There is a move by governments to move all financial transactions to the digital world.
The first step in that direction is to ban cash. More specifically, to ban high denomination banknotes.
To that end, the European Central Bank is talking about phasing out the 500 euro note. And former US Treasury Secretary, Larry Summers, recently wrote an op-ed about getting rid of the $100 bill.
In addition to phasing out these large banknotes, governments are also imposing bans on all cash transactions above a certain level.
Spain has banned cash transactions over 2,500 euros.
Italy has banned cash transactions over 1,000 euros.
France has banned cash transactions over 1,000 euros, down from the previous limit of 3,000 euros.
Why the rush to ban cash, particularly in high denominations? The official story is that getting rid of high-value banknotes would help in the fight against organized crime and terrorism. These bad players conduct most of their transactions in cash to avoid detection. The higher the value of the banknote, the easier it is to move large sums of money across borders.
Another explanation, which is just as credible, is that governments want to be able to track all financial transactions…digitally. In a world where every purchase and transfer happens across the Internet, spy agencies would have the means to track your financial life, down to the last penny.
If that’s the endgame, and I believe that it is, then where does that leave us with gold?
Like cash, gold coins and bars allow us to keep some of our wealth outside of the banking system. Gold also allows us to move wealth across borders. And, because if its high value, we can take a very considerable amount of money with us, all wrapped up in a small corner of our suitcase.
If governments want to be able to track all of our financial transactions, ownership of gold presents them with a significant problem.
While spy agencies might be able to identify where and when we originally purchased our gold, they will have no way of knowing where that gold is now. They don’t know whether we have it at home, stashed in a safe place within the same city. Or overseas even.
In the near future, allowing citizens to hold significant wealth in the form of gold will become unacceptable to governments.
And when they come out and declare a ban on private ownership of gold bullion, they’ll trot out the same argument. They’ll tell everyone that the ban is necessary as part the war against global terrorism.
They’ll then go on to say that to hold onto our gold is unpatriotic. They’ll paint us as being supporters of terrorism.
Of course our view is different. To hold part of our wealth outside the banking system is our right as free individuals within democratic societies.
To keep our gold, even in the face of an outright ban, isn’t an act of terrorism, it’s a declaration of our personal rights and freedoms.
On that note, given that I see a ban as being inevitable – and sooner rather than later – you might want to stock up on some more gold now.
I would advise that you take personal delivery of some of your gold, so you have the physical coins or bars in your possession.
For the balance, keep it overseas in the form of an allocated gold purchase. This means you don’t take personal delivery today, but that you can at any time in the future. And having that gold overseas will protect you from sudden changes in the law here at home.
For overseas, allocated gold purchases, I recommend BullionVault.