Perth Mint vs Kitco Canadian Allocated Storage

[Ad Orientem]

When I started this thread I stated that I like GTU Central Gold Trust. My feelings have not changed, I think the best is to hold physical bullion and GTU . For me GTU is the best option. For a taxable investor it has favorable tax treatment, for safety the Gold bullion is stored on an allocated and segregated basis in the underground treasury vaults of the Canadian Imperial Bank of Commerce. I feel that it has an extra level of safety because it is a closed end mutual fund. Seems to me the assests that a closed end Canadian mutual fund holds would be harder and take a lot more time to confiscate thus may add another level of protection. Hopefully I will never find out.

Generally I think you are right. For safety GTU is a step above the bullion backed ETFs like GLD and IAU. Not that I think they are scams or anything. But in a nasty situation I would much rather be in something like GTU, CEF or SGOL than the open ended bullion ETFs. My only real objection is that you have to contend with the premiums which can vary dramatically so you are not necessarily tracking the price of gold that closely.

[murphy_p_t]

Steve...have you looked into getting "direct registration" for GTU...to take your brokerage account out of the loop?

[bronsuchecki]

ahhrunforthehills,

"how much $$ in gold the Perth has of US citizens money"

Perth Mint Depository holds around $3.5 billion and about half of our customers are American. This is not exactly a lot of money to a Government who is cash strapped in the trillions. I therefore don't see Perth Mint as their first priority in a confiscation scenario or other asset grab. Their first target would be GLD with $75b, IAU $11b, SGOL $11b. It would take time to get those domestic (and thus a lot easier) stockpiles, before they got around to Perth Mint.

"Swiss is a shining example of who wins in a pissing contest"

A good example, but this was an information getting exercise, not an assets getting exercise. I'm not aware of wholesale repatriation of assets. Secondly, the US was able to exert pressure because the banks involved had US operations. The Perth Mint has no operations in the US.

"relationships that exist between the United States and Australia"

You are talking Federal Govt to Federal. Perth Mint is wholly owned by the State Govt of Western Australia. The Australian Federal Govt does not have control over us nor can it instruct the State Govt to do anything. Certainly pressure can be applied to the State Govt, but I would direct you to the link I put up earlier about confiscation which discusses the political dynamics in this State re the other States.

As I understand it, Western Australia (WA) is very much like Texas, with a "them and us" attitude to the rest of the country and the Federal Govt. WA is a net exporter whereas the other states are importers. A sense that the rest of the country rides on our back is not far from the surface of the WA voter. An Australian confiscation order, or pressure to hand over gold to the US, which would damage the gold industry in this state (which employs a lot of voters) could easily turn this underlying resentment into a move for seccession, particularly if done in a deteriorating economic environment where it is every one/state for themselves.

"under the guise of fraudulent transfer or tax evasion"

You have a simplistic understanding of the process to actually effect this. In the 16 years we have been running the Depository business, we have only had one request by US authorities for assets to be handed over to a US court. The general process was as follows:

1. The US has to file a request to a WA court for the assets and justify why (ie which US law has been broken).
2. WA police appoint an officer to investigate the US reqest, that is, is it legtimate and meets WA law requirements for hand over of assets.
3. WA police officer interviews us and takes statements, collects evidence.
4. WA police officer reports back to WA court which makes a decision.

In this instance it was a pretty clear case so the metal was liquidated. Note they didn't want the gold, so we sold it and gave them fiat, which I'm sure you'll all find quite funny.

Anyway, first point is those steps don't take a couple of days, months actually. Second point is that if the US decides to go down "fraudulent transfer or tax evasion" they will need to file about 10,000 (approx number of US clients) requests nominating specific people and the US law breached (and I think they would first have to start US court proceedings as well).

A more likely approach is a general confiscation executive order. However I'm not sure they can just turn up and tell us to blanket hand over assets of all the accounts and may still need to file individual requests. In addition, while a US address is indicative of US citzenship so even if a blanket request was legally valid in WA, we would have to establish the US citzenship ourselves. Again, it isn't going to take a couple of days.

I would also note that a confiscation order is on you personally to hand over the assets. US can probably tell US depositories to just hand it all over on the basis that it is illegal to hold gold for people, but the US cannot just "instruct" another soverign the same way. Just look at your Swiss example and how long that took and all the negotiations involved.

