Home > Marc Faber Fears Gold Confiscation From The Government (GLD, GDX, IAU, DZZ, SLV)
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Marc Faber Fears Gold Confiscation From The Government (GLD, GDX, IAU, DZZ, SLV)

December 9th, 2011

Dominique de Kevelioc de Bailleul: Aside from the cherished and entertaining Faberisms deployed from  time to time in his fight to preserve the truth in front of television audiences  controlled by a media-based establishment propaganda machine, Marc Faber also demonstrates why he’s the go-to man for clarity and thoughtful insights in the  midst of today’s Orwellian headache.

Speaking with FinancialSense Newshour’s (FSN) James Puplava on Wednesday, Faber, the editor and publisher  of the Gloom Boom Doom Report discusses a range of topics, from geopolitics, to freedom  and tyranny, to his concerns of people living in an age of central bank monetary  cannons gone completely rogue.  He also touched on one of his favorite  asset classes, gold (NYSEARCA:GLD), and the  third-rail subject of interest to every gold bug: government confiscation.  Get my next ALERT 100% FREE

Note: James Puplava’s FinancialSense.com Web site is loaded with some of  the most informative interviews from the brightest minds assembled on the  Internet.  See its audio  archived interviews.

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As far as how high the price of gold (NYSEARCA:IAU) can go, it depends upon who has control of the printing presses, according to  Faber.  Right now, he said, the power hungry in Washington won’t let gold bugs down,  as each sign of a lurking systemic collapse or stock  market meltdown has been propped up by the Fed.

“If I could show you a picture of Mr. Ben Bernanke and Mr. Obama, then I  would have to say that the upside is unlimited,” said Faber.

And the downside risk to gold (NYSEARCA:DZZ) rests on the shoulders of central bankers, as  well, as the Fed, and now the ECB, will go to any length to feed the global  financial system with creative and backdoor credit expansion mechanisms.

“In my view the downside exists if money printing by government is  insufficient to revive or maintain credit growth at this level and you have a credit collapse,” he said, and also noted that competing asset classes would  most likely fall more, thus retaining gold holders purchasing power during a bona fide deflationary collapse.

But, first, the globe will undergo roaring inflation, according to Faber, then, second, the Robert Prechter, Gary Schilling and David ‘Rosie’ Rosenberg  deflationary spiral scenario will play out.

“One day there will be a credit collapse, but I think we aren’t yet  there.  Before it happens they’re going to print,” Faber speculates.  “And when printing as it has done in the last 12 years in the U.S. leads to  discontent populations, because when you print money then only a few players in  the economy that benefit, not the majority of households.”

However, Faber warns that the gold market’s extremely volatile, a normal  symptom of a fiat-backed financial system inducing the public into  schizophrenia—of clinging to the familiarity of a 67-year-long financial system,  moving to periods of fearing total loss at the currency graveyard—will chase  investors out.

“A 30 percent correction or 40 percent correction cannot be ruled out, but as  I maintain, again and again, I’m not going to go and sell my gold,” Faber said  forcefully, as he explained that owning gold is should be viewed as the ultimate  insurance policy to cover financial calamity, a viewpoint shared by famed Dow Theory Letters’ Richard Russell—another periodic guest of FSN.

Whether the gold price is in  bubble territory, as a few prominent analysts claim, Faber doesn’t see it that  way, at all.  In fact, he said, very few people own it or talk about  it.  History clearly demonstrates that every bubble will suck in the very  last investor before collapsing under its own weight.

Besides, the powerful propaganda machine, which endlessly repeats the party  line of a system predicated on a fiat system of dollar hegemony, will not allow  cheerleaders of the gold bugs to expend too much airtime away from Wall Street  advertisers and obvious shills (to the trained eye) of CNBC, Bloomberg and other ‘mainstream’ media.

So far, the propaganda has only delayed the inevitable rush into gold—the  next and longest stage of the bull market.

