Monday, August 10, 2009

Are We Being Conned About Gold Confiscation?

Whiskey & Gunpowder
Gary’s Note: Your gold could be seized. The U.S. government is proving almost every day that it nothing within its borders is really private property. But FDR II doesn’t need your gold because the dollar isn’t backed by it anymore and is free to be inflated with abandon. Either way, there’s trouble brewing as Doug Hornig explains below.

Whiskey & Gunpowder
By Doug Hornig

August 10, 2009
Stowe, Vermont, U.S.A.

Are We Being Conned About Gold Confiscation?

There’s a lot of Internet chatter these days about the possibility of the U.S. government seizing its citizens’ private gold holdings.

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Well, it’s always good to bear in mind that there is no telling what the government might do. It’s already doing things that were unthinkable just a few years ago. If President Obama believes there is political hay to be made from seizing your gold — or even if he sincerely thinks such a move would be “good for the country” — we’re sure he won’t hesitate to make the grab. After all, his favorite predecessor, Franklin Roosevelt, set the precedent.

Many Americans don’t even realize that private gold ownership was forbidden for forty years, but it was. The relevant edict is Presidential Executive Order 6102 of April 5, 1933, which begins:

Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled

An Act to provide relief in the existing national emergency in banking, and for other purposes, in which amendatory Act Congress declared that a serious emergency exists,

I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding of gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations…

There was, of course, no constitutional peg on which to hang such an outrageous crime against the people, so FDR decided to fall back on the 1917 Trading with the Enemy Act, which he claimed gave him the authority to do this in order to prevent gold from falling into the “wrong” hands. If that seems a flimsy argument, it is.

But it echoes eerily today. How much of our personal freedom have we already been asked to sacrifice to the Forever War on Terrorism? And note also the reference to an “existing national emergency in banking” that requires extreme measures. Sound familiar?


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So, no question that Obama could follow in the footsteps of his mentor, if he wanted to. That said, though, the likelihood of a new gold confiscation is remote, for a number of reasons.

2009 is not 1933. Back then, the money supply was constrained by the gold standard. As Roosevelt concocted the New Deal, he ran smack up against that wall. He needed more money than he had, couldn’t raise taxes in a depression, and couldn’t print dollars that weren’t gold-backed. 

His solution may have been reprehensible, but it was elegant. First, make the private possession of gold illegal, paying those who surrender their metal the official price, $20.67 per ounce. Then revalue gold to $35 per ounce. Voilà: Instant inflation, lots of new money, problem solved. And the New Deal was off and running. 

But we have long since abandoned the gold standard, and Obama doesn’t face FDR’s constraints on monetary inflation.  However much money is needed to finance his New Deal Redux, he can have it. All he has to do is rev up the printing press or turn an unlimited number of bits and bytes into electronic cash.

Given this kind of clout, what does he need gold for?

An argument can be made that the yellow metal is still useful. It runs like this: Creating money out of thin air is inflationary, and a large stash of gold, even if it doesn’t officially back anything, serves as a sort of counterweight. People around the world will have greater confidence in your currency knowing that, as a last resort, you can pay your bills in gold. And the more gold you have, the better.

Furthermore, confiscating gold and assigning it a fixed dollar value would also prevent the kind of runaway gold price that the coming massive inflation is bound to trigger. As those who argue that the gold price is already suppressed correctly point out, the government has decided to sacrifice the dollar in order to avert deflation. Thus a lower-than-free-market gold price helps obscure the damage that’s been done to the currency. People feel richer with more, albeit inflated, dollars in their pockets; a rapidly escalating gold price shows them that they’re not.

These two arguments aren’t empty, but they’re not convincing. Most folks in government subscribe to the “barbarous relic” school of thought about gold. Precious metals probably cross the minds of Obama’s economists only when they’re out buying jewelry.

And most American citizens have never even seen a physical gold coin, much less own one. Reeling in all the bullion out there will, in reality, do the government little if any good.


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One final point. In the 1930s, when people were asked to turn in their gold, compliance was quite high. Americans believed their government when told that it was for the greater good. Imagine.

Today, that attitude seems laughably naïve. Those who have gold know that it is an unequaled storehouse of value. That they would meekly part with it at the government’s behest requires a belief that naïveté still rules the land.

Far more likely is that gold owners would resist. And since they also tend to be gun owners, there could be serious confrontations. The government doesn’t want mass resistance to one of its orders, nor an escalation of the domestic violence it will probably get anyway, when unemployment rises to Depression-era levels. It’s simply not worth it. 

Never say never where government stupidity is involved. But all things considered, a modern-day gold confiscation is not high on our list of financial worries.

Doug Hornig
Casey’s Gold & Resource Report

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Parting Shot...
Your apostate editor returned to church this Sunday, Shooters, and managed not to catch fire upon crossing the threshold.

It’s been a while since I was in a house of worship and my sins since my last visit have been various and inventive…but I wasn’t there to worship or seek forgiveness. Rather, a local musician had gathered some of his friends to give a beautiful trombone concerto.

The church itself was a High Victorian Gothic masterpiece, just around a couple corners from Agora Financial headquarters. I arrived fashionably late and heard the expert trombone-playing as I walked along the side of the church toward the entrance.

The space inside was magnificent. I was to learn later that all the original details had been lovingly restored at great expense. It produced a curious effect. In this slick, degenerate age, they simply don’t make ‘em like that anymore. Yet this interior recalled the old world without the usual patina of age. It was as disconcerting as meeting your grandmother as a toddler, but pleasant all the same.

Speaking of grandmamma, your editor was taken back to the days of his early youth, sitting next to the family matron in the stifling heat of the pew. The music itself was very good and at times sublime.

Roving Whiskey reporter Samantha “Sam” Buker sends proof of America’s slide into Third World penury and chaos: The dead are being unclaimed.

“Several large counties across the country are experiencing unprecedented increases in the number of unclaimed deceased — not only because the dead people could not be identified, were indigent or were estranged from their family, but also apparently because more people simply cannot afford to bury or cremate their loved ones.”

It was bound to come to this. Mounting job losses, foreclosures and a powerful urge to keep eating…it all amounts to the dead having to bury their dead; the living really need the cash.

When I inevitably die of starvation or exposure, I hope my family or whoever finds me will comply with my wishes and just soak me with an accelerant and drop a match. If they can pry my last few pieces from my dead fist, then I hope they’ll be honest enough to use them to get me a proper and more thorough cremation. If they use the money to eat, I’ll understand.


More on Stopping The Vote…and your initial reactions.

Gary Gibson
Managing Editor,
Whiskey & Gunpowder

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