Last Updated September 19, 2020
The history of gold confiscation is a storied one. The extensive use of precious metals throughout history has made them a prime target for greedy politicians looking to shore up their own failing economies.
Yet, most people are perfectly happy to store their gold right under Big Government’s nose.
Americans are widely familiar with President Roosevelt’s Executive Order 6102, which ordered anyone holding gold to turn it in to the government in exchange for around $20.
As you can imagine, the government made out well on that deal; it’s the equivalent of $370 per troy ounce today. The order also made it a crime to hold monetary gold anywhere in the continental United States.
Leave it to the Land of the Free to make criminals out of people holding the world’s oldest currency.
In 1959, Australia used its Banking Act to outlaw the ownership of most gold, demanding that individuals turn their gold into the government within one month of coming into possession of it. But they didn’t leave their victims empty-handed either: the government made sure to have plenty of its own paper money to hand out in exchange.
Not long after that, the British tried to shore up the pound by blocking imports of gold. Having left the gold standard, they were worried that their citizens were resorting to buying precious metals offshore; they reacted by banning gold ownership to no more than four coins. Anyone wishing to own more had to apply to the Treasury and explain themselves.
Nothing like going hat in hand to your own government to beg for basic freedoms.
Even other nations aren’t immune to gold confiscation. In World War II, Hitler marched into Prague and proceeded to send an order to the Bank of England, where Czech gold reserves were held, to transfer them from their account to his account.
After all, history shows that when things get bad, Big Government abandons the few principles they had to begin with. One strike of the ink pen could wipe out every law protecting your gold ownership.
The economic climate has become so hostile that you just know greedy politicians could easily convince the vast majority of non-gold owners that your precious metals holdings must be confiscated. They’ll declare an “emergency”, which is code for “the government needs a believable reason to take your stuff”.
That’s Why You Need Offshore Gold Storage
Fickle governments unafraid of usurping any power necessary is why I recommend holding your gold and silver offshore. While owning gold or silver is a diversification away from sovereign risk, holding those precious metals overseas is an important step in internationalization.
For many Americans in particular, the idea of storing gold anywhere but buried in the backyard is puzzling.
“Why can’t I just keep gold in a cereal box in my closet?”, you might ask.
You could, and unless you live in a bad part of town, it might be relatively safe – unless the babysitter finds it and helps herself. But what would you do if your government made gold ownership illegal or demanded you handed your metals in?
At that point, no reputable merchant would take them as payment. You would be reduced to the black market. And forget about traveling with it.
You’ve heard the stories about how Jews escaped Germany by hiding their heirlooms discreetly on their person. Many of them got caught. While your preference would be to escape the country with your gold, you might not even make it that far down the street if checkpoints are located along the way.
Whenever I fly back into the United States, I always end up coming across a dog working for Customs or local law enforcement. The agent will ask me to put any bags I’m hand carrying on the ground so the dog can take a sniff. These dogs can be trained to detect narcotics, but there are also dogs trained to the scent of US currency.
While the United States and many western countries are already light examples of police states, imagine how much worse it will be when they really, REALLY want your money. Escape will be difficult.
And even if you can get it out, if you’ve invested in American Eagles, there’s a chance no one outside the US will want your gold either.
Where to Store Your Precious Metals
It’s best to buy gold that is in demand on a global stage and easily store some or all of your gold offshore, waiting for you when you need it. If you’re concerned about selling it in the event of a price movement, you can always hire a local lawyer and give him power-of-attorney to take such actions on your behalf.
And since many other countries, especially those in Asia, view gold as money and something in-demand rather than the trinket most Americans see it as, it’s often easier to sell and fetches better prices.
Even better, if you choose to store your gold in a private vault facility, you add a layer of privacy to your assets. At least as I write this, precious metals held in non-bank facilities are not subject to government reporting in the United States.
There are offshore gold storage facilities in more privacy-friendly countries such as Switzerland, Austria, Singapore, and Hong Kong. The Austrians love for secrecy gave birth to one of the world’s only anonymous gold storage facilities, located in Vienna.
Asians love gold and the economic centers of the continent are making it easier to buy and store metals. I recently wrote about how to get secure offshore gold storage in two different Singapore vaults with ease.
Other countries like the ones mentioned have facilities where you can rent a box capable of holding millions of dollars in bullion for as little as about $100 a year. Since these facilities are built for housing valuables of this nature, security is generally excellent, unlike many of the safe-deposit boxes run by the ninnies at your local bank.
At places like The Storage in Hong Kong, you can rent your box in the name of your offshore corporation at a fraction of the cost. And in Singapore, one company will store any gold you buy from them online in your own segregated storage in their rented vault.
Obviously, it’s important to do your due diligence on the offshore gold storage option you choose. If you choose to transport your precious metals overseas in order to deposit them, you’ll have to comply with various export regulations and disclosures that vary by country. More on that later.
Hopefully, though, you’ll be taking them to a friendlier place where the government doesn’t particularly care what gold you’re bringing in – or even that you report it to them.
If the dollar or your home currency collapse, you can bet the government will impose some even more draconian capital controls.
Since I believe in gold as a store of value and an escape hatch from sovereign risk, it doesn’t do you much good if the sovereign risk you were avoiding is all up in your business about it. And if you were to exchange gold in your own country, you would wind up with overpriced barter goods (in a crisis) or fiat currency (the rest of the time).
That doesn’t sound like a great plan to me. The gold climate in the rest of the world is much better than you’re probably used to. Don’t let the fear of the unknown or some paranoia of another first-world country hold you back. You already know what your own government is capable of.
Accordingly, there are some things that shouldn’t be kept at home.