-- Posted Friday, 10 July 2009 | | Source: GoldSeek.com
By R. D. Bradshaw
In early April 2009, the London Times online had a story by David Robertson on “Gold Sold for Scrap Outstrips New Purchases.” The story said: “For the first time in nearly 30 years, there are more people selling gold jewelry as scrap than buying new items. The high price of gold combined with the economic downturn has encouraged people to raise extra cash by selling everything from family heirlooms to tooth fillings.”
The article cited GFMS, the leading precious metals analyst, which reported that an estimated 500 tonnes of gold had been sold as scrap during the first three months of this year. Yet, demand for new jewelry had fallen to 420 tonnes. This was the first time since 1980 that more scrap gold was being sold than there were purchases of new jewelry.
Surely, there were some credible reports to prompt this story from London. In order to bring out this scrap gold and encourage people to sell it, I am suspicious that dealers have been paying good prices for it and have advertised that fact and made known their desire to buy it. Thence, it appears that the response has been good. The public is looking through its scrap or junk jewelry and offering it for sale to dealers who seem to be scooping it up.
The question here has to devolve as to the whether this is merely a routine reaction to higher gold prices or if there is another explanation. This Goldsmiths will offer some possible ideas on what could be prompting this motion besides higher gold prices.
The US Gold Confiscation by Franklin Rosenfeldt/Roosevelt.
Privateer.com had the contents of Presidential Executive Order 6102 as signed by FDR on Arp 5, 1933 viz:
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 gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order:
Section 1. For the purpose of this regulation, the term 'hoarding" means the withdrawal and withholding of gold coin, gold bullion, and gold certificates from the recognized and customary channels of trade. The term "person" means any individual, partnership, association or corporation.
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:
(a) Such amount of gold as may be required for legitimate and customary use in industry, profession or art within a reasonable time, including gold prior to refining and stocks of gold in reasonable amounts for the usual trade requirements of owners mining and refining such gold.
(b) Gold coin and gold certificates in an amount not exceeding in the aggregate $100.00 belonging to any one person; and gold coins having recognized special value to collectors of rare and unusual coins.
(c) Gold coin and bullion earmarked or held in trust for a recognized foreign government or foreign central bank or the Bank for International Settlements.
(d) Gold coin and bullion licensed for the other proper transactions (not involving hoarding) including gold coin and gold bullion imported for the re-export or held pending action on applications for export license.
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; unless such gold coin, gold bullion, and gold certificates are held for any of the purposes specified in paragraphs (a),(b) or (c) of Section 2; or unless such gold coin, gold bullion is held for purposes specified in paragraph (d) of Section 2 and the person holding it is, with respect to such gold coin or bullion, a licensee or applicant for license pending action thereon.
Section 4. Upon receipt of gold coin, gold bullion, or gold certificates delivered to it in accordance with Section 2 or 3, the Federal reserve bank or member bank will pay thereof an equivalent amount of any other form of coin or currency coined or issued under the laws of the United States.
Section 5. Member banks shall deliver all gold coin, gold bullion, and gold certificates owned or received by them (other than as exempted under the provisions of Section 2) to the Federal reserve banks of there respective districts and receive credit or payment thereof.
Section 6. The Secretary of the Treasury, out of the sum made available to the President by Section 501 of the Act of March 9, 1933, will in all proper cases pay the reasonable costs of transportation of gold coin, gold bullion, and gold certificates delivered to a member bank or Federal reserve bank in accordance with Sections 2, 3, or 5 hereof, including the cost of insurance, protection, and such other incidental costs as may be necessary, upon production of satisfactory evidence of such costs. Voucher forms for this purpose may be procured from Federal reserve banks.
Section 7. In cases where the delivery of gold coin, gold bullion, or gold certificates by the owners thereof within the time set forth above will involve extraordinary hardship or difficulty, the Secretary of the Treasury may, in his discretion, extend the time within which such delivery must be made. Applications for such extensions must be made in writing under oath; addressed to the Secretary of the Treasury and filed with a Federal reserve bank. Each applications must state the date to which the extension is desired, the amount and location of the gold coin, gold bullion, and gold certificates in respect of which such application is made and the facts showing extension to be necessary to avoid extraordinary hardship or difficulty.
