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Gold Confiscation: Will it happen again?
Protection and Profit
Recently, in his annual letter to shareholders of his Berkshire Hathaway, Inc. holding company, Warren Buffett announced that Berkshire had increased its bet against the U.S. dollar 78 percent to $21.4 billion. Buffett, one of the world’s most successful and respected investors, launched his most withering attack to date on the U.S. trade deficit, describing Americans as “rich spending junkies” who could turn into a nation of “sharecroppers.” (2005)
Buffett expressed concern that U.S. policies are causing trade and budget deficits to spiral higher and might cause non-U.S. investors to pull money out of the country, causing downward pressure on the dollar, which already trades near lifetime or multi-year lows against several major countries. Mr. Buffett painted a bleak picture of a future U.S. in which ownership and wealth had continued to move overseas, leaving the economy in thrall to foreign investors and facing financial turmoil and political unrest. “Americans...would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an ‘ownership society’ will not find happiness in – and I’ll use hyperbole here for emphasis – a ‘sharecroppers’ society’.” Mr. Buffett warned “the evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come.”
The impending monetary crisis will make gold more valuable, but could create a scenario where gold will be confiscated again. Will history repeat itself? If, as Professor Rogoff says, the world is set to jump off the top of a monetary waterfall, then rare gold coins provides both protection and profit.
The Time to Act is Now.
The time to act is before, not after, a crisis occurs. The political process does not always deliver its best troops at the point of attack and governments pushed to the brink often ignore the constitutional niceties. In any event, if you wait until gold confiscation, currency exchange controls or any other emergency measures are taken it will be too late.
As an investor, what should you do?
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Put some of your savings in the ultimate crisis hedge – rare gold coins. In the event of a crisis it would be far better to own numismatic gold than bullion.
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Put some of your savings in platinum and platinum coins. Unlike gold, platinum has no history as a monetary metal and has never been considered to be a component of the U.S. monetary system. Unlike gold, platinum cannot be confiscated under current federal law. Moreover, platinum is every bit as effective as an inflation hedge as gold, and outpaced gold in the inflation and crisis-driven bull market of 1979 - 80, when it became the only precious metal to trade at over $1000 per ounce.
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