Gold has always been considered as a haven by investors who intend to diversify their investment portfolios; this assumption is true to a certain degree and totally inaccurate from a different perspective due to the fact that monetary authorities are able to confiscate gold held by private investors in private agencies via minor legislative amendments on top of the fact that they can ‘force’ owners to surrender gold kept on their own premise of face legal action. Thus, investors who are under the impression that their gold is safe and sound in their own vaults or the vaults of private holding agencies may have to reassess their contingencies about the safety of their investments in gold.
Lessons from History
Just before the advent of World War II the Gold Reserve Act of the United States (30th January 1934) was executed which resulted in the surrender of gold and gold certificates that were held by the Federal Reserve to be handed over to the United States Department of Treasury. The Gold Reserve Act simply made owning gold ILLEGAL, thus, those who owned gold privately were also forced to sell their gold to the treasury and this law remained in full effect until 1964 and it was not until 1975 when Americans were free to own and trade gold as the enactment also prohibited American citizens from trading gold in any part of the world until 1975 (Richardson et al., 2013) and (Baettig, 2013).
Modus Operandi : The Ploy
As it is currently, there is no requirement by law to report ownership of gold by individuals or organizations holding gold on behalf of investors, but this could change abruptly as it only takes a flick of a pen to re-enact the Gold Reserve Act, leaving the burden of declaring the amount of gold that you own on you and by failure to do so (declaring) you will be persecuted, this is only the beginning of a process that would continue as the government slowly shifts their focus from the individual to the organisations such as vault agencies and banks to supply information on their customers who owned how much gold ? Financial Institutions and vaulting companies will have no choice but to comply with the request of the governmental agencies or risk losing their businesses. If this does not yield the desired results they step up their confiscating activities by taking direct action. Bearing court orders, governmental agency personnel are able to them from your home and failure to comply would land the individual in court and if at all the gold that is held by investors resides within the sphere of a Gold Exchange Traded Fund the investor is omitted out of the equation and the gold is handed directly to the authorities by the bank or vaulting company without your consent. Investors will be informed after the gold is confiscated from the ETF which usually results in the closure or suspension of the gold market in regions within the government’s jurisdiction (Baettig, 2013).
Confiscate Proof Haven
Most investors are under the notion that places such as Canada and Dubai are safe places to keep their gold; again this is true only up to a certain degree as national interests such as security and bilateral trade relations would easily override your importance as an individual investor. Singapore is another place where investors turn to when they need to store their gold, again Singapore is a tiny island nation that relies on the goodwill of other nations and would easily give in to external pressures if it becomes necessary in view of their national interest.
If at all there was a place where investment gold would or could be safe, it would definitely be Switzerland, and the reason behind this fact is simple – Switzerland’s economy depends on their banking system and the country would lose their current vantage of being the safest place to store wealth if at all they were to place the interests of a foreign sovereign above the interests of their clients. Therefore, it is not only about how you store your gold, it is also about where you store your gold and Switzerland is without doubt the safest place to store assets such as gold.