murphy_p_t wrote:
Craig...I'm a little surprised that you discount the threat from the US gov't...esp in light of precedent (1930s confiscation & years of ownership being made illegal) and the current erection of de-facto capital controls (courtesy of FATCA)
I don't discount anything. But at the same time I see investors get sucked into riskier ideas by marketers that know just what buttons to push.
My concern simply is that if you're going to go through the trouble of offshore gold storage, then do it right and store it as directly as possible. But that's not what these services do. They either insulate you from the asset through their policies, or they base the company in some tiny foreign jurisdiction where it likely is done to protect the operators and not the depositors.
Why the Channel islands for a locale? What's the point? Why not Switzerland itself? If you're going to store the gold there anyway, why not put the operating company under Swiss law as well? I'd feel far more comfortable dealing with a company regulated under Swiss financial rules than the channel islands. But that's just me.
In terms of confiscation, I agree it's there. But it's
way down the list compared to simple fraud or incompetent management of customer assets. It's also far down the list compared to one or more governments shutting down the entire operation and freeze the assets while things get sorted out if customers are accused of criminal activity. That's just not the kind of thing I worry about happening at the Perth Mint or a Swiss Bank or even an ETF. These other methods of holding gold have big money behind them plus governments looking to protect their interests. Who is going to protect Gold Money and Bullion Vault? They are small fish and nobody will care what happens to them. IMO.
In particular, while holding up ETFs...which don't offer important benefits which I think HB pointed out as reasons for gold ownership...such as being totally outside the financial system & reducing the number of layers between you & the metal.
What is the source of your confidence in the US gov't to respect property rights? Do you think there is little need to be totally outside the financial system?
Bullionvault and Gold Money are *not* outside the financial system. If they have any assets in US dollars they are being held in a US bank somewhere. That's even what Swiss banks do. If people are wiring money in and out of them they are going through a wire network like SWIFT which can isolate their accounts at any time. Authorities in Switzerland will seize assets if they are being linked to criminal activity. Etc.
People using these services think they are outside the financial network, but they are not. They have an intermediary in the Channel Islands or London (bullionvault??) working on their behalf to hold assets at vaults operated by companies like VIA MAT in Zurich, or where ever. There is plenty of exposure there. They have the bank they work with in the US to get funds into their account. Then the people managing the account assets to buy/sell gold. Then you have the vault company holding the assets in the name of the intermediary for the customer's behalf. Lot's of layers. No better than an ETF. IMO.
With Perth Mint it is more direct and the people behind it have deep pockets and financial interests to protect on world markets. They are not likely going to do anything to kill their business like take customer's gold.
Another benefit of Perth Mint is they just do gold. That's it. They aren't going to get roped into all sorts of business around funneling money, fraudulent shell companies, tax dodging, etc. like some of the Swiss banks got roped into and caused lots of problems. So there is far less chance US government action against them would have any footing whatsoever. Yes individual customers could be problems, but it won't bring everyone into the fire if that is the case. But you get someone like bullionvault who at one time was allowing direct trading of gold internally (still I believe) and you get e-gold type situations showing up. Meaning that a few people doing illegal things can get the entire enchilada taken if they aren't careful.
Like I said people can use these services and I may off base. But my Spidey sense is tingling. Given the choice, I'd rather use an ETF or closed end fund like GTU and accept the limitations but know I have better accountability if there is a problem. But this middle ground stuff gets really murky in my mind. I don't like all the moving parts. I can't express it any more than that. I just don't understand all the risks and that immediately tells me I don't want to invest. That's just how I do things and obviously people smarter than me can make another choice. It's just how I feel right now. Maybe my mind will change in the future.
