Is Gold and Silver Registration Coming to Illinois?

This bill won't pass, but expect more versions of it to come up in the future.  Research Executive Order 6102 in 1933, signed by FDR.  And then Google what he did in 1934.  Confiscation and theft are the only two words to describe that bait-and-switch.

http://libertyblitzkrieg.com/2013/01/10/is-gold-and-silver-registration-coming-to-illinois/

So let me get this straight.  First they want gun registration and now precious metal registration?  I’m sure the government would only use such information in our best interests, because as we all know: Your Government Loves You.  Sounds reasonable, after all, only “terrorists” buy guns and gold anyway.

Meet the ” Precious Metal Purchasing Act” or SB3341, brought to you by the lovely folks at the Illinois 97th General Assembly:

Turkish Government "Goes For Gold"; Seeks To "Transfer" Private Gold Holdings Into Bank System

This "polite confiscation" of citizens' gold will occur in the US--again, as it did in 1933, under Executive Order 6102, by Franklin Delano Roosevelt.  It's happening as we speak in Turkey. 

http://www.zerohedge.com/news/turkish-government-goes-gold-seeks-transfer-private-gold-holdings-bank-system

For some Turks, the government will have to unveil a lot more sweeteners before they part with the family gold. 

Because what may not be apparent to a Princeton Ph.D., is more than obvious to a 70 year old housewife in Istanbul:

"I'm keen to save, so keeping gold at home is easy for me; there is no complicated procedure," said Ayten Altin, a 70-year-old housewife in Istanbul. "In an emergency, I can convert it to cash and I don't have to wait for the bank to say the asset has matured."

The Bank Runs Of The Early 1930s And FDR’s Ban On Gold

http://blogs.forbes.com/richardsalsman/2011/04/06/the-bank-runs-of-the-early-1930s-and-fdrs-ban-on-gold/

The article is generally accurate, but a couple clarifications are in order,

1) After FDR confiscated private gold holdings via Executive Order 6102 in 1933, gold was re-priced from $20.67 to $35 in 1934.  That's how the author came up with this calculation:

...so FDR’s Treasury, not private gold owners, profited from the 60% gold-price jump.

2)  The price of gold remained fixed at $35 until 1971 when Nixon took us off the gold standard.  It was later officially re-valued to $42.22 in 1973 (where it remains today), despite a floating market price.  Hence, my confusion by the author's comment:

Since private gold holding was legalized, the gold price has increased by nearly eight-fold, from $185/ounce to $1464/ounce, and precisely because the U.S. dollar, officially unhinged from gold, has declined in basic purchasing power.

Overall, I agree with the tone and the basic premise of the article:  the price of gold will increase as long as the Fed and US Treasury continue to debase the USDollar.

Executive Order 6814 - Requiring the Delivery of All Silver to the United States for Coinage

Apparently gold wasn't the only precious metal confiscated by Executive Order.  FDR also confiscated silver with Executive Order 6814 in 1934.

http://www.presidency.ucsb.edu/ws/index.php?pid=14741#axzz1Gm5VOpBU

Search Executive Order 6102 to see the blog entries for the confiscation of gold.  Or just click here.

Prepare To Give Up All Private Data For Any Gold Purchase Over $100

http://www.zerohedge.com/article/prepare-give-all-private-data-any-gold-purchase-over-100

By the way, Executive Order 6102 referenced in the article was FDR's creation to confiscate all private citizens' gold in 1933...all except your gold wedding band.

The time to shut down the blog is coming.  Instead, I will blog about Justin Bieber.

California authorities investigating Goldline's sales practices

This is a nice hit piece by ABC News' George Stephanopoulos on Goldline's executive for their alleged boiler room sales practices. Notice Goldline's Scott Carter's response to Stephanopoulos' assertion that the government can't confiscate the citizen's gold. In fact, FDR absolutely banned private gold ownership in 1933 by Executive Order. See below.



Executive Order 6102, issued April 5, 1933:
http://www.wellsfargonevadagold.com/confiscation-order.pdf

Criminal Penalties for Violation of Executive Order
$10,000 fine or 10 years imprisonment, or both, as provided in Section 9 of the order.

