Many have speculated that the U.S. government could once again turn to gold confiscation/nationalization if it became desperate enough. These fears are not unfounded given the abysmal financial situation of the U.S. government that only continues to get worse, coupled with a total lack of political will to cut spending but would the U.S. government really turn to a 1933-style grab again? I would argue that they wouldn’t, but that doesn’t mean the threat to your gold has diminished. Quite the opposite. [This articles identifies what they might well do.]
The above introductory comments are edited excerpts from an article* by Nick Giambruno (internationalman.com) entitled What the Next Gold Confiscation Will Look Like.
Giambruno goes on to say in further edited excerpts:
Today only a tiny fraction of the overall U.S. population owns gold – which wasn’t the case back in 1933 when the U.S. was still on a variation of the gold standard…so I think it’s unlikely we’ll see a repeat of the 1933 ripoff. It’s simply not worth the effort.
If the government is looking to confiscate wealth, they’ll likely:
- go for the low-hanging fruit, like financial accounts, which can be plundered with a few mouse clicks or
- continue to ramp up the inflationary money printing, which is a way to confiscate from savers
but that doesn’t mean gold owners are in the clear. Instead there will be a new scam – and that scam is likely to be a windfall profits tax on gold.
A Windfall Profits Tax On Gold
A windfall profits tax on gold would be much easier for the government to administer than what they did in 1933 and, thanks to the system of citizenship-based taxation, a windfall profits tax on gold could be levied on Americans no matter where in the world they live. There’s precedence for this, too. In 1980 the Congress passed the Crude Oil Windfall Profit Tax Act, which taxed up to 70% of what they deemed to be “windfall profits” of domestic oil producers.
If gold were to explode to the upside (another way of saying the dollar crashes), we shouldn’t be surprised to see a bill like the Fair Share Gold Windfall Profit Tax Act get passed, which would levy a 80%, 90%, or higher tax on gold.
How To Protect Yourself From A Windfall Profits Tax On Gold
Fortunately, there are some practical steps you can take to protect yourself from a windfall profits tax on gold, which I believe is the most likely form of future confiscation.
- become a resident of Puerto Rico…,
- preemptively divorce the U.S. government by renouncing your citizenship… or
- own gold in a Roth IRA, preferably offshore gold.
A Roth IRA is like a tax-free zone. It’s funded with after-tax savings, and any future capital gains or income derived from investments in a Roth IRA are not taxable—if you wait until the age of retirement to withdraw.
While we can never know 100% for sure what the U.S. government will do, it would be unlikely that gold placed in the tax-free zone of a Roth IRA would be affected by a future tax increase. That is, of course, unless the politicians start monkeying with the IRA rules – but that would produce a lot of screaming from tens of millions of people, most of whom are voters. If I were a politician, I would stay away from IRAs.
This is not to say that the U.S. government doesn’t have its eyes on the juicy target of retirement accounts. As we’ve seen with the myRA scam, they most certainly do.
However, if and when an executive order is issued to convert a portion of your retirement savings into unwanted Treasury securities, it will likely apply only to the most susceptible retirement assets—those being accounts with the large, traditional IRA custodians. These assets are soft targets for the government. They could be frozen, confiscated, or nationalized at the flip of a switch.
Physical gold held offshore in a Roth IRA would represent a significantly more complex challenge for them to confiscate. It probably wouldn’t be worth their effort either, as only a very tiny percentage of Americans hold their retirement assets in physical gold overseas. It makes much more sense that they’d go for the sitting ducks at the large custodians.
In short, a Roth IRA with gold held offshore is the most practical way to protect yourself from the most likely forms of future confiscation—a windfall profits tax on gold and a forced conversion of retirement savings to Treasuries. It’s the ultimate retirement insurance policy and makes you a hard target.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://www.internationalman.com/articles/what-the-next-gold-confiscation-will-look-like (© 2014 Casey Research, LLC.)
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