Will the Feds Confiscate Gold Again?

Investors suffered financial losses in recent weeks as stocks globally came under pressure in August and had their worst month in the last three years.

In one of the most volatile trading periods since the global financial crisis, August saw a massive $5.7 trillion erased from the value of stocks worldwide. No major stock market was left unscathed and the risk of financial and economic contagion became evident again.

There are growing concerns internationally that in the event of another Wall Street or global stock market crash and a new systemic crisis – a Eurozone debt crisis or another  Lehman Brothers collapse – there could be enforced bank closures or extended bank holidays in the EU and U.S. as seen in Greece recently.

In this scenario, deposit boxes and vaults in U.S. banks and financial institutions could be sealed and gold confiscated again.

There is a legal precedent for this. April 5th, 1933 – at the height of the Great Depression – was the day when U.S. President Franklin Delano Roosevelt instructed all American citizens to hand over all their gold coins and bars to the Federal Government.

Platinum and palladium are all a touch weaker this morning. On a weekly basis, palladium’s the biggest loser – down 2.2%, followed by platinum which is down 1.7%.

On the wider markets today, investors cut holdings in riskier assets, seeking shelter before U.S. payrolls data that may again show the U.S. economy is weaker than thought and weakening. Stocks fell for the first time in three days in Europe and shares in Asia extended a seventh weekly decline as equities in Japan and Hong Kong resumed losses.

Most European share indices are down nearly 2%. Markets are focused on a U.S. jobs report for hints about the timing of an expected interest rate rise in the United States.  The dollar fell as stocks weakened, with traders increasingly certain that a key U.S. jobs report due later is unlikely to push the Federal Reserve to raise rates.

The euro rose 0.25%, while euro zone bond yields fell further following a strong signal from the European Central Bank that it is willing to undertake further QE in an attempt to revive the struggling single currency bloc’s economy.

The ECB downgraded its growth forecasts for the euro area yesterday, with President Mario Draghi citing a slowdown in emerging-market economies and signaling policy makers may expand ‘stimulus’, engage in further QE and further debase the euro.

Reprinted with permission from GoldCore.