Lunacy

Even gold bugs don't fully understand gold's store of value. Breaking news: gold's performance during deflationary times actually outperform periods of inflation. Not necessarily in nominal terms (since prices of everything generally increase nominally during inflation), but in real terms, gold actually does better in a deflationary environment. In other words, while gold is a great hedge against inflation (i.e., it maintains its purchasing power even as paper currencies are debased), it is an even better hedge during financial crisis and deflation (e.g., the Great Depression).

Second point: since official cpi numbers are understated, the inflation-adjusted price of gold should be $6300/oz., not $2400/oz., like you read in many gold-related trades. One can also arrive at the same outcomes by dividing the money supply by the amount of gold above ground, depending on which Mx metric you use for money supply. But it doesn't take a rocket scientist to track the Fed's exploding monetary base since 2008, money supply debates notwithstanding.

And if you believe the nation's unemployment rate is 9.9%, instead of the actual 22%, I've got some US Treasury bonds I'd like to sell you (or Greek bonds, for that matter).

3rd point: the bullion banks, with implicit authorization from central banks, allegedly are suppressing the prices of precious metals in London and at the COMEX. This was considered a lunatic fringe conspiracy theory, but is now being investigated by the US Department of Justice--and the normally shiftless CFTC, according to an article in the New York Post. JPMorgan was specifically named in the article. In other words, a phenomenon a few observers who cared to examine for years, is about to be blown wide open, much like the Goldman Sachs subprime mortgage derivative fraud case brought on by the other previously shiftless and incompetent enforcement agency, the SEC. Only in this case, JPMorgan and a host of other bullion banks are naked shorting silver and gold futures contracts with huge, concentrated positions.

4th point: in a related matter, the Federal Reserve Bank (Fed) has been complicit in surreptitious price suppression schemes with gold swaps, sales and leases to other central and bullion banks, with no independent auditing, and according to Ron Paul, with no authority. That's why he wants to audit the Fed, as the vaults at Ft. Knox and in New York have not been independently audited since 1953. If the gold is there, why has the Fed refused an audit for over 50 years? And if bullion banks are naked shorting precious metals, what happens to the price of a commodity if there are shortages and there is a run on inventory?

5th point: how did gold end up in Ft. Knox in the first place? Due to Executive Order 6102, FDR confiscated all private citizen's gold in 1933. Can our government do that again? Probably not, but if they did, the black market would thrive, as gold ownership is now a worldwide phenomena--among individuals, financial institutions, and sovereign central banks. Hedge fund managers, Swiss bankers, latin American overlords, oil sheiks, and 3 billion peasants in Asia are waking up to the reality of the paper currency Ponzi scheme.

6th point: the shortage in silver is even more pronounced, as it is an industrial metal, and since it is cheaper, the silver market is easier to manipulate. When the shortage hits, and "failure to deliver's" pile up, industrial silver buyers will pay any price to keep their production lines humming. We all want our iPad's yesterday, right? Industrial uses include solar panels, electronics, disinfectants, antibiotics, biotech, batteries--any green technology you can think of. Good luck on finding it when there's a run on silver.

And lastly, those on the sidelines have missed out on a decade-long bull market in precious metals. Sure, gold was the worst investment between 1980 and 2001, when the spot price declined from $850 to $250. That's because between 1983 - 2000, financial assets like equities had a historic run of about 12% return annually. But between 1971 and 1980, gold increased 24-fold. That's when the US was fighting a war it couldn't afford, the government was running a deficit, energy prices were going through the roof, and economic growth was stagnant (stagflation = stagnation + inflation). Sound familiar? Only this time, due to compounding interest on the liability side of the Federal government's ledger, our fiscal problems are much larger. If the government were to stop cooking its books and include unfunded liabilities like social security, medicare, medicaid, Fannie Mae, Freddie Mac, etc., our sovereign debt grows from $13 trillion to $60 trillion (or $100 trillion, depending on who you ask). No wonder the Fed and US Treasury are turning on the printing press.

So people have to ask themselves: are the US government budget deficit and debt problems getting better or worse? And if so, will the Fed bail out bankrupt states and municipalities also--or will they just step aside and let them undergo "austerity" measures like the Greeks have had to endure?

