Within each and every one of those kits is a one once gold coin. It’s understood that gold is recognized as money in every culture and corner around the globe. Every ounce-coin a pilot carries in his aircraft has been furiously debated by the military, as weight (fuel) impacts everything tactical capability engineers can design into the pilot’s cockpit. All pilots carry gold for ‘worst case scenarios’, as you should. As they teach the legions in the Boy Scouts – be prepared.
In closing, please Google precious metals investing. Take time to read up on the subject, and be safe. The banks and their fiat monopoly-style currency have not earned, and do not deserve, your trust. Protect yourself by investing in sound money – gold and silver collectable coins, which historically skyrocket when big corrections occur. These coins represent financial insurance for the modern retiree who deserves peace of mind. Position yourself to protect a lifetime of labor and savings with an investment into sound money. A financial tradition extending back 5000+ years, precious metals, needs to be at least a small if not large part of your portfolio. Gold and Silver = Real Money 🙂
Disclaimer / Due Diligence Reminder / Preview on Silver
*** The following article is based on the investment experience of a known gold bug, who began buying Gold when it was a mere $400 an ounce in 2003. He only keeps small amounts of ‘junk silver U.S. coins’ on hand for emergency bartering, something you too should do.
Please note that there exists approximately 1 ounce of refined/processed gold for each person on the planet, and approximately 16 times that amount of silver. It is the very ‘small’ nature of these metals markets wherein the opportunity and risk lie. PM’s are best thought of as a store of wealth over their potential value in terms of speculation.
Precious metals are the most manipulated commodity on the planet! Local coin store shelves are relatively empty of Gold and Silver inventory. Retail prices for PM’s have only creeped upwards in terms of dollars, seemingly in defiance of the laws of supply of demand. How long can these manipulations hold on? Are PM’s ready to break out, or will the dollar carry the day?
Keep a lookout for a future article on buying Silver! This advice comes free of charge for your own financial reflection. Lastly, note you alone are responsible for your own due diligence and decisions regarding all aspects of PM purchases. Good Luck and stay safe in the investment jungle currently confronting all modern retirees.