MineWeb cites GATA and raises confiscation question

10:50a ET Wednesday, May 20, 2009

Dear Friend of GATA and Gold:

In an article posted today, MineWeb's Lawrence Williams cites GATA's work as he acknowledges that central bank manipulation of the gold price would not be so different from the currency market manipulation often undertaken and admitted by central banks. Williams goes on to raise the question of whether the United States again would prohibit private ownership of gold. His commentary is headlined "Could President Obama Ban U.S. Citizens from Holding Gold?" and you can find it at MineWeb here:

http://www.mineweb.co.za/mineweb/view/mineweb/en/page72068?oid=83579&sn=...

While even nominally democratic governments lately seem capable of almost any outrage, the rationale for the U.S. government's attempt at gold confiscation in 1933 is no longer available. That is, in 1933, amid a catastrophic deflation, gold coin constituted a large part of the country's money stock, and the government could and did plausibly complain of "hoarding" of gold coin. Of course people were "hoarding" gold for a reason -- banks were failing and their depositors uninsured by the government, and the only way to survive was indeed to hoard money outside the established financial channels. But the government pledged to replace confiscated gold with paper money -- and then, the exchange having been made, devalued the paper money.

Today, of course, gold coin does not constitute a meaningful portion of the money stock of the United States, and nearly all gold claimed to be held in the country is held by the government itself in official reserves. Whether the government's claim to hold that much gold is true, and whether the government is the only claimant to that gold, are fair questions, but it remains that privately held gold is no longer a meaningful part of the country's money stock, and thus the 1933 rationale for confiscation no longer applies.

In any event, the definitive statement from the U.S. government about gold (and silver) confiscation may be found in correspondence GATA had with the Treasury Department in 2005, wherein the Treasury Department claimed the power, in certain emergency circumstances, to seize or freeze any financial asset, not just assets involving gold and silver. You can find that correspondence here:

http://www.gata.org/node/5606

GATA is not a financial adviser but to us a good policy always has seemed to be to acquire as much real precious metal as possible -- and then find a safe planet to keep it on.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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