(Government confiscation fears are common)
Silver Stock Report
by Jason Hommel, July 3, 2008
The silver market is several orders of magnitude too small for the U.S. government to even be concerned about. It is impossible that the U.S. government could confiscate enough silver bullion to even make even the tiniest difference to the annual budget!
The total silver bullion available in the entire world is down to about 60 to 600 million ounces. At $20/oz., that's worth $1.2 billion to $12 billion, yet U.S. annual government budgets are around $3000 billion, and the deficit alone is about $1000 billion. How could $1.2 billion dollars even help in the slightest to help fund a budget deficit of 1000 billion, nearly 1000 times as large?
Thus, there is no need to be remotely concerned about confiscation until well after silver bullion rises in price by at least a factor of 1000! And even then, the silver in the U.S., about 100 million ounces, at the COMEX, would be worth $20,000/oz., for a total of a mere $2 trillion, which is, again, a mere drop in the bucket when considering the dollar amount of government expenditures, which are over $3 trillion, and the U.S. debt is $9 trillion, with unfunded liabilities of $75 trillion!
Furthermore, let's look at the gold confiscation of 1933. In actual fact, the vast majority of people never turned in their gold. The government increased their own gold hoard by only 1% through confiscation, so you are not likely to lose your silver if the government even tried to confiscate.
Furthermore, of all the assets available, gold and silver are the absolute hardest to actually confiscate, because they are easily hidden, portable, off the books, and are essentially untraceable. That's why they are money, because of such intrinsic properties.
In contrast, Real Estate is much easier to tax. There is no such annual "property tax" on silver or gold.
In fact, you may need physical gold or silver to be able to hold on to real estate in the future. If paper money collapses, they will surely levy a tax of gold or silver on all real estate.
So, although it is always possible that the government might confiscate silver in the future, I think the possibility is rather remote.
The typical result in history when governments try to confiscate gold and silver is that the governments quickly collapse. It is an anomaly of history that the U.S. government did not collapse in 1933, but perhaps the reason it survived is that paper money could be redeemed for gold by foreigners until 1971, and perhaps because gold trading was legalized again in 1975.
But more importantly, let's focus on the present. They are not confiscating silver now.
Today's government confiscation takes place through inflation! Currently, money creation rates are at about 20%, so inflation is 20%, and thus, the dollar will lose 20% of its value in a year. In the last 4 years, the dollar has lost over 75% of its value (as measured by silver and gold, since gold and silver prices have nearly quadrupled), and the dollar is on pace to lose another 20% in the next 12 months!
Another government confiscation is through income taxes. There were no income taxes in the U.S. when silver and gold were money, prior to 1913 when the Federal Reserve was founded.
Confiscation fears are understandable. Although silver that you own is default free, and cannot go to zero value. But there is only one remaining problem: it can be stolen by thieves, or government. This is the age-old problem of being wealthy, you have to protect your wealth.
Let me emphasize, you have to protect your wealth, you, not somebody
else. Like many activities, we often try to hire out jobs we don't
like. We hire people in government to be the police, to fight fires,
and to build roads. In the private sector, most of us hire other
people to build our houses or cars for us, as the vast majority of people
work in other jobs.
Let's put it this way. You don't ask another man to hold your wallet, and you don't ask another man to hold your wife. Some things are your responsibility only.
You can hire a personal trainer, but you cannot hire another person to exercise for you, either.
You can hire a driver, but you can't hire someone else to take your test to get your driver's license.
Some things you just have to do yourself, and guarding your wealth is one of them.
Guarding your own wealth serves several positive functions and purposes for society and you. First, it distributes wealth among the people, rather than allowing it to be concentrated, and more easily stolen by thieves or government entities. Second, it forces you to take more responsibility for your direct surroundings, such as where you live, which directly contributes to helping make the world a safer and better place. Third, you will be more likely to take precautions for overall home defense and personal security, such as getting a burglar alarm system or firearms. Fourth, you are more likely to want to keep yourself physically fit and ready for personal self defence, which is good for your health. Fifth, a people that owns firearms is more likely to be free and more immune to invasion by any enemies.