One guess is that they will continue to print currency, tanking the dollar further. The USDollar is only looking stronger because the euro is sinking faster. You can be the tallest midget in the room, but you're still a midget. The scary part is gold is appreciating in tandem with the USDollar, and has decoupled from its normally inverse relationship. What the markets are saying is that gold is the ultimate currency, the last man standing in a race to the bottom among paper currencies. After all, the logic goes, a weakened currency stimulates exports and employment, right?

This is not to say any asset values go straight up or straight down--there will continue to be violent gyrations from central bank intervention, and manipulation by financial institutions. But due to profligate printing and spending (and hence, the necessary obfuscation of said reckless policies), the trend of debased currencies and soaring sovereign debt will continue. Solving debt problems with more debt is lunacy, but the path our governments have chosen. It's either die now quickly, or inflate and die later. Owning precious metals is the only defense an individual has in this mad world of fiat paper currency.

See disclaimer on side bar.

Disclosure: long precious metals, long gold and silver mining shares.

Convoluted logic

After European finance ministers unveiled a $1 trillion bailout plan for Greece and other indebted nations, gold immediately crashed almost $30. Why did it crash if:

1) quantitative easing (money creation) is inflationary, and
2) gold is a hedge against inflation?

The answer is while gold is an effective hedge against inflation, it is an even better hedge against financial crisis (and eventual collapse). In light of the Club Med countries' fiscal problems, gold prices have been rising, as the possibility of bond defaults has become very real. Hence the correct flight to gold as a safety valve, and the incorrect flight to the USDollar as a long-term safe haven (I would agree the dollar may rise nominally in the short term--until the market figures out the USdollar is an impaired currency).

With the announcement of a bailout for indebted European countries, the markets perceive the possibility of a default has been taken off the table. Hence, the fear of a financial crisis subsided temporarily last night in Asian overseas trading. However, sober speculators realized quantitative easing is also inflationary, and subsequently drove the price of precious metals back up. Long-term, precious metals bulls will ultimately profit--whether inflation or financial crises occurs, probably both.

The Euro bailout is a precursor to more bailouts about to occur in the US. Attempts from both sides of the pond to normalize economic recovery will fail, as the bailouts are merely debt bandaids to major debt problems. I expect the Fed to "rescue" bankrupt states and municipalities, including currency swaps and quantitative easing as part of their monetary arsenal. The Fed certainly can't reduce short-term interest rates any further--we are already at zero.

In a related matter, European Central Bank (ECB) President Trichet last week declared the ECB would not resort to purchasing junk bonds from Greece, Spain or Portugal, in attempting to prop up the Euro currency. In a huge reversal last night, the ECB agreed to purchase said bonds. Talk about head fakes. In the process, the ECB slaughtered the bond vigilantes who were betting on the Euro collapsing, as well as the countries whose governments and citizens have been living beyond their means for decades. Ultimately, those bond vigilantes will be proven right, as the ECB has indeed extended the Euro zone life line, but they have done nothing to structurally resolve their debt problems. These bailouts merely delay the inevitable collapse; they do nothing to address the debt problems--if anything, they make them worse.

While current group think among economists, politicians, and academia have distorted Keynesian economics into its current monstrous from of government manipulation in markets, John Maynard Keynes for whom those economic theories have been named after, was absolutely correct with this comment:

"Markets can remain irrational far longer than you or I can remain solvent."

In other words, perfectly efficient markets with rational price discovery mechanisms are mythical in a world where markets are rigged and gamed to the advantage of a powerful few. I should correct myself: gold is not only a hedge against inflation and financial crisis, it also hedges an individual against a corrupt and reckless government money printing press. When one takes possession of physical gold, there are no counterparty risks. Thousands of banks have collapsed over the course of modern banking history. Thus, depositors and holders of derivatives have lost capital in our fiat currency financial system, unlike holders of gold, which have retained their store of value for thousands of years. With gold ownership, there are no other claims against it, and you won't get zeroed out.

The only way to be dispossessed is if the government confiscates it, which is exactly what Franklin Delano Roosevelt did by Presidential Executive Order 6102 in 1933:

http://www.wellsfargonevadagold.com/confiscation-order.pdf

See disclaimers on side bar.

Disclosure: long physical gold and silver, long precious metals mining shares.