“I have one concern about gold.  I was recently on Taiwan and South  Korea, at two large conferences, nobody owned any gold,” Faber said.  “Gold  is owned by a minority, even in the U.S..  Most people in the U.S. have no clue what an ounce of gold is or looks like and so forth.  The same in Europe.”

But as the ‘wealthy’ begin to acquire gold, the chasm between the ‘rich’ and  poor will widen substantially, not just between the 1 percent and the rest, but between the upper 10 percent and the growing-poorer middle class.  That’s  when the democratic process turns ugly, morphing from a society of rights to a nation ruled by a tyrannical banana republic political dynamic.  See FSN  interview, Ann Barnhardt: The Entire Futures/Options  Market Has Been Destroyed by the MF Global Collapse. Or transcript.

Populist political leaders vying for votes from the masses will opt to score easy points with the 90 percent have-nots at the expense of the haves, with  draconian taxes on assets such as gold and silver held by the haves, not just through taxes on capital gains, but maybe even through a wealth tax on the holdings.

“This is what the tyranny of the masses can do,” Faber explains.

“You can make it, advertise it to the masses by just taking away from a few  people, he added.  “I’m worried most about is the case of gold, not the price; that I’m not worried . . . but I’m worried about the government taking it  away.”

The interview moves on to the discussion of the bull rally in gold and silver (NYSEARCA:SLV).   After 11 years of continuous gains in the price of gold, why, then, do so few  investors hold the metal?

Faber explains that there remains too many deflationists holding to their  thesis of a tumbling gold  price, though, as Faber suggests, there has been no factual evidence to  support the argument since the pop of the Nasdaq bubble of 1999.

What deflationists point to as proof of their contention, declining housing  prices and stock prices, are really manifestations of inflation moving out of  those asset classes into others, such as commodities,  precious metals and overseas assets, of all kinds.  Inflation, Faber has  stated in the past, doesn’t move all asset prices up simultaneously.

“I don’t hear about gold.  I lived through the last gold bubble between  1978 and January 1980.  The whole world, whether you were in the Middle  East or in Asia or Europe or in America was trading London gold, buying and  selling every day,” he recalls.  “This has not happened yet, and it hasn’t  happened.  Your friends, the deflationists, have been telling people that  gold will collapse to $200 an ounce for the last 10 years and that’s it was in a  bubble.

“[They] said it [gold] was in a bubble at $500; they said it at $600, and  they’re still maintaining it.  So a lot of people they don’t own it; they  bought it and sold it again.  But in the meantime, gold has moved into sold  hands.

“In my case, I’m not going to sell my gold unless I have to.  In other  words, everything else is bankrupt, bond market, stock  market, cash and real estate.”

Faber also points out, even though the price of gold appears to look like and  quack like a bubble duck, with the price of the yellow metal sporting gains of  700 percent since the year 2000, the monetary base and credit creation by the  Fed has been so large for so long, the gold price has much more room to move  higher to reach ‘fair value’.  See Goldmoney Founder James Turk’s analysis  on this very point: BER article, Goldmoney’s James Turk, $11,000 Gold Price.

“I can turnaround and say, look if I consider the price of gold, an average  price in mid-1980s, then we take $400 or $450, or whatever it is,” Faber  explains, “and we take the monetary base at that time; we take the international  reserve; we take into consideration that China hasn’t really begun in earnest to open up; and we haven’t had this wealth expansion in emerging economies, and so  forth and so on.  Then, I can maintain, well, actually the gold price is  not up; it’s just the price of money, or the value of money, has declined so  much against a stable anchor.  So I don’t think that we’re in a bubble  stage.”

For the newcomers to the gold market, Faber stresses, “Don’t buy it on  leverage.”

Reiterating his previous comments during the interview, Faber leaves the FSN  listener with his overriding observations of a U.S. government (other Westerner  countries, as well) that shows signs of eventually taking the next steps in its  fight to maintain a hopelessly broken political and financial system:  confiscation, not necessarily though a highly unlikely and dangerous  door-to-door search of proof of non-paid taxes on a citizen’s bullion stash, but  through confiscatory levels of taxation and possible criminal penalties to those  who daring to escape the Marxist or Fascist regime’s grip on power over its  population’s wealth.