So, if there ever was any sort of government confiscation order, who would mostly likely be harmed? Primarily those entities who would be affected would be the investors who held silver or gold with the exchange traded funds (ETF's) such as Barclays SLV, or e-bullion trading systems, or the COMEX, or any sort of silver or gold held for you by any major broker or bank.
In fact, if there is any silver or gold confiscation order, it would likely be to help the banks, to eliminate the silver and gold liabilities of the major banks and brokerage houses, so that they can give you paper, instead of silver or gold, in case the prices of the precious metals begin to take off.
Some people say that places like goldmoney.com which is incorporated overseas and uses vaults in Europe, is immune from U.S. government confiscation. Others say that Australia's Perth Mint certificates are also likewise immune.
But the lesson of the Argentina currency crisis in 2001 should be
remembered. U.S. Citizens who put U.S. dollars in U.S. banks in
Argentina had their dollars converted to Argentine pesos against their
will, and lost 75% of the value of their accounts nearly overnight as the
Argentine peso collapsed by about that amount. U.S. Banks said they
had no choice but to obey the orders of the government of Argentina, which
was, of course, very convenient for them!
So, being located in another nation does not always offer protection.
Freedom requires responsibility.
Banks offer a false kind of security.
Those who would give up responsibility for security deserve neither one and will end up enslaved.
Those who mock silver and gold love to tout stories of people who had their silver or gold stolen by common thieves.
At most, I could hardly conceive that 1% or less, of the people's physical wealth could be stolen, physically, in a year!
Yet what is inflation? Inflation of 20% steals 20% of all of society's paper wealth in a year!
The irony is that paper money's "reason for existence" is that it's supposed to protect us from the theft of physical bullion, but paper money is no protection at all! Paper money is evidence that you and your ancestors abandoned your silver and gold to the institutionalized thieves long ago.
Could you imagine the societal uproar that would happen if 100% of the assets of 1 person in 5 were totally stolen each year by thieves? And yet, that is the societal equivalent of a 20% inflation, or currency devaluation!
If you are going to fear confiscation, then fear inflation, for that is the real confiscation.
In fact, fear paper money, for paper money was created to deceive the holders of the physical gold and silver in the first place. And also, fear the entire concept of banks, for banks are also a mechanism of confiscation! Fear also, insurance, social security, annuities, inflation-indexed bonds, futures contracts, and options. All are merely "promises to pay", and are all paper instruments designed to confiscate your real gold and silver.
The only solution to the problem of confiscation is getting real silver and gold.
Some scammers will try to convince you that "numismatic" items are immune from confiscation. Whatever! I think numismatics are just another form of confiscation themselves; they are expensive idols, special images on coins that supposedly have higher value, but the value is to the seller of the items, as they usually have a very large spread, and you get much less back when you try to sell them. Even if you get "cheap" numismatic coins for only 15% over spot, I reason, why pay 15% more for "special" bullion, when you can pay 5% just to protect the real stuff?
I know a guy who spent $150,000 on "walking liberties" at 75% over spot! He only got the spot price when he sold them! Most people who try to spend $100,000 in the rare coin market, ARE the rare coin market. Beware!
I recommend that you store your wealth in a safe, in your home. Bolt the safe down, from the inside, into concrete or wall studs. Get a safe that is an appropriate size for your wealth. Buy a $50 lock box, or a $500 floor safe, or a $5000 vault safe if you have to. A good rule of thumb is to spend about 1-5% of your wealth on personal security.
If you have wealth, you can afford to guard it, or you can afford to move to a safer neighborhood, it's that simple. Don't neglect that crucial responsibility.
Don't try to insure it, I think insurance is a scam, and I don't even know if you can insure bullion stored at home. One way to insure your wealth is to spread it around. Do you have family? Buy them a few safes, and store wealth with them.
Finally, some people have asked me, "What if a crook comes to your
house with a gun, and forces you to open your safe?" What if, what
if! It's never happened yet. Common thieves don't read
investment newsletters, they are out for the easy score. Most silver
and gold thieves disguise themselves as "respectable" businesses who want
to hold your silver and gold for you!