Marc Faber: Store Your Gold Before Government Takes It

Posted by Mike Tirone - Monday, March 5th, 2012

We've heard it all from the Dr. Doom, economist Marc Faber. He likes to buy physical gold...

And what's not to like about the yellow metal? We've seen highs in prices consistently throughout the past ten years, including last year's $1,900/oz. spike.

But, as Faber warns, there is a catch: the U.S. government can and may seize privately held gold.

"I prefer to play the commodity space by owning physical gold [but] if I were an American, I would store it outside the U.S. because in the U.S., it is not completely unlikely that they will eventually take it away."

We have heard these kinds of accusations and assumptions about the U.S. government crumbling so badly that gold and other precious metals will be taken away from their rightful owners. One cautious gold owner points out "since [the U.S. government] have found a way to not allow you to access your cash at a bank, they'll eventually take your metals as well."

From MoneyNews,

"Like in 1933, gold will be purchased back by the government" because eventually the financial mess will be so bad that gold prices "will go ballistic, and the government will take away something from a minority, and not many people own gold."

"When gold prices shoot up, it will be quite a popular measure to take it away from these rich people," Faber says. "It's happened before!"

The topic of storing your physical gold internationally is one that continues to be discussed, as Wealth Wire has published several articles on the best places to store your gold and several other reasons why you should store it overseas. We even showed you how to hide it in your backyard. But Faber is one of the first credible economists to publicly suggest finding alternative storage areas for your gold.

Faber is a historian --as most economists are-- and he knows that from May 1, 1933 until 1974, U.S. citizens could no longer hold gold as a protection against paper money, as the U.S. currency lost its gold backing at the same time. He continues to sight this large period of time in U.S. history for gold's incredible value and he believes it could happen again.

At the time foreign currencies would exchange the U.S. dollars that came into their possession, which were known as 'eurodollars' for gold. The strategy to hedge against the United State's currency grew most popular once the dollar was devalued and floated against the gold price in 1971.

But like most of the big named economists and analysts, there are different opinions on what gold's next move is, as well as America's financial status. Recently, the gold world went abuzz as billionaire hedge-fund manager John Paulson told investors it's time to buy the metal as protection against inflation caused by government spending. Gold traders took action and got quite bullish.

But Faber says he's not in a hurry to buy gold, but he accumulates gold every month on dips because he believes the gold market is still under a correction (which he has been saying since just after last year's $1,900 high.)

With his finger on the pulse of the Asian market, Faber finally notes that China's economy is continuing to slow and he feels it will crash at some point. This is why he is personally staying out of commodities other than gold. 

As for the rest of the market, the Paulson push might have been holding strong during the last two weeks as, according to Bloomberg,

Twelve of 22 surveyed by Bloomberg expect prices to gain next week and five were neutral. Paulson & Co. is already the biggest investor in the SPDR Gold Trust, the largest exchange- traded product backed by bullion, with a stake valued at $2.9 billion, a Securities and Exchange Commission filing Feb. 14 showed. Investors have 2,389.7 metric tons in ETPs, within 0.2 percent of the record reached in December and more than all but four central banks, according to data compiled by Bloomberg.

Speculators in U.S. gold futures are now their most bullish since September after the Bank of England and Bank of Japan said they will buy more assets and the Federal Reserve said it was considering purchasing more bonds. Central banks are also expanding their bullion reserves, adding 439.7 tons last year, the most in almost five decades. They may buy a similar amount in 2012, the London-based World Gold Council said.

Gold for April delivery, the most actively traded contract, rose $10.90, or 0.6%, to end Thursday (March 1) at $1,722.20 a troy ounce on the Comex division of the New York Mercentile Exchange. 

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