by Nick Giambruno, International Man:
Chris Lowe: What’s the first step someone can take to insure their freedom?
Nick Giambruno: The first step is to place some of your savings beyond the easy reach of your home government.
This is the best way to ensure you can get to your money if your home government implements capital controls or seizes some of your assets outright. Any government can do either without warning.
The ultimate way to diversify your savings is to put it into something tangible—something that can’t be easily confiscated, nationalized, frozen, or devalued at the drop of a hat or with a couple of taps on the keyboard—while retaining as much privacy as legally possible.
You want to own something that’s universally valued and not controlled by any government. Gold and silver fit the bill perfectly.
Gold has always been an inherently international asset. There’s nothing American, Chinese, Russian, or European about it. Different civilizations have used gold as money for millennia.
When you buy gold, you trade paper money—which the government can devalue and confiscate at will—for a hard asset that’s been a stable store of value for thousands of years.
Gold is universally valued. Its worth doesn’t depend on any government. This is why buying gold is the easiest way to lessen the political risk to your savings.
Chris Lowe: What form of gold are we talking about—bullion, gold coins, ETFs?
Nick Giambruno: Physical gold is your best option. Then you don’t have any counterparty risk.
Having some gold in your possession in your home country is good. But having another stash in a foreign country is even better. You can either store it at a foreign property. Or you can store it in a non-bank safe deposit box.
Chris Lowe: Why not a safe deposit box in a bank?
Nick Giambruno: When President Roosevelt criminalized the possession of gold in 1933, federal agents went through bank safe deposit boxes searching for undeclared gold.
Today, bank safe deposit boxes fall under the regulations and jurisdictions of banks. If there’s a bank holiday, like the one in Greece… or a bail-in like the one in Cyprus… or any event that shuts down or otherwise affects the banking industry, your bank safe deposit box is at risk.
That’s not the case with non-bank vaulting and storage companies.
Chris Lowe: What about gold ETFs? What role do they play?
Nick Giambruno: If you’re buying a lot of gold, that’s where ETFs come in. That’s because storing a lot of physical gold can be expensive and inconvenient.
You want to look for a fully allocated physical fund. They carry less counterparty risk than non-allocated funds.
The Sprott Physical Gold Trust is one example. It trades under the ticker symbol PHYS, and it stores gold on your behalf in the Royal Canadian Mint.
Chris Lowe: What about gold coins? Can you just hop on a plane to Colombia or Argentina with gold coins in your pocket?
Nick Giambruno: Well, it’s a gray area. And because it’s a gray area, I wouldn’t recommend taking more than a couple of gold coins with you when traveling abroad.
The average TSA agent has probably never seen a gold coin in his life. He probably wouldn’t know what it was if he found one. But, if he thought it was something suspicious, he would confiscate it and let the courts sort it out. And that’s no fun.
You’d have to go to court to get your metal back, and that would involve costly legal fees.
I’ve taken gold coins across numerous borders, and I haven’t had a problem. But I’ve heard horror stories. And from personal experience, I can tell you that gold coins set off the X-ray machine. So there’s a decent chance the TSA folks—or their foreign counterparts—will find them.
And remember, if you take more than $10,000 of “cash” in or out of the US, you need to file a “Report of International Transportation of Currency and Monetary Instruments” with FinCEN, a branch of the Treasury Department that deals with financial “crimes.”
These are not really crimes, but rather violations of the law. It’s an important distinction that few people understand. A real crime involves harm or the threat of harm to a person or property. Think murder, theft, or arson.
When someone breaks the law, it’s often not because they’ve committed a real crime. They may have merely violated a particular government’s law without threatening or harming anyone.
This is the case with most of what FinCEN handles. In my view, it’s a completely unnecessary and destructive organization. I think it’s one of the largest threats to your financial privacy.
Of course, I am not suggesting anyone break the law—even if they’re not harming people or property. As a practical matter, it’s foolhardy to violate any government’s laws while you’re within its reach.
You wouldn’t want to be a woman driving a car in Saudi Arabia or crack a joke about Kim Jong-un while in North Korea—both supposed “crimes.” Likewise, you wouldn’t want to break one of FinCEN’s Orwellian non-crimes while you’re under its jurisdiction… which is unfortunately almost everywhere, as long as the US financial system is still king.
But back to your question about gold coins…
If you have more than $10,000 on you, you’re asking for extra attention from the authorities. So, again, this is where it gets into a gray area.
Gold coins have a low face value. But they have a high metal value. For example, a 1 ounce American Gold Eagle has a face value of $50, but a metal value of about $1,300 at today’s gold price.
So some people might say, “Oh, yeah, well, I’m taking 100 American Gold Eagles with me. The face value is less than $10,000. So I should be okay.”
Technically, they might be right. But don’t bet on winning that argument with a TSA agent (or a judge later on). He’ll find it suspicious. At best, he’ll take your coins and let you deal with the courts. At worst, he might arrest you.
You’re better off buying coins when you’re already in your destination country. Taking gold coins with you is just too risky.
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