[ahhrunforthehills]

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[ahhrunforthehills]

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[ahhrunforthehills]

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[Ad Orientem]

Bottom line from my perspective:
If the Feds are determined to get your gold and willing to go to extreme lengths they probably will win unless you are prepared to take extreme steps of your own. If you are really that worried about gold confiscation then you should probably be looking at immigrating or only investing in things you don't think they will go after. Most of what you are describing could not happen quickly in our system of government. If the US Gov decides to start targeting gold then that would be the signal to take an extended trip abroad, preferably in a place with a welcoming immigration policy and no extradition treaty with the US.

At the risk of sounding like a like a gold bug I think everyone should have at all times a valid passport and an idea as to where you could go with your family on short notice just in case things start getting really bad here. In the end though, if the Feds want your gold bad enough, and are willing to go to extreme lengths, then your choice may come down to handing it over or renouncing your citizenship.

I know how I would answer that question but that's a personal choice that everyone would have to deal with.

But for the record I think the chances of this kind of scenario going down are lower than my odds of being named Bill gates sole heir in his will. Seriously we are starting to venture into the realm of extreme paranoia. This is the sort of discussion I usually expect on survivalist forums.

[Ad Orientem]

Severe restrictions on capital movement could not be put in place that fast. Again if you see it coming you have some time to figure out what to do. But the first step would be to get whatever you can out of the country as quickly as you can. And whatever you can't move I would sell and convert to silver.

[ahhrunforthehills]

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[Ad Orientem]

Yes. But there was plenty of warning that it was coming. Most wealthy people had their gold safely in Swiss Banks before the law was passed and went into effect.

[craigr]

And just to add fuel to the fire, if there was lots of talk about targeting overseas gold such as the mainstream media propaganda machine going on about the necessity, etc. that would be a good time to get a ticket to Perth or your other locale and withdraw the asset. Then consider investing it in local real estate that is not as easily targeted. Perth has some beautiful properties by the way.

But again, this is shooting at a good plan for search of a perfect plan. Someone with assets at Perth is in a tremendously stronger position to protect those assets from blanket govt. orders than someone using an ETF. The mechanics of gold confiscation across international borders is going to be much more complex both legally and politically. Both of which work in your favor.

[murphy_p_t]

I think most in america do not see "perth mint gold" being at risk from the US govt.  I think what most of us are referring to is what actions the govt would take to prevent a financial flight of US citizens (i.e. capital controls).  Which would likely  be blanket policies being put in place.

Agreed. So I think the HB recommendation is to have some resources outside your country of residence ahead of possible capital controls being implemented. As something like Perth Mint meets these objectives...what other objections did you have w/ the geogrpic diversification?

[ahhrunforthehills]

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[MachineGhost]

But craig hit it on the head... these are not low cost solutions.  A good solution?  IMHO, I am still looking.  I personally consider an account at the perth to be basically the same safety as having a checking account in Canada... except I can drive to Canada.  Come to think of it, some real estate on the border would also be nice

It sounds like you're a shoo in for the Hard Assets Alliance: http://hardassetsalliance.com/  The $35 setup fee is waived if you fund it before the end of the month.  No FBARs to worry about.

But also, you may want to consider doing what the super-rich have done for centuries to preserve their wealth.  Put 1/3rd in land (foreign real estate), 1/3rd in fine art and 1/3rd in gold.  You should probably increase the gold to 50% and decrease the other two proportionatelly to make rebalancings practical.  You could also put 2/3rds into semi-numismatic gold bullion coins such as $20 Liberties.  Premiums above gold spot are very historically low right now for all uncirculated Liberties, but the "fine art" level would start at MS-65 (gem).

[steve]

Steve...have you looked into getting "direct registration" for GTU...to take your brokerage account out of the loop?

I never did look into direct registration. I did talk with the IRS last year about form 8938 Statement of Specified Foreign Financial Assets and I was told that as long as it is held in a US brokerage account like Vanguard these forms do not have to be filled out. Although if in a taxable account the form 8621 with proper elections still needs to be done. I am pretty certain that if you had direct registration and you were above the threshold you would need to fill out the 8938 Statement of Specified Foreign Financial Assets. I feel that if there were a problem it maybe easier to deal with using the resources of Vanguard. They also have insurance.
As far as the premium or discount goes so far it has only worked in my advantage. If gold were to rise to the point where I needed to sell some off the premium would most likely be high because it would be in high demand and if I were to be a buyer that would most likely occur when gold is beaten down and premium is low but I really do not worry about premium or discount because I track it and look to take advantage.