e-gold Under Attack by U.S. Govt., Could the U.S. Ban Gold Again?
Did you see that the U.S. Department of Justice indicted on-line firm e-gold on charges of money laundering, conspiracy, and operating an un- licensed money transmitting business? The government claims e-gold's easy-to- use private transaction service makes it easier for criminals to launder money. For good measure, the Fed's added that a digital payments system in gold would be favoured by terrorists, child pornographers, and other real or imagined enemies of the Nation state and civil society.
Did it occur to the Fed's that maybe people want to use gold as money because they have no confidence in the fraudulent, counterfeit product currently printed by the U.S. Treasury?
Governments fear gold because it competes with their own paper currency as a viable and preferred means of exchange AND a store of value. So, under the guise that only people with something to hide would use a digital payment system backed by gold, the U.S. government is hoping to obscure what the very existence of a company like e-gold signals: a growing lack of trust in the money of the American government.
As we mentioned yesterday, the huge bull market in resources and resource stocks is also a sign of U.S. dollar diversification. Investors and foreign governments are storing (and hoarding) their wealth in more tangible sources of value rather than U.S. currency or bonds. If anything, the Department of Justice's attack on e-gold is a sign that officials in Washington are getting nervous. They don't want any competition for the dollar. They have lawyers and jails and are willing to use both.
Incidentally, we asked a lawyer friend of ours who works for the DOJ what he thought of this case. Off the record he wrote, "I wonder how, with all that anonymity [in the creation of e-gold accounts], the government will show that the company knew that they were receiving money from these illicit sources. This is the crux of the case. Knowingly receiving stolen property is a crime and having any involvement with kiddie porn is probably enough for a jury to convict anyone, but I would venture a guess that every bank in the world, without exception, possesses proceeds from criminal gains. However, most depositors don't inform the teller where the deposited money came from."
The U.S. government has ruined American money. It is the biggest fraudster of them all. People are seeking alternatives like e-gold to protect themselves from the government's monopolistic debasement of the currency. Trying to make alternatives to that money illegal or criminal doesn't change the fact that the money is suspect. It just alerts the public that something is horribly wrong with America's currency. This is good for gold, if you can keep it. Which brings us to an obvious question...
Can the U.S. government again make gold ownership illegal? Will the U.S. government again confiscate gold? Would the Australian government do the same? Let us know your thoughts by leaving a comment.
Dan Denning
The Daily Reckoning Australia
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). Dan draws on his network of global contacts from his base in Melbourne. He’s the managing editor of resource newsletter Diggers and Drillers and the editor of The Daily Reckoning Australia.
Comment by Chris. Fulker on 3 May 2007:
Someone a few days ago pointed out that they wouldn't actually have to make gold ownership illegal. All they need do is prohibit the sale of gold. That seems to make a lot of sense and, if it does in fact come about, you can COUNT on every western government following suit.
Comment by William Pix on 3 May 2007:
The Perth mint is owned by he WA Government. They could repossess gold in depository and pass off as in the "public Interest". They do this with property all the time proving that property rights are an illusion.
Buy gold and stick it to the man!!
Comment by Aki on 3 May 2007:
The value of all the gold owned by US citizens is minuet when projected against the US debt said to be approximate eighty trillion dollars.
The US Gold Reserve is just over 8,000 tons which is about 6% of the total gold ever mined. It is worth about $100 billion depending on the current pog.
Meanwhile the entire gold stock of the world including the privately held bulk is much less than one half of one percent of the underwritten risk in the global financial derivatives markets.
Confiscating gold would be like trying to row a boat with a rope.
Comment by Dollar Falls. Gold Raises. E-Gold Targeted on 3 May 2007:
You haveto wonder at the sense of timing of the action. Why this action on e-gold could have taken place 2 years ago. It didn't. It took place at the lowest ebb of the US Dollar. I know that correlation don't necessarily mean causation. Nonetheless, you'd have to be blind not to see a strong positive correlation in this action. That's enough even for the Secret Services to be convinced.
Comment by Matt on 4 May 2007:
They've done it before. They'll do it again. Once again those who are prudent, who have exchanged some of their dollars for gold, will get their property confiscated. It's tyranny.
Comment by Bart Thesc on 4 May 2007:
Two of the top four internet challenges:
#2 Finding pictures of Pamela Anderson with her clothes "On".
#3 Finding someone who accepts e-gold payments who is not running a scam.
The issue here doesn't have to do with gold ownership (and there are serious questions as to whether the gold referenced by the company actually exists). The issue is that this money transfer system has been used by scammers and criminals for years and the company was well aware of it and benefited from it.
The funny thing is that in a chat room that the scammers hang out in they were lamenting the imminent demise of e-gold because it was going to make it harder for them to run their scams. It seems that they might even be forced to "gasp" identify themselves.
