Global financial repression picks up steam, led by India. After declaring large denomination notes illegal, India now targets gold.
It’s not just gold bars or bullion. The government has raided houses, no questions asked, confiscating jewelry.
For background to this article, please see my November 27 article Cash Chaos in India, 86% of Money in Circulation Withdrawn; Cash Still King in Japan.
Large denomination means 500-rupee ($7.30) and 1,000-rupee notes ($14.60), which account for more than 85 percent of the money supply. They are no longer legal tender, effective immediately.
As one might imagine, chaos ensued. And it continues.
India Confiscates Gold
– What gold nationalization really means (Sovereign Man, July 25, 2013):
July 25, 2013
Gold owners are almost universally familiar with the story of Franklin Roosevelt criminalizing the ownership of gold back in 1933.
Executive Order 6102 was signed on April 5, 1933, and it forbade the “Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States.”
– On This Day in 1933 ( The Circle Bastiat, June 13, 2013):
You were considered a hoarder and a slacker if you still resisted turning over your gold to the government. From the New York Times, June 13, 1933:
(Click on the image for a sharper picture.)
Roosevelt had only been in office for 101 days and while there was broad bipartisan support for inflationary policies in Congress, it’s safe to say that most of those who voted for FDR never expected him to confiscate private holdings of gold coins, bullion, and certificates. Roosevelt called the measure a temporary one (it wasn’t), and he followed it up by invalidating gold clauses in private contracts that obligated payment in gold dollars, which had the effect of devaluing the assets of bond and contract holders. Many of these hoarders and slackers purchased gold as a hedge against the (Fed-fueled) inflationary boom of the 1920s and then hung on to it during the Hoover years when his crazed and unprecedented interventions in wages and prices caused a normal market correction to devolve into a depression. Why would they trust Roosevelt any more?
They were smart not to. By January 1934, Roosevelt increased the dollar price of gold from $20.67 to $35, thus devaluing the dollar by 70 percent while increasing the value of gold that the government now owned.
Gold flowed to the United States because the new price exceeded the world price, causing Fort Knox to become, well, Fort Knox. Since the Treasury was authorized to maintain the new dollar-gold exchange rate, it increased the money supply accordingly. Over the next three years, M2 increased by an average of 13.4 percent a year. Congress and the president with strong ties to Wall Street got the inflation they wanted.
Queue the tape: “Happy Days Are Here Again.”
– Doug Casey on Internationalizing Your Assets (ZeroHedge, April 11, 2013):
You probably do remember that when Roosevelt confiscated gold in 1933, he also sealed safe deposit boxes in all US banks. No American could visit a safe deposit box for some time without a government agent accompanying him. That could certainly happen again.
And all of this is true in other countries around the world.
– Governments Worldwide are Implementing Orwellian Gold Confiscation Today. You Just Haven’t Realized it Yet. (ZeroHedge, March 7, 2013):
Bankers Have Flipped Monetary Truth Upside Down
Bankers have flipped the paradigm of monetary truth upside down today. People believe in fiat digital money that is, by definition of the term, counterfeit and have zero belief in money that is real, and thus lasted over 5000 years of global history. In fact so few people today have an understanding of monetary history and truth that when I tell them that all money in wide use and circulation today is the equivalent of counterfeit money, even though this is true, they look at me like my beliefs, not their beliefs, are crazy. Hopefully this article will finally open some eyes and answer the question, “What is money and what is not?”
Executive Order 6102 Was Passed to Force Americans to Use Counterfeit Instead of REAL Money
– What 40 Years Of Gold Confiscation By The US Government Looks Like (Zerohedge, Aug 21, 2012):
The chart below, which is a time series showing the total “Gold Held by the US Treasury and the Federal Reserve” (which for all intents and purposes are interchangeable), demonstrates vividly the moment when the US government enacted Executive Order 6102, aka the “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States” order which criminalized the possession of monetary gold “by any individual, partnership, association or corporation.” But not the government of course. Spot the moment after which gold confiscation by the US government (also known as USD devaluation) from its citizens was legalized.
The actual April 5, 1933 order, which in the coming years will make a repeat appearance with absolute certainty, is below.
What was the point of Executive Order 6102? It was two fold.
- First, in order to make the confiscation legitimate, the US government required the delivery of all gold coin, bullion, and certificates to be concluded by May 1, 1933 in exchange for $20.67/ounce. Several months later, the new, official gold exchange price (which however was merely the government’s bid as nobody could actually buy gold at this price) became $35.00, which remained until 1971 when the last trace of the dollar’s pseudo convertibility into gold was wiped out by Nixon. In effect, what FDR did was to devalue the USD by 70% overnight.
- Second, not only did the government remove the incentive for ordinary citizens to hold gold by establishing price and criminal controls over possession, it also changed the rules in the middle of the game allowing it to build up a massive gold hoard of over 8000 tons today which is maintained at Fort Knox, and is, to the best of our knowledge, unauditable by any mere mortal. Critically, it made the US government the sole source and monopoly agent of gold purchases, using reserve fiat currency it could print with impunity, beginning in 1933 and continuing through 1974 when the limitation on gold ownership was repealed after President Gerald Ford signed a bill legalizing private ownership of gold coins, bars and certificates by an act of Congress codified in Pub.L. 93-373, which went into effect December 31, 1974. In summary, the US government, which is now the largest official holder of physical gold in the world, had 40 years of uncontested zero cost gold accumulation in which it could build a gold inventory that was second to none.
As for the process the government had in place to deal with those who refused to voluntarily hand over their gold quietly, curiously there was only one case of prosecution, which however should make it very clear that holding gold in “authorized” bank safes is about the dumbest thing one can do the next time the US government decides to devalue the dollar, and change the rules.
The circumstances of the case were that a New York attorney, Frederick Barber Campbell, had on deposit at Chase National over 5,000 troy ounces (160 kg) of gold. When Campbell attempted to withdraw the gold Chase refused and Campbell sued Chase. A federal prosecutor then indicted Campbell on the following day (September 27, 1933) for failing to surrender his gold. Ultimately, the prosecution of Campbell failed, but the authority of the federal government to seize gold was upheld, and Campbell’s gold was confiscated.
The fact that the custodial bank of the 5000 ounces of gold is the bank that would subsequently become JPMorgan is not lost on us.
This time gold will be confiscated from the public voluntarily.