Section 8. The Secretary of the Treasury is hereby authorized and empowered to issue such further regulations as he may deem necessary to carry the purposes of this order and to issue licenses there under, through such officers or agencies as he may designate, including licenses permitting the Federal reserve banks and member banks of the Federal Reserve System, in return for an equivalent amount of other coin, currency or credit, to deliver, earmark or hold in trust gold coin or bullion to or for persons showing the need for same for any of the purposes specified in paragraphs (a), (c), and (d) of Section 2 of these regulations.
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.
This order and these regulations may be modified or revoked at any time.
/s/ Franklin D. Roosevelt
President of the United States of America
April 5, 1933
Backdrop of What Happened
In general, the disciplined American people obeyed FDR and turned their gold in without a whimper. A Ron Paul blob on this issue noted the following lessens that could be learned from the 1933 gold confiscation—as follows:
Lesson 1: Many forms of gold were exempt from confiscation. Roosevelt confiscated only gold bullion - bars of gold and bullion coins. Numismatic coins were exempt, as were gold jewelry and semi-numismatic coins (those with a premium of 15%+ over the price of gold). The writer of the Mar 2008 report on the blog noted that these forms of gold also were exempt from previous gold confiscations in the U.S. - during the Revolutionary War and Civil War. They are the only forms of gold that are relatively safe to store in your safe deposit box. Also exempt from Roosevelt's gold confiscation were gold mines, gold mining stocks, gold nuggets and dust, gold art objects, and gold held by U.S. citizens outside America.
Lesson 2: Gold soared. Despite Roosevelt's gold confiscation, gold bullion and stocks soared during the 1930s. Bullion went up 70%. Homestake Mining shares increased nearly 700%.
Lesson 3: Don't leave a paper trail of your purchases. Under FDR, known owners of large quantities of gold were severely harassed and threatened with imprisonment if they didn't turn their gold in. The names of some were even published in newspapers - with disastrous consequences for their businesses and careers. The blog went to say that “the government cannot seize what it does not know about. There is no required registry for gold purchases and no need for you to reveal what is not required of you. You also can purchase gold overseas and keep it there in a bank vault or foreign safe deposit box.”
Presently, there is no IRS reporting requirement if a US person owns physical gold, silver and other precious metals so long as it is not held in a financial account such as a foreign savings or checking account. While there is a reporting requirement to the IRS if U.S. citizens have foreign bank accounts, there is no reporting requirement for gold, silver, cash, etc., held in foreign safe deposit boxes.
The Ron Paul blog added that “the easiest way for most Americans to do this is to set up a safe deposit box in Canada, London or Switzerland. It is important to note that if you sell your gold, you must report your profit or loss on your federal income tax form.”
The blog asks: ‘Why bother? Primarily because having assets outside the U.S. gives you an added layer of privacy. In the event that gold is again confiscated, foreign safety deposit boxes may well be exempt, as they were under Roosevelt's confiscation. Further, it will be much more difficult for a third party to confiscate your gold if it is outside the U.S. For additional protection, open your foreign safe deposit box in the name of a company or a family trust. Neither has to use your name in the title.”
More on the Present Situation
I mention the above report in this Goldsmiths because intelligent people should be giving some thought to gold confiscation once more in the United States. My take is that it is a virtual certainly that the Big Brother state will again confiscate gold. I am convinced that the handwriting is on the wall. Thus, we should be preparing for that eventuality.
Over the past several weeks a number of writers have addressed the benefits of certain types of numismatic coins which may once again escape confiscation. I and others have written before about this option.
But importantly, there is also the possibility that gold jewelry will be exempted. Frankly, my take is that initially jewelry will be exempted although as trouble intensifies and the government becomes more desperate there is too the likelihood that the government will even go after jewelry.
In any case, jewelry can offer some early probabilities of exemption when the state strikes. In that vein, it seems to me that a person trying to save some assets for a rainy day must consider buying some junk or scrap gold jewelry. By all means, for people now holding such metals, why sell them to dealers? It makes sense to hold onto scrap gold and old jewelry.
The very fact that dealers are so anxious to buy scrap gold makes me suspicious that the dealers may be preparing for the coming time when there will be a confiscation of gold. In that context, dealers holding used gold jewelry can really clean up by selling some of this secure form of gold back to the public.
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-- Posted Friday, 10 July 2009 | Digg This Article
| Source: GoldSeek.com
