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A Right Way and a Wrong Way to Weather “The War on Cash”

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company-addison-qualeThis article was submitted by Addison Quale, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

Many people have been talking recently about the “war on cash.” With policymakers seriously talking about eliminating cash, it can be worrisome. But there is a way to avoid the consequences of the “war on cash. You just need to pick the right strategy.

With the endless lowering of interest rates and the possibility that they could turn negative, there is more incentive than ever for people to pull their dollar savings from banks and just hold on to the paper cash at home. After all, why risk your dollars in a bank that yields zero return or even charges you to hold your money? As a result, people are buying up safes, pulling their dollars out of the bank, and storing them at home.

safe

They are kind of missing the point though. As this article points out, if interest rates are making you want to hold your money outside the banking system, why not just get REAL money and hold it outside of the banking system? Why not just buy physical gold and silver coins and bars? If you are going to buy a safe, THAT’S what you should be storing in it.

This is definitely a message someone should give to the Japanese, who are now buying up safes hand over fist.

Keeping physical cash at home may mean your wealth is “outside the banking system,” but it is still very much “inside the fiat-currency system.” Fiat currencies will fail one day and the dollar with them. So cash offers no protection in that sense. So those who think they are being smart by hoarding paper currency at home are actually a bit mistaken.

Normally, people are reluctant to buy the metal argue that it just sits there offering you zero yield. But physical cash will just “sit there” as well – its value eroding away thanks to inflation. Metals, by contrast, are a much better option.

Some mention the possibility that your metal might be confiscated by the government as they say there is a precedent for that under Franklin Delano Roosevelt. But first off, no metal was ever physically confiscated. People voluntarily brought their gold to the banks and were paid fiat dollars for them. Those who did not were not hunted down. Government agents never went door-to-door taking gold.

Second of all, during that time the US was on a form of gold standard monetary system. Gold was an admitted official part of the monetary system. It is no longer. We are no longer on the gold standard. And as you may recall from Ron Paul’s encounter with Ben Bernanke, “The Fed only holds gold because of ‘tradition’”.

Just to make this point a bit further, there really is no precedent for the government going to people’s homes and stealing their gold and silver. Can you even imagine such a thing happening here in the US? You’d basically be asking for an armed revolution in response. Additionally, do you realize how costly it would be to go door to door with armed agents rummaging through peoples’ stuff trying to find their metal? It’s just not worth it. In light of this, the idea of confiscation is really more of a bogeyman scare-tactic to keep everyday citizens from owning the real thing.

Don’t be dissuaded. Protect yourself from the “war on cash” the right way. Buy gold and silver.

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6 thoughts on “A Right Way and a Wrong Way to Weather “The War on Cash”

  1. paul maloney says:

    O.K. , So fiat currencies fail and you have precious metals ,, now what. What will be the new means of transitional money..?

  2. Mark says:

    I wonder what will happen? ,if governments confiscate gold or make trading of gold illegal.
    Regarding safes – if someone finds out , that you have safe they can force you to open it.It has to be hidden very well.

  3. thomas doland says:

    have purchased physical gold…from you…and sitting…i see some projections having to do with consumer price index and 10 yr treasuries that see gold back into the 800. why such contradictions abounding…would be nice to see into the future…depend on folks like your org to straighten the lines for us…take for instance the call for ditching cash..going digital…oops…how will gold fit into an exchange for goods or currency?..maybe i think too much…but much is at stake…is there some communications available to give confidence for further investment…sam…thanks

  4. Robert Greenwald says:

    It seems to me that the article is essentially correct. However, what currency would be used in a total collapse is an unknown. I suspect that the keeping of gold and silver is best done with the idea that it is a store of value and a better store of value than fiat currency. In other words a certain amount of silver or gold will always buy a pound of sugar, but the same cannot be said for fiat money. And so from time to time U would swap out some of ur metal for the fiat stuff to be using in the market place. Governments have always made some new money to replace their old. Witness the German Mark of Super Inflation fame. People were buying up pianos and anything else they could keep as a store of value because they knew there money was not going to hold up. I suspect that metals R a more convenient store of value than pianos. But in truth I do not know anything, I only make educated guesses.

  5. Paul Gregory says:

    Obviously there is a growing need for Banks that deal in precious
    metals rather than govt issue currency.

  6. RalphB says:

    Mr. Quale Writes:

    …there really is no precedent for the government going to people’s homes and stealing their gold and silver. Can you even imagine such a thing happening here in the US? You’d basically be asking for an armed revolution in response. Additionally, do you realize how costly it would be to go door to door with armed agents rummaging through peoples’ stuff trying to find their metal? It’s just not worth it.

    This comment betrays a certain naivety about how government accomplishes its objectives and what those objectives actually are. First of all, ever her of civil forfeiture? You think that’s not a precedent, think again. Do you think the IRS raids houses and takes any cash around in payment of tax debts? No. And all thy have to do is “assess” your gold ownership and order you to turn it over at their buyers’ price in fiat currency. If you don’t they order you to pay a penalty equal to some part of it’s current market value or else they auction off your house. As John Roberts would say, it’s just another tax. They will never get their hands dirty.

    Besides, with enough power, they don’t need the wealth — the ‘effective demand’– represented by your gold. Their ‘effective demand’ issues from the muzzle of a gun. They don’t need your property, they need your obedience. Here’s a perfect summary of the situation from Ayn Rand’s Atlas Shrugged:

    “Did you really think that we want those laws to be observed?” said Dr. Ferris. “We want them broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against—then you’ll know that this is not the age for beautiful gestures. We’re after power and we mean it. You fellows were pikers, but we know the real trick, and you’d better get wise to it. There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals, one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted—and you create a nation of law-breakers—and then you cash in on guilt. Now that’s the system, Mr. Rearden, that’s the game, and once you understand it, you’ll be much easier to deal with.”

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