BUY GOLD...But Be Prepared For What the Government Might Do To It In A Dollar Crisis

By David Rehak

​​Gold is up at record highs and now silver is starting to make strides too. This is great. But just keep in mind that the government will try to control it as much as possible, especially in an economic “dollar crisis.”

Be prepared...

Storing gold with a bank that prohibits in-person inspection of your holdings is generally not recommended, as it defeats the primary purpose of holding physical gold: having secure, direct, and immediate control over your assets. While it might seem convenient, this arrangement introduces
significant risks, including counterparty risk, lack of transparency, and limited insurance.

Here is a breakdown of why this is risky and better alternatives.

Risks of Bank-Held Gold Without Inspection

• Counterparty Risk: If the bank faces financial distress or goes under, your gold could be tied up in legal proceedings or treated as part of the bank's assets.
• Lack of Proof of Ownership: Without physical inspection, you cannot verify the purity, weight, or authenticity of your gold (e.g., ensuring it hasn't been swapped for lower-value items).
• No Insurance Protection: Banks generally do not insure the contents of safe deposit boxes. If the bank is robbed or the gold is lost, you may have no recourse.
• "Unallocated" Risk: The bank might be selling you "unallocated" gold―a promise to give you gold later―rather than storing specific, serialized, "allocated" bars that belong solely to you.
• Government/Bank Restrictions: In times of financial crisis, banks may block access to vaults, meaning you cannot access your safe-haven asset when you need it most.

Better Alternatives for Storing Gold
If you are looking to hold physical gold, consider these options:

• Private Vaulting Services (Specialized Custodians): Third-party, non-bank vaults (like Brink's or specialized precious metals depositories) often provide better security, insurance, and transparency. Manyallow for audits and personal inspection.
• Allocated Storage: Ensure any storage agreement specifies that the gold is allocated (segregated and registered in your name).
• Home Safe: While it comes with theft risk, a high-quality, bolted-down safe allows for total control and immediate access.
• Physically Backed ETFs: If you do not need the physical metal in hand, a gold-backed ETF provides exposure to the price of gold without the storage hassle.

CONCLUSION:
If you cannot inspect your gold, you are essentially trusting the bank's paperwork rather than owning the physical asset. For true wealth preservation, it is better to use a dedicated, reputable, and transparent
storage provider that allows you to verify your holdings.
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Governments can and have historically over-regulated and heavily taxed gold during economic crises, and they possess the legal authority to do so again in extreme circumstances. While modern monetary systems are different from the 1930s, governments can still restrict private gold ownership through emergency legislation, impose high taxes, or implement strict reporting requirements to control the asset.

Here is a breakdown of how this can happen based on historical precedents and current legal structures:

Historical Examples of Gold Regulation

• USA (1933): President Roosevelt signed Executive Order 6102, which prohibited the "hoarding" of gold coin, bullion, and certificates, forcing citizens to turn in their gold to the Federal Reserve for $20.67 per ounce. After collecting the gold, the government raised the price to $35 an ounce, effectively devaluing the currency held by citizens.
• Great Britain (1966): To protect the pound, the government banned private citizens from owning more than four gold coins and blocked imports of gold.
  
• Australia (1959): The Banking Act allowed the government to seize private gold to protect the currency.
  
• India (20th Century): The government has frequently used high import duties and taxes (ranging from 7.5% to 12.5% or higher) to control gold imports and restrict private ownership, particularly during crises.
  

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Modern Risk Factors (Over-Regulation)
While a total, forced surrender of gold (like in 1933) is considered less likely today because currencies are not backed by gold, other, more subtle forms of regulation are possible:

• Stringent Reporting Requirements: Governments can require brokers and dealers to report all purchases, creating a "central gold register" that tracks owners.
  
• Transaction Restrictions: Rules aimed at "fighting money laundering" can limit cash purchases of gold or ban anonymous transactions.
  
• Import/Export Bans: In a severe crisis, a government could prohibit the movement of gold across borders to prevent capital flight.

Over-Taxation

• During an economic crisis, governments may turn to increased taxation to generate revenue or to discourage people from holding gold instead of fiat currency.
  
• Capital Gains Tax: Governments can significantly increase the tax on profits made from selling gold.
  
• Excise Taxes: Special taxes can be imposed on the purchase of physical gold.

Why Governments Do This
Governments usually take these actions when their fiat currency is devaluing, and they need to regain control over the monetary system. By forcing citizens to trade gold for cash, the government increases its own reserves and reduces the "competition" from a safe-haven asset.

CONCLUSION:
In a severe crisis, the government can, and often does, change the rules to suit its needs, regardless of past promises. While outright seizure is rare in modern, developed economies, increased regulation, reporting, and taxation are likely methods of "over-regulating" gold which would almost certainly take effect in a major economic collapse.