Not long ago a group of entrepreneurs approached us about a great idea they had that involved a gold-backed cryptocurrency. Over a couple of years, the conversations persisted, and the project gained steam with business plans and projections. Numbers were thrown back and forth of the great fortune that was possible in the endeavor. A decision was made on our part to end these conversations, as we decided cryptocurrencies contradicted our mission of serving the public in gold and silver bullion ownership.
Last month, it was reported by officials in Texas they were investigating FTX for selling unregistered securities. FTX is a cryptocurrency exchange headquartered in the Bahamas and was founded by Sam Bankman-Fried (SBF) and Gary Wang in 2019. In 2017, SBF and his highly accomplished partner Tara Mac Aulay formed Alameda Research, a quantitative trading company. In a nutshell, quantitative trading involves derivatives and high-risk portfolio management. It is alleged FTX was funneling billions of its customer’s funds into Alameda Research to prop it up. As of this writing, FTX and Alameda Research have filed CH 11 bankruptcy leaving millions worldwide with billions in losses. Our question is this: Where does this leave other sweetheart cryptos like Tether and Bitcoin?
On March 9th, 2022 President Joe Biden signed Executive Order 14067. The official title of the order: Ensuring Responsible Development of Digital Assets. The order is designed to protect consumers and investors, decrease national financial security risks, and the development of a Central Bank Digital Currency (CBDC). This is the US Government`s first real move into the regulation and enforcement of digital assets. At this point in time it feels kind of convenient on many fronts…is this action the canary in the coal mine? Our country is currently 30 trillion dollars in debt with inflation at a 40-year high. Politically speaking the policies that created the current economic storm will remain intact per a statement from President Biden post-midterm election.
If history has taught us anything, executive orders usually work against and not for the people. The government will argue differently, but let’s consider Executive Order 6102. On April 5th, 1933 then President Franklin D. Roosevelt declared a national emergency. His edict EO 6102 made it illegal for US citizens to privately own gold. At the time the citizens were forced to sell their gold to the government at an outrageously low price or face a fine and up to 10 years in prison. Years later FDR was credited with saving the US dollar because of EO 6102, but at the expense of those who sought to protect their assets from inflation.
The question here is could the US government confiscate gold again? The answer is a resounding yes! There is little doubt the US dollar is once again in serious danger. But facing 30 trillion in debt our belief is gold confiscation would do little good. And if you are lucky enough to have 20% of your net worth privately held in gold bullion when the price per ounce skyrockets to 10K or higher, and you want to cash it in, never forget the Crude Oil Windfall Profit Tax of 1980. Could these same laws apply to gold? At the end of the day, the US government will find a way to take what they feel is their fair share…for the good of the government and the people of course.
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