“My only concern with the gold insurance is government will take it away,” Faber concluded.  “That is my only concern.  I’m not concerned about the price.

“I also have a concern generally speaking about our capitalistic system.  For sure people with assets, they will be taxed more heavily,  that’s for sure.”

By Dominique de Kevelioc de Bailleul From Beacon Equity Research

BeaconEquity.com is committed to producing the highest-quality insight and  analysis of small-cap  stocks, emerging technology stocks, hot penny stocks and helping investors make  informed decisions. Our focus is primarily OTC stocks in the stock  market today, which have traditionally been shunned by Wall Street.  We have particular expertise with renewable energy stocks, biotech stocks, oil stocks, green energy stocks and internet stocks. There are many hot penny stock opportunities present in the OTC market everyday and we seek to exploit these hot stock gains for our members before the average daytrader is aware of them.


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  1. Charles Savoie
    October 7th, 2012 at 12:39 | #1

    My name doesn’t strut nearly as well as Dominique de Kevelioc de Bailleul, but I also am French! Two French provinces bear the name Savoie, including the highest point in the Alps, Mont Blanc. Before moving on to French cuisine I must return to the germane subject matter of gold/silver. Now may I be allowed to strut some, by making a claim, but also fully backing it up? No one in the metals community has presented so much as 1% of the research I presented on Franklin Roosevelt’s gold and silver seizure—this research was presented as a free read, not as some thinly summarized “Jesus wept” presentation steering the individual to buy numismatics! Take several days to read the 312 page research at http://cache.silver-investor.com/charlessavoie/cs_summer09_PreciousMetalsConfiscation.pdf This is no mere dry research documentary, as in addition to intricately detailed weekly accounts (33,465,091 silver ounces were surrendered by frightened Americans as of August 17, 1934, the end of the first week after Roosevelt’s Executive Order #6814 nationalizing silver),I also name the single organization that pulled the strings of FDR and Henry Morgenthau Jr., Treasury Secretary—”The Pilgrims Society,” conceived by diamond cartel organizer Cecil Rhodes to be “a secret society gradually absorbing the wealth of the world” (Review of Reviews, May 1902, pp557-558) described at http://www.silverstealers.net Paul Volcker, a current Pilgrims vice president, dispossessed the Hunts of 59 million silver ounces by 1986 and is Obama’s top economic adviser! A prominent organization in metals which most investors have heard of, does NOT regard any of this as relevant, including the dismal fact that our USA President is always an “honorary” member of this central committee of anti-gold and silver global financiers! To prevent Federal seizure of gold and silver, the plans of The Pilgrims Society must be made known, as well as its existence! John R. Drexel IV is on its executive committee, his wife is a relative of John Jacob Astor, main domestic power in the second United States Bank, wrecked by hard money champion Andrew Jackson! Vincent Astor, Pilgrims Society, was FDR’s closest Wall Street pal; Astor’s Manhattan land holdings today are reckoned at north of $100 billion by the New York Social Diary! Douglas Dillon who removed silver coins from circulation was another Pilgrims executive committee member! William Simon who bombed gold for an almost 50% decline and presided over the crushing of the Hunt/Arab silver play was a member! Just how much relevance must be demonstrated—with court acceptable documentation— before Gold Anti-Trust Action Committee is willing to comment on this subject, of which I remain the sole pioneer? I never charge for research because my goal is to protect our private ownership rights!

  2. Hey You
    October 6th, 2012 at 20:57 | #2

    Faber says that he is apprehensive about the government taking away gold. I’m not because it seems that such would start secession movements that would essentially do away with centralized governments. The collectivists simply are not in very strong positions and other than some misplaced hubris, can readily see the writing on the wall.

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