Are Precious Metals Being Quietly Confiscated?

November 3, 2008 – In 1933 the U.S. government confiscated gold from the people. In 2008 is it covertly repeating that exercise?

By The Cerebral Aesthetic Vagabond

1933

Many people are aware that in 1933, President Roosevelt issued Presidential Executive Order 6102, explicitly confiscating gold from private citizens. Some chilling excerpts from that executive order include:

Section 2. All persons are hereby required to deliver on or before May 1, 1933, to a Federal Reserve bank or a branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion, and gold certificates now owned by them or coming into their ownership on or before April 28, 1933, except the following:
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Section 3. Until otherwise ordered any person becoming the owner of any gold coin, gold bullion, and gold certificates after April 28, 1933, shall within three days after receipt thereof, deliver the same in the manner prescribed in Section 2;
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Section 9. Whoever willfully violates any provision of this Executive Order or these regulation or of any rule, regulation or license issued there under may be fined not more than $10,000, or,if a natural person may be imprisoned for not more than ten years or both; and any officer, director, or agent of any corporation who knowingly participates in any such violation may be punished by a like fine, imprisonment, or both.

After the issuance of this executive order, any American owning gold was retroactively made a criminal and remained so until 1975 [1], even though the U.S. Constitution specifically states that only gold and silver may constitute money!

The confiscation of gold in 1933 had little practical benefit, even though the U.S. dollar was still then backed by gold. It was more of a psychological assault on the populace, intended to coerce them into using U.S. dollars. It also enriched the politically-connected insiders who were still allowed to hoard gold when the price was arbitrarily raised from $20 per ounce in 1932 to $35 per ounce in 1934, a quick 75% gain for those in possession of gold. [2]

2008

While I cannot prove gold is being confiscated today, a number of curious observations have converged, making me wonder if a covert confiscation process is underway, specifically:

If one recognizes that today virtually all markets – stocks, bonds, currencies, commodities, precious metals, and even real estate (bank bailouts, toxic MBS purchases, interest rate reductions, renegotiated mortgages) – are heavily manipulated by the powers-that-be, then looking at the above list it’s easy to believe that the PTB could be behind every one of these trends.

If one wanted to effect a covert confiscation of precious metals, how would they go about it? They would quietly reduce the supply to keep people from getting their hands on precious metals, while encouraging the public to disgorge themselves of what precious metals they already held. And to thwart the law of supply and demand, which one would expect to cause precious metals prices to rise in a low supply/high demand environment, the prices can be manipulated in a forum that lends itself to that endeavor, such as the paper commodity futures market. (By the way, allowing the paper contracts bought and sold on the futures market to establish the price of physical metal is like allowing a market for apples to establish the price of oranges.)

I’m not alone in my speculation about confiscation. Here’s an article from The International Forecaster, Slaves To The Orgy Of Money, that suggests something similar:

In essence, this bottleneck between the wholesale and retail levels of the market in precious metals amounts to a de facto confiscation of gold and silver from the masses.
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In any case, most people in the US no longer own gold and silver. They are slaves to the orgy of money and credit that the Fed has provided, and they now worship paper over metal. This means that no confiscation is necessary to prevent the American sheople from having a place to store the value of their savings. All you have to do today is to keep US citizens from acquiring precious metals, first, by making it look too volatile to be a good investment, and second, by making it hard to acquire, especially in larger amounts. [My emphasis.]

Why Confiscate?

Today gold is theoretically even less relevant to the U.S. dollar than it was in 1933, but only theoretically. The U.S. dollar is, or until recently was “backed” by oil, since most of the oil on the planet is traded for dollars. The dollar is also “backed” by military muscle. Yet gold still holds tremendous psychological sway as a monetary alternative to dollars, sometimes even referred to as the “anti-dollar.” The Federal Reserve bank and central banks the world over hoard gold. Why? If the stuff has no value, if it is indeed a barbarous relic as has been asserted, they ought to sell it all. But they don’t because gold still provides an implicit psychological backing for fiat currencies. The fiat currency of a country that has no gold holdings would probably be trusted less than that of a country with gold holdings.

Nevertheless, although central banks apparently still need gold to imbue some legitimacy to their fiat currencies, they don’t want too much of a good thing. If people wise up and start storing their wealth in gold rather than in fiat currencies, the former will increase in value and the latter will decline in value. Issuers of such fiat currencies obviously don’t want their sole “product” to decline in value. So the trick for them is to balance the appeal of gold against that of fiat currencies. They must maintain a high enough valuation for gold so that it remains a credible asset with which to back their fiat currencies, but not too high a valuation so that people flock to gold instead of fiat currencies.

