The Daily Reckoning

For some years now, Swiss Banks have not been willing to take on U.S. clients because of the aggressive tactics of the U.S. IRS. Since they hauled UBS over the coals for harboring U.S. tax evaders and continue to investigate many Swiss Banks, the IRS has posed a threat to Swiss companies operating in the United States.

No matter where they live in the world, fear of being involved with a U.S. tax evader has put the wind up Swiss companies, and understandably so.

So how should that affect U.S. gold owners? Holdings of gold need not be reported to the U.S. Taxman even under the new tax system, called FATCA.

Could it be that untaxed money is being squirreled away in gold? If so, it is only a matter of time before the IRS requires gold holdings to be reported to them, including those held overseas. In fact, if that is what the Taxman believes, it’s inevitable! Or are there more reasons for fear on the gold front?

We wrote an article on the ramifications of Swiss Banks offering “allocated” accounts to U.S. citizens as opposed to the current “unallocated” accounts, which removes the Swiss Banks from standing between the IRS and the gold owner. This pointed to a darker interest in U.S. citizen’s gold holdings including potential confiscation.

By their actions, the Swiss banks anticipate gold holdings to receive the unwelcome attention of the IRS, etc., no matter where they are held. But now even the leading Swiss Vault in Switzerland, Via Mat, is taking action to take themselves out of the firing line of the IRS, etc., by no longer accepting private customers with a potential U.S. tax liability. The letter sent by Via Mat to customers who fall into this category states:

“We are currently experiencing rapid and substantial changes in the general regulations within this business. The changes mainly relate to the tax structures and taxation systems of various countries. As a consequence of these changes VIA MAT INTERNATIONAL has taken the decision to stop offering this service at its vault [sic] outside of the U.S. to private customers with potential US-tax liability.”

Via Mat is the leading Vault in Switzerland and as part of its logistics service, transports Swiss Francs around Switzerland for the Swiss central bank, the Swiss National Bank. Started just at the end of the last World War in 1945, they now have vaults from Switzerland to Hong Kong to Dubai, and they count among their clients some of the largest mining companies in the world. Via Mat does a great deal of business within the United States, too.

Nevertheless, allocated accounts held in their vaults are not vulnerable to attack from the U.S. authorities. They are secure and owned by the individuals or companies that hold them in the Via Mat vaults. They are not part of the assets of Via Mat, so they are not vulnerable, even if Via Mat ceased to exist.

Via Mat’s exposure to the U.S. authorities lies in its U.S. branches and vaults. In the event of an IRS attack, it is these that would be attacked, not Via Mat assets or operations outside the U.S. This was so in the case of UBS too. Via Mat’s action removes this danger.

We emphasize that no nation goes outside its borders into another’s jurisdiction to impose its own laws. Just as if U.S. citizens’ gold were to be confiscated, the U.S. authorities would only take them to task at home and penalize them at home if they did not repatriate their gold for confiscation.

An article on this subject said:

“For one, the big gold depositories like Gold Money and Bullion Vault ALL use Via Mat as a primary secure storage provider. So it’s only a matter of time before Via Mat’s decision cascades across these other firms.”

We believe that neither BullionVault nor GoldMoney will see “Via Mat’s decision cascade across these other firms.” Neither company faces U.S. taxation nor are they in U.S. jurisdiction. They are gold dealers who buy and sell gold for their clients for cash and house the gold in Via Mat’s vaults. The same is true of Stockbridge Management Alliance (under the guardianship of the Ultimate Gold Trust S.A.) which stores gold held for clients in Via Mat’s Zurich vault.

Beware Safe-havens Other than Switzerland

Many feel that if they secretly hold gold, they will be out of reach of the authorities. The author’s experience is different. Experience shows that ownership visibility is not a danger if your gold is held properly and legally. As the experience of C.V. Myers in Canada shows (see below) it is possible that all safe-havens will release the names of their people who hold gold outside the country if they deem it fit. Allies of your country may cooperate with them as was the case here of Canada working with the U.S. to penalize gold owners.

Where gold is held on behalf of the investor and its ownership is not transferable, then the safe-haven of Switzerland remains the only place that will ensure gold remains inside its borders and in your beneficial ownership. Be clear of one historic fact: Exchange and Capital Controls cannot be enforced on other Jurisdictions. So we strongly suggest that you readers take this subject very seriously and act prudently to guard your wealth ahead of the problem.

Quickest, Easiest, Cheapest Way to Move and Secure Gold in Switzerland

Neither BullionVault nor GoldMoney accept the transfer of gold into their companies. Stockbridge Management Alliance, however, does. So for those private customers with a potential U.S. tax liability, the quickest, easiest and cheapest way of moving their gold is to transfer it under the wing of Stockbridge Management Alliance Ltd, and incur no shipping, insurance or other costs associated with moving your gold. The gold will remain in Switzerland as before, but more securely and protected from other dangers and appropriation.

Visit www.StockbridgeMgMt.com or contact admin@StockbridgeMgMt.com for more details.

Is Canada Safe?

We have heard from many commentators that they feel Canada is the safest place to store their gold out of the reach of the U.S. monetary authorities. We take a look at history and find that Canada has cooperated with the U.S. Monetary Authorities in the past as recently as 1974, just before U.S. citizens were allowed the privilege (not the right) to own gold again. We refer you to the story of the famous newsletter writer C.V. Myers of “Myers Finance and Energy”. This illustrates just how close the Canadian Authorities are to the U.S. Authorities and remain so. We refer you to the personal account of the son of C.V. Myers who lived through the experience. In order to verify the story we contacted John Myers in Calgary. He confirmed that the story was true. Click here for that story.

We have also added a link to information on how the Canadian Authorities are currently cooperating with the U.S. money Authorities on handling U.S. investors in Canada to show Canada is not the safe-haven many take it to be.

Why IRS and other U.S. Authorities are a Danger to Gold Owners

Readers should consider: why is a vault–which is not a bank and not offering tax advice or anti-tax schemes–worried about the gold holdings of U.S. taxpaying individuals? After all, UBS and other Swiss Banks were accused of helping U.S. citizens to evade taxes. Vaults do no such thing. What do they fear that the U.S. monetary authorities are contemplating?

This is not a tax issue; it is now a gold issue!

We see Via Mat reacting just as the Swiss Banks are doing now on the gold they hold. They’re acting prudently ahead of potential actions by the IRS and maybe other U.S. monetary authorities on the gold holdings of U.S. citizens in the future. Do you need to wait until you see the U.S. authorities act, or should you act prudently ahead of that time?

Julian D. W. Phillips,

Original article posted on Laissez-Faire Today

The Daily Reckoning

It's hard to believe that more than ten years have gone by since we began writing The Daily Reckoning out of a Paris office back in July of 1999?

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In short, we pen The Daily Reckoning each day -- for free -- to show you how to live well in uncertain times. We aim to make each article the most entertaining 15-minute read of your day.

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