Securing Your Wealth

There was a little suggestion in a "Daily Reckoning," last week, that all may not be as well as one thought, if certain things happen. Papers can get mixed up, computers fail, and all sorts of ugly things can happen.

Take the all too common "identity theft" plague, which some of us have experienced. Innocent people, victimized by thieves who steal identity, credit card numbers, and all sorts of personal information, which is then used to purchase goods under the victim's name and identity. Usually the problem can be solved, but more often than not, one's credit rating has taken a beating because of the troubles.

Cell phone theft is also common. A friend of mine had his Dodge pickup stolen, and his cell phone was in it. The cell phone was used hundreds of miles away, and this might have given a clue as to where the truck could be found and repossessed, but he wasn't so lucky. Neither the phone nor the truck, were ever seen again. If your cell phone is stolen, it can be disabled by your server, if you call them promptly, but you need a new phone, probably a new number as well, and the trouble caused by cell phone theft, is a nuisance and expensive.

Those of you who read my three times a week column on my web site (Don's Column) know about my close to $14,000 loss to FEDEX. A detective is working on it now, but it was so easy for $13,900 to disappear in the flash of one's eye.

We've all lost money, wallets, purses, and other valuables, which one may never see again, and the trouble of stopping credit cards must be hideous. In other words, your wealth can be stolen by various means, both physically and electronically, and it may never be recovered.

Now think about satellites, computers, and all sorts of electronic gee gaws which are universally used in today's modern technological age, and think what could happen. I am not saying it will happen, but certainly could happen. As far as the internet is concerned, I suggest that everyone write down pertinent phone numbers and addresses, in case the internet fails. My web site may not be gotten up one day because of technical snafus, disabled satellites, or even my local server. Know phone numbers, and have them readily available, because things can fail.

You investors in gold and silver ETF's, think about what could happen. First of all, the gold and silver is supposedly stored overseas in vaults. Is it really there? Suppose someone robbed the vaults, assuming it is there, what recourse would you have? I guess it is easy to make a call, write a check, and think that you have invested in gold and silver. No physical to bother with, and you have invested, trouble free. What if the ETF's had their gold and silver snatched by governments? Suppose gold and silver were made illegal in the lands where the gold and silver is supposedly stored? Suppose there is no gold and silver there in the first place? Ever see photos of it? It's not as if frauds have never been concocted before. Again with ETF's? Maybe? I don't know. Suppose the government in that nation seized the gold and silver in the ETF's? What recourse would you have? I dunno, but I don't buy ETF's.

If you die and have your wealth in gold and silver…in ETF's… the whole thing will be inheritance taxed. If you had physical, no one would know, and your kids would have free access to it with no taxes. Have a lot of stocks? When or if you die, the kids will have to pay taxes on them or sell them and pay taxes on the proceeds. Be sure to tell the kids where the gold and silver is, so that they can have inheritance tax free access to it. If you have a safe deposit box, be sure their names are on it as well as yours, so the contents will not be taxed.

Suppose you have a lot of dollars or euros, or something else stored in a Swiss bank? All you have is an electronic message or certificate. Suppose someone crashed the computer where records were kept? Remember, a few years ago, a young trader took down one of the world's oldest banks! Literally took it down, by his trading. What became of the depositors' funds? There was no FDIC in the UK when the bank went down. I don't know that either, but I think they probably lost it all. ( Seems as though I "don't know" and "suppose" a lot, doesn't it?)

I've dealt with three suppliers of gold and silver which went down, and took their depositors' gold and silver with them. NEVER LET ANY ONE OR ANY FIRM STORE YOUR PHYSICAL GOLD AND SILVER. YOU PAID FOR IT AND IT'S YOURS. YOU TAKE POSESSION IF IT! What's the difference between a U.S. supplier going broke and taking people's stuff with their bankruptcy, and an ETF doing the same? Inventories of ETF holdings are merely a piece of paper, which can easily be lied about. Euros are supposed to be "backed 15% by gold," but no one's ever shown pictures of the gold, or told where it is, and can be inspected. The U.S. Government lies about just about everything. Can't a bank, storage facility, or ETF do the same? There's an unbelievable amount of white collar crime in the world today.

You own stocks, and you have little electronic blips which show how much you own. In the old days, you got physical possession of the stocks you owned, but no more. Suppose the electronics were destroyed, fiddled with or sabotaged? Remember the film "Ferris Buehler's Day Off?" He changed his grades by messing with the school's computer. Why can't it be done with your stocks, savings, or investments? I know, everything is 'backed up' every day, but you just cannot know what can happen in this troubled world. Remember 9/11? Not to get into who did it, (not a few Arabs), but as everyone went to work on that fateful morning, who could have imagined the events which would follow? No one! Suddenly, within a couple of hours, thousands were dead, and three buildings were gone. What records were lost? Were they 'backed up?'

It isn't just that most people's wealth and surplus assets are listed on pieces of paper with ink on them, but more often than not, there aren't any pieces of paper, but electronic blips, computer entries, and which are transferred by satellite probably. The Chinese, a couple of months ago, shot down their own satellite. Could they shoot down one of ours with all the financial records on it? A brilliant client of mine with a Doctorate from Harvard, and who helped to invent the GPS system, also invented a Thermolized Laser Glass, which the Ruskies promptly stole. At any rate, with this glass, anyone can burn the insulation off of a satellite, and it will cook in a half hour, and be worthless. Want your information stored or transferred by satellite?

As far as satellites are concerned, just about everything from telephones, TV and radio broadcasts, bank information, cash transfers, stock purchases, and every conceivable communication modus is dependent on satellites, which to me is really scary. Weather forecasts? Stock information? Google? Internet? It is all transmitted and received by those little electronic balls floating around, 220 miles above the earth. They're obviously easily shot down, disabled, or baked, making them useless or non- existent. Could civilization, and economics survive without those little electronic balls? I don't know, but I urge you to consider it. If you have a supply of food, in case of emergencies, or a generator, fire wood, and guns, that makes sense. Your gold and silver are also in case of emergencies. Why would you want them stored overseas, or in paper or electronic form? They are just as important to you in case of emergency, as are food, firewood, electricity or guns. Keep them close! And of course…,protect yourself.

March 29, 2007

Don Stott has been a precious metals dealer since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com