Wednesday, September 11, 2013

Fascinating Interview

I just watched a fascinating interview here and want to post it here so others can watch it as well. Towards the end of the interview the specter of confiscation reared its ugly head once again. I responded to that on Greg Hunters' site and have posted my response below.

 Here's my response:

"Hi Greg,

Great interview and thanks for having on Mike Maloney!

I’d like to just put my .02 cents in on the confiscation issue. As you and Mike correctly fleshed out, gold was NEVER confiscated. It was nationalized and holders were subsequently paid for their gold at the fixed rate. Much of the talk of confiscation today are by numismatic coin dealers trying to sell coins with high premiums.

The uranium story after WWII gives us some insight into how the government may react here. In 1946 the Atomic Energy Commission (AEC) guaranteed a minimum price for uranium to increase the domestic uranium supply. This supported the mining endeavors at the time and brought a lot of uranium to the market.

The same thing could be done today. Governments would be far better off to promote a fixed (or better, free market) price of gold that would guarantee profits and cause much more gold to come to market and allow them to either grow the money supply or pay debt down. Many instances of government nationalizing mines have ended up in complete disaster. I just don’t believe this would be attempted. Sure they may raise royalties and taxes but I assure you that with the returns you will have you will still be compensated as an investor.

Another case here is instructive though some may not approve. Look at Venezuela. Chavez had the wisdom to NOT nationalize their gold minds but mandated that the gov get first dibs on all gold mined and they would pay market price. Brilliant. China (and Russia?) are currently doing the same thing.

Consider the consequences of nationalizing mines and gold and silver in America today. It would cause permanently damaged psyches in the minds of investors when retail investor participation rates are already in decline. Would the gov further exacerbate a dwindling (non-existent?) support level for government? Do they want to completely erode ANY trust left in the system? Very dangerous long term implications involved there.

And lastly, as Jim Sinclair points out, when gold was nationalized in 1933 we were on a gold standard. We are not now. QE is effectively taking the place of that prior insidious process of deception and trickery. Think about it, 80 years later and people are STILL distrustful of the gov and what they did back in 1933!!!

That’s all. Thanks again for all yo do!"

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