QUESTION:
Hi Martin–
Thank you for your daily blog. I read it first thing each morning.
Regarding the bank liquidity problems with the Eurozone banks: would it make sense to put assets in precious metals as a hedge against problems in the banking sector (i.e., getting capital out of the banks and into a safe harbor of sorts)? Do you see this liquidity problem impacting major brokerage houses in the U.S.?
Thank you
Jack
ANSWER: The only problem with precious metals is that governments are targeting the bullion industry, and by regulation they can also create a real nightmare from a liquidity perspective. They are targeting dealers and compelling them to report on their clients. Back in 2015, France targeted gold coins, and they also targeted the ancient coin show in Paris. The French government forbid cash sales and they threatened dealers with fines and imprisonment for failure to report on buyers/sellers who were their clients. The major rare coin show in Paris left as dealers refused to comply with such reporting. At one time, Paris was the largest international coin show – no more. After government demanded the dealers report everyone who sold and bought at the show, they just shut it down.With respect to gold, the French people were driving to Belgium to deal in gold with dealers there. The French government was complaining about that to Belgium and began trying to track people driving back and forth.
While we could sell some coins from hoards in the USA and at our WEC to people who attended our conferences in the USA, we cannot bring such coins to Europe or even Canada. They want import taxes just to even display them. This is all caused by the hunt for money by governments. They are destroying any freedom of movement and property ownership.
You will find that gold bullion will also get caught up in a liquidity crisis in Europe where you will be unable to sell it even if you have purchased it with cash after taxes. The hunt for taxation is really destroying the world economy far more than people are aware and Europe is in first place. The best hedge is to have it outside of Europe. Even Singapore or Hong Kong is OK as long as you DO NOT have a bank with offices in Europe. They are fond of telling banks to turn over lists of clients who belong to their jurisdiction.
Germany paid bribes to a Swiss banker to steal data files from his employer all to expose lists of German citizens with accounts in Switzerland. If a private company did that to another, they would be sued for unbelievable amounts and probably even lose their license. When a government carries out illegal acts, they are untouchable. Then France joined in and this maneuver brought an end to Swiss secrecy. Tax havens have given up everyone under threats from the IMF that their countries would be blocked from the international clearing system. They even threatened the Vatican to turn over info on every wire in and out.
Perhaps the best hedge is paper dollars that you hide someplace under a big rock.
Gold will survive long-term. But don’t count on it being available during the period before the crash and burn.