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Home >> Why Protect Yourself Against The Next Gold Confiscation?

Author: Gold Why Webmaster
Date: August, 2009
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In 1933 the United States Government confiscated everyone's gold coins. Can you believe it! If you were smart enough to hold gold coins to hedge your bets against an unstable government, too bad. Your coins were confiscated for a fraction of their actual value and your hard work and prudence were all for nothing. Want to learn a bit more about the 1933 gold coin confiscation? There are already a ton of great articles including this one by Blanchard and Company. I personally believe there will not be another gold confiscation. Perhaps I'm just an optimist. Or, it's my belief that the media is so widespread that it would be impossible for the government to get away with something like this. However, that doesn't mean that I'm not planning for the worst. Hey, I'm a gold coin investor. Is there a gold coin investor out there that is not planning for the worst? The topic of today's article is all about how you can protect yourself from the next gold confiscation.

Multiple Safe Deposit Boxes Protect You From Gold Confiscation, Somewhat

As you know, I'm a big advocate of storing your gold in your safe deposit box. However, I have read a variety of opinions on the Internet that certain banks have orders from the government to freeze safe deposit boxes in the event of an economic collapse. I'm not sure if I believe this or not. Regardless whether it's true or not, why not split your gold holdings amongst several safe deposit boxes at different banks? For example, why not have one safe deposit box at Wells Fargo and another at Bank of America? This only makes sense if you have sufficiently large gold holdings because these boxes will run you $75 or more per year, but I totally recommend this if your gold holdings are large enough. If one bank confiscates or freezes your gold, at least you have the hope that the other won't. Moreover, I have heard reports of bank employees breaking into safe deposit boxes and taking gold coins. Again, I'm not sure if this is true. Regardless, it makes sense to diversify your gold coin portfolio amongst several safe deposit boxes. In the worst case, you will lose half your gold coins if one bank steals your gold. All of this sounds "worst case" and it truly is. However, why not sleep better at night by hedging your bets in case another gold confiscation really happens. Another tip: check your safe deposit boxes regularly. I check mine at least once per year to make sure everything's in order. Another tip: If you go the multiple safe deposit route, why not diversify geographically? Make sure they're at least 20 or so miles apart in different cities.

Protect Against Gold Confiscation With Overseas Gold

There are several options these days to purchase gold and store it overseas, outside the US. If your gold is not in the US, the theory is that the US Government will not confiscate the gold. I personally have not explored any of these options. I'm all about doing things by the book and urge you to do the same. That doesn't mean these aren't good options. It just means you really need to do your homework and execute these strategies the right way. With overseas strategies, I don't know about the tax and reporting ramifications so I have decided not to do anything, just yet. However, once I have a better handle on things and understand how do to this the right way, I very well may explore and implement these options as a way to diversify my portfolio and hedge against the next gold confiscation.

So, what are these overseas gold ownership opportunities? As mentioned in my recent article about my gold monkey, Australia's Perth Mint offers gold certificates. The Perth Mint is the only government-backed allocated gold program. You can buy Perth Mint certificates and have your gold stored in the Perth Mint's vaults overseas. What a great way to protect against gold confiscation and diversify your holdings geographically!

The other neat way to diversify internationally is Bullion Vault. Bullion Vault offers an awesome web interface where you can buy gold bullion. You get to specify where the gold is stored, with many of the options overseas. While this is not a government-backed program like Australia's Perth Mint, the storage facilities are very secure and they seem to go to painstaking details to keep your gold safe and secure. How neat!

Diversify With Some GLD

In recent years, GLD has become extremely popular, now with over 30 billion dollars worth of gold in the fund. GLD is an exchange traded fund of unallocated gold. You buy the fund and you own gold. You don't own specific gold bars and coins like you can in an allocated solutions such as The Perth Mint or Bullion Vault, but your gold is indistinguishable from everyone else's. They store their gold in secure vaults. I see GLD as a great way to diversify in the event of a gold confiscation however I also realize they are a big target. If the government were to confiscate gold, I think they would go after this target first given the huge size of the assets. At the same time, it's great to be able to diversify your holdings in multiple locations to better minimize the risk of confiscation in my opinion.

Gold Mining Company Stocks - Perhaps The Best Hedge Against Gold Confiscation

Here's a solution I really like: Allocate a portion of your portfolio to shares of gold mining companies. This one makes great sense to me because most of these companies are non-US corporations with gold in the ground overseas! While I personally think it's not the right time to own gold mining companies, I advocate owning some of them as a hedge against the risk of gold confiscation. Moreover, as the price of gold rises, these companies should continue to thrive. Key tips: Pick a company that's not US-based and a company with their mines overseas. If gold ever were confiscated, I would imagine these stocks would become increasingly pricey overnight.

Gold Coins On Your Person - Take Matters Into Your Own Hands?

As you may know, I'm a proponent of having a few gold coins on your person. Not only will these gold coins bring you good luck but this is also a good way to potentially avoid confiscation. If there is a gold confiscation, you would think the government would go after easy targets such as GLD and safe deposit boxes. However, the government could also confiscate gold that you hold in your person. If you buy your gold coins with cash and leave no paper trail, there's no way the government could prove you have gold and at that point it's your own moral decision. Personally, like I said above, I like to follow the rules and would hand my gold in if it came to that (we'd have worse problems than gold if things got that bad). Important tip: Make sure to hide your gold carefully.

The Government May Not Confiscate Numismatics

There are two types of gold coins: gold bullion coins and numismatics. Most of this site is devoted to gold bullion. I personally don't own any numismatics yet, however I do plan to go that route as I have more money. A great example of a numismatic gold coin is the gold Saint Gaudens. If the government confiscates gold coins, they are likely to ignore collectible coins, especially those with older dates. At that point, these coins will be increasingly valuable.

Confiscation Not Likely But Why Not Protect Yourself

I don't think there will be another gold confiscation. However, just in case there is, why not protect yourself a bit by deploying a few of the strategies in this article? You will sleep better at night knowing you have done your best to protect your valuable gold portfolio. Moreover, I want to stress there's nothing shady about this. As I said, I like to do everything by the rules. You can protect against gold confiscation while following the rules to the letter if you're smart and plan well.

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