Jim Sinclair: Gold Confiscation in 1933 Was What QE Is In 2012

When Mr Gold talks, you better make sure you listen. Jim Sinclair requested via his website to control emotions and writings with regard to gold confiscation. It’s quite unlikely that gold will be confiscated in 2012 like it happened in 1933. In order to understand the reason why, it’s mandatory to have some basic monetary insights. This is how Jim Sinclair explains it it:

In the 1930s gold was to the monetary system what QE is today, a means of increasing the supply of money for Fed and Treasury discretionary use. The US Secretary of the Treasury and President Roosevelt set the gold price higher at their daily breakfast together arbitrarily. Higher because to create money then the system required a higher value of gold to have more money outstanding. This is why Roosevelt ordered the confiscation of gold in order to unfold his type of monetary stimulation, his QE. This is what confiscationophiles simply do not know.

Your fears and the outrageous untrue statement by the Scottish hedge fund manager are based on totally wrong reasoning and misunderstanding. Gold was not confiscated because it was going up in price. Gold’s order of confiscation came as a tool of monetary stimulation in order to create monetary creation in order to attempt to increase employment. The order of gold confiscation had nothing whatsoever to do with punishment of the gold holders. It preceded the then big run up in the gold price. Believers in confiscation, because they are incorrect on its basis, are totally wrong in predicting it. Those that predict confiscation of anything gold love sensationalism and benefit somehow from scaring the dickens out of you unnecessarily.

The reasoning behind Jim Sinclair’s central point is the following. In the 30’s, gold was part of the monetary system of the US. The primary objective of the gold confiscation act was to buy the gold from the people and redeem it for bank notes. That was a simple and sure way to increase the paper money base, which was at the time a debt-based banking system just like it is today. Now after the gold was confiscated, the price of gold was increased in order to get more banknotes out of it.

As gold is officially not part of the monetary system in 2012 (at least it is not considered by the central banks in the Western developed countries), it doesn’t make sense for governments and central banks to confiscate … all they want is an increasing money supply, which is what they are doing via Quantitative Easing. Otherwise stated, gold confiscation would not be effective today.

Moreover, Nick Barisheff recently noted that “The only example of confiscation we can find in history was in the US in 1933. In fact it wasn’t confiscation, it was rather expropriation.” He also made the point that in case gold will be confiscated, “It will likely not be at $1,700 gold, but rather at $5,000 or $10,000 gold. ”

We wrote in an earlier article that – in case you do not agree and are looking to protect yourself for some sort of confiscation – the best thing you can do is store your precious metals outside the banking system and diversify your holdings across safe jurisdictions. Read the article Government and gold confiscation: tips to protect your assets.


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