Comment by themusicgod1 on 4 May 2007:
Bart: I'll accept e-Gold. I'm not running a scam; I write music, I sell CDs with my music on it.
eGold, as far as I'm aware, is the only online payment system that makes sense. Up until google checkout(which last I checked, requires both a credit card and US citizenship to use), it was either Paypal, e-gold, or some sketchy other platform; and if you consider e-gold's record on privacy/users rights, and paypals, there is no competition--paypal is a disgrace, and e-gold is a legitimate business
Comment by Marlow M on 4 May 2007:
Dan,
As no government will tolerate threats to its power, and as all governments appear to be in a race to debase their money faster than others for the sake of encouraging exports, all any government needs is an excuse to eliminate potential monetary competition - in the case of money, that threat is precious metals, primarily gold and silver.
Its easy enough to manufacture any number of such excuses. In Australia's case, an article entitled "Native Title and the Royal Metals" published by the Australian Indigenous Law Reporter in 2001 provides just such a legal excuse. This article concluded, "In any event, in most Australian jurisdictions the legislature has displaced the common law and declared the Crown to be owner of gold and silver mines. Nonetheless, this paper argues that valuable native title and statutory interests may yet survive in both South Australia and New South Wales".
It is but a short step for an appellate court to find Crown ownership of gold and silver mines extends to the metals themselves, most likely as the purpose behind Crown control of mines would likewise be found to exist as to the metals themselves. As for South Australia and New South Wales, I presume the doctrine of Federalism has enjoyed an expansive interpretation such that in a finding of national necessity, federal power would supercede state power.
Will Australia take such a step? Certainly, when the government of the day decides failure to do so threatens its interests and sees little public opposition. We know that debasement of the currency will eventually prompt more and more people to take financially protective action in the form of alternative monetary arrangements (gold and silver use). Sadly, the Australian populace is so government addled and thoroughly ignorant of the importance of a commodity based money for monetary stability that any opposition would be hooted down by the media and such a move heartily endorsed by the mass of Australians.
Marlow M.
Comment by Murray S. on 4 May 2007:
They will do it in a heartbeat. All it will take is a BIG crisis, and our gold will be gone.
The creatins that are our politicians know that they will lose very few votes.
Murray S.
Comment by TexN on 4 May 2007:
The US Govt can certainly pass a "law" making gold illegal. This time, however, the folks are not so naive as to believe the lies from Washington. In the 1930s, the folks were civil. Today's folks are rebellious and won't tolerate such bureaucratic nonsense. In the 30s, the folks voluntarily gave-up their gold. That won't happen today. There are always ways around dumb laws, and this would certainly be one of them.
Tex N.
Burnet, TX USA
Comment by Allan D. on 4 May 2007:
G'day Dan,
Yes, like the US Government, the Australian Government would confiscate gold or indeed anything of any value but only if they were ordered to do so by the Money Lenders. Collectively, the pseudo-democratic lackeys supposedly running our respective countries could not muster an original thought between them ... they merely do as they are told.
"Who pays the piper, calls the tune". We all know it but we dare not say it.
Allan D.
Queensland
Comment by A.H. van Herp on 4 May 2007:
I can agree with what Texn says.But I was in Holland when the Germans invaded. They demanded the surrender of radio's and all non-ferrous metals. This was backed by a death penalty. It's amazing what you will do in those circumstances.
A.H. van Herp
Gorokan NSW
Australia
Comment by Luke on 4 May 2007:
I think one lesson in all this, is to make sure you hold your gold in coin and in very close physical proximity - and be very private about it.
Comment by Brad on 5 May 2007:
So, if Gold is confiscated and people aren't sheeple and decide to keep their Gold...How would this benefit them? How would they use it to buy anything used daily, like bread, soap, toilet paper, etc..
How would you sell it, take it out of the country? How would you get it out of the country in amounts sufficient to make the trip worthwhile?
I don't understand how holding Gold/Silver can benefit anyone in a confiscation scenario.
What am I missing?
Comment by A.H. van Herp on 5 May 2007:
Brad, you are missing the Black Market.
Even as late as 1973 when the Oil Producers boycotted the Western countries, and there were long waiting lines at the gas stations you would soon get to the front when showing silver or gold. And you would get a tank full when gas was rationed.
A.H. van Herp
Comment by Robert Kline on 6 May 2007:
Govts everywhere will do anything that is necessary,to remain in power, cover their tracks, lie, cheat.etc
NB: Latest news , Australian TV operaters in Afganistan.
In Western Australia, the Govt, via the Real estate Board, seconded all the RE Trust accounts throughout the state, so that all the interest earned in those Trust accounts went to the Govt. In the first year they earned $3.6 million.
What an act of sheer bastardry.