Today outright confiscation of gold makes little sense because U.S. dollars aren’t ostensibly backed by gold. Moreover, there are tens, if not hundreds of trillions of paper and electronic dollars floating around the globe. By contrast, all the gold ever mined from the earth is worth perhaps a couple of trillion dollars, and the amount of physical gold in the U.S. is probably worth no more than a few hundred billion dollars. So even if all the gold in the U.S. were confiscated it would amount to a figurative drop in the bucket compared to the amount of dollars circulating the planet. In other words, all that gold would do little to reinforce the backing of the currency. Overt confiscation of gold may, in fact, backfire and decimate the value of U.S. dollars, as people may view such an act as a desperate move to prop up a failing currency. Since dollars are used the world over, even though Americans may be deprived of alternatives to dollars, foreigners would not and they may well ditch their dollars specifically in favor of the very thing the U.S. wants to steer them away from: gold.

So if the powers-that-be wanted to confiscate gold today, it would be best to do it in a covert fashion, so as to not alarm either Americans or foreigners. But why might the PTB wish to confiscate gold today?

Demand among the masses is soaring. Remember, the PTB don’t want gold to become too desirable, but that’s exactly what is happening, so the genie must be stuffed back into the bottle.

This is a critically important time for the U.S. dollar and it cannot withstand the advent of a viable alternative. It’s widely accepted that the U.S. is effectively insolvent, meaning it cannot pay its day-to-day obligations. That’s why it must borrow $2 billion per day to keep operating. Its national debt cannot be paid back either. Ultimately the U.S. will go bankrupt and its currency, the dollar, will be destroyed.

Taking away as many alternatives to the dollar as possible, especially precious metals, is one way to extend the lifespan of the dollar. Perhaps once the dollar begins its final, irreversible descent to death is when the Amero will be introduced to replace it. Naturally, the people behind the Amero would not want a fledgling currency to have to compete with precious metals as a store of wealth, so weaning people off precious metals now might be part of the groundwork for the introduction of the Amero.

Such preparations are especially imperative when one considers that outside the U.S. there is frequent talk of creating new regional currencies that are based on precious metals. Perhaps even the Amero might be based on precious metals, which is all the more reason to take precious metals off the market right now, to accumulate the backing asset for these new currencies.

Another goal might be to steer people away from tangible stores of value, such as precious metals, and into paper realms which can be easily manipulated and looted, such as exchange traded funds, or ETFs. While in theory, ETFs are supposed to back each share with physical metal, I have my doubts, and I expect that ETFs will eventually devolve into the same kind of manipulated sham as the commodity futures market. Some observers have already noted discrepancies between physical metal and outstanding shares in some ETFs, and have even suggested that naked short selling is occurring. Not only is that not supposed to happen in a market that’s ostensibly 100% backed by physical metal, but naked short selling is a favorite tool for manipulation. Moreover, ETFs are managed by the very same insider corporations that are at the center of today’s financial storm. Can they really be trusted? Do they really have all the metal in their vaults that they claim? By contrast, one doesn’t have to trust physical metal, especially if it’s resting heavily in their own hands.

Conclusion

I have no proof that a quiet confiscation of precious metals is underway, but it looks like a plausible possibility. There are some good reasons why such a confiscation might occur and why it might be done covertly.

References

1. The Political and Economic Agenda for a Real Gold Standard, by Ron Paul.

2. Historical gold prices.

Update – December 1, 2008

Here’s an interesting and lucid article about The Early Gold Wars. It provides some background and reinforces the claim that governments around the world, especially that of the U.S. have been “at war” with gold for quite some time.

Update – January 1, 2009

Here is an interesting interview with the principals from GATA, titled Is the COMEX Just a Farce? It reinforces many of my assertions here, in particular, that there is a concerted global effort to keep precious metals out of the hands of the public. Here’s a relevant quote:

I receive reports EVERY day of gold coin shortages in countries around the world --from Germany, to Argentina, to Canada, to England, all of Asia, etc. Months ago the US Mint announced it was curtailing production of US gold coins.

Last week the Mexican Central bank limited sales of its Libertad silver coins. This is no accident. It is an organized effort to limit demand for gold and silver and keep this kind of money out of the hands of the people. [My emphasis.]

And:

As mentioned earlier, there is no doubt in my mind there is a coordinated effort, not only by the US (it emanated here of course), but all countries to limit the amount of gold and silver that ends up in the hands of citizens.

The interview also reinforces my belief that “banning” outright the private ownership of gold, ala the 1930s, would be counterproductive. To quote:

Instead of banning gold ownership, they are making it less available, hence the extraordinary premiums. I can't imagine the US banning gold ownership. So few Americans own it. People would say, "HUH?" The rest of the world would then laugh at us and buy all they could. That would be the death knell of the dollar. [My emphasis.]

Finally, the price suppression schemes aimed at gold and silver are tantamount to price controls. As many people have pointed out over the years, price controls usually produce two consequences, which are, shortages and the formation of alternative markets. We’re seeing both of those consequences manifest themselves in the gold and silver markets, which confirms the view that their prices are being “controlled.” Shortages are becoming increasingly apparent, and alternative markets – to the COMEX – are becoming increasingly popular as well. These alternative markets include local coin dealers, larger online dealers and eBay.

The End