There were a few screams & shouts, now nobody even mentions it.
So, would the Govt confiscate Gold & Silver...absolutely
Comment by GD on 7 May 2007:
I have some e-silver in my e-gold account and think I had best withdraw it. Is it still possible or have those US bast**ds stolen my silver?
I was considering withdrawal for a long time before this happened but as silver was going up (doubled my money) I decided to leave it, also the difficulty of withdrawal detered me.
I was considering using goldmoney.com next but their fees are insane to buy in and the UK might do the same thing to them. I am going to have to go with a Hong Kong bank instead - in HK they still respect precious metals and freedom.
Comment by GD on 7 May 2007:
Looks like banning ways of investing in gold out of US control seems to be the order of the day. News on the Global Digital Currency Association website says
Recently the US government released a report entitled the Money Laundering Threat Assessment
The Global Digital Currencies Association is mentioned briefly in the MLTA report:
"The Global Digital Currency Association (GDCA) is a trade association of digital currency dealers and exchangers pressing for self-regulation. The GDCA provides a public ranking of its membership and offers arbitration procedures.
However, the GDCA constitution makes no mention of AML policies and procedures or of adhering to international AML
recommendations such as those prmulgated by the Financial Action Task Force (FATF).
The GDCA manages member conduct through its "reputation ranking system," which allocates or subtracts points based on the length of membership and dispute record."
read the GDCAs reply here:
http://www.gdcaonline.org/content/news.html
Comment by bill on 8 May 2007:
i would not give up what i have.
yes,there would be a black market.
or,one could take a vacation to a
country where what you have to sell
is legal.
b
Comment by Timbakto on 11 May 2007:
Hello
In my view everything will be back but with some new terms and conditions
All USDOJ did is allegations not final judgement so now case will be procced in routine and its hard for us gov as well to delcare all accounts misused. US govt cannot eat the whole bunch of money just by allegations. The account which will be guilty and found bad will be closed but they have no reason to freeze or seize money of exchangers which are operating outside USA. Out of states companies are out of jurisdiction of US courts. alot of questions will raise on Govt that why they didn't stopped it for last 10 years. Is USDOJ and USSS and FBI was sleeping for 10 years and now today when e-gold is spreaded worldwide they suddenly make allegations and freeze whole money its very funny . no?
Finally i think if Govt stands at their point of view and if they already have decided under table to close egold then no power can stop them but if it happen then no other company can take place for alternate of E-gold. No doubt e-gold is leader in E-currency business.
I love E-gold and i m sure if USA jurisdiction is free and not under pressure of USSS final verdict will be in favor of e-gold.
USSS FBI allegations are more then two and half years old within this time alot of improvments e-gold already have taken.
One suggestion to e-gold. Now you leave this land this country is not good for good peoples and businessmens. Leave this country for only USSS and DOJ DONKEYS
This is what i think what you think your coments are welcome
Bbye
Comment by Robert on 15 May 2007:
After selling gold coins to the public how would any government have the cheek to later confiscate them? I suspect most wouldn't comply anyway (neither did they in 1930s either!) knowing full well most prisons are full already! Just in case, buy silver instead!
Comment by Robyn on 21 May 2007:
I'm no expert at this but other internet services, banks make or have contact transactions for crimnals an don't always know it. Like the hackers an scammers. If they have a service where someone investigates the indiviual by going by their license, address e.t.c before accepting their service. Why not have that for e-gold?
Comment by Fred Rabin on 7 June 2008:
It is a great irony that for fiscal security in the future you must look to "Communist" China, or once basket case socialist countries like India.
Comment by Henry Cohen on 1 October 2008:
Until your essay above, I was not planning to sell the gold coins, bought as recommended by many "gurus", I own. I find myself wondering whether owning the stock GLD constitues owning gold. As a shareholder of an organization (albeit an ETF) that buys gold bullion, am I not a partial owner of this gold and as such have to sell it if the gov't bans gold ownerwhip? What about gold mining stocks? This would be a perverse interpretation of such a ban, but we do live in "interesting" times. Can anyone help me with this?
Comment by Neil Sutton on 29 October 2008:
In reply to comment from Murray S
"They will do it in a heartbeat. All it will take is a BIG crisis, and our gold will be gone.
The creatins that are our politicians know that they will lose very few votes"
Due to the fact that the word "Greed" is fashionable at the moment, all they have to do is have a current affairs program to show a story on some prudent person who prepared for this financial downturn and hedged with gold or silver, making it clear that while everyone else is hurting (due to their credit card debt and loosing all of the equity in their house)they are still living the "high life" due to their Greed. The hords will soon be out like a lynch mob. Can't see too much resistance to Govt confiscation myself.
Comment by George on 4 April 2009:
I just wanted to say that I love this site