Confiscation, Price Suppression & The True Gold & Silver Price

Today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News.  Fitzwilson, who is founder of The Portola Group, discusses the true price of gold and silver, confiscation, price suppression, coming shortages, and what powerful entities are doing in this chaotic environment.
Below is Fitzwilson’s exclusive piece for KWN:

“There have been a number of comments in the past few weeks about the issue of outright confiscation of gold and silver as was done in the 1930s by the Roosevelt Administration.  We have also heard views on the suppression of prices for those metals in the paper markets.

If an entity were interested in confiscation, the first place to start would be to determine the highest value items to confiscate, not simply repeat what was done in another era.  The value of gold and silver held by individuals is trivial compared to the other real assets such as labor, industries, real estate and energy....

“It is hard to imagine that people with the power to confiscate gold and silver would even bother doing so relative to the other massive, easy pickings.

The biggest target for confiscation is labor and accumulated labor such as pools of retirement money.  With regard to confiscating direct labor, it has been going on for a very long time.  Take a look at your next paycheck.  Removed from the payment for your labor are a whole host of taxes and deductions, both pre- and post-tax.  As you take what is left of your labor and purchase consumables, you face a gauntlet of sales, use and excise taxes.

At the end of your life, many will pay a significant portion of their remaining accumulated labor in the form of estate and death taxes.  It would be painful to add up the amounts received from your labor over your lifetime and compare that to the amounts taken out along the way.  It would probably represent a percentage well north of 50%, probably closer to 100% than you would care to know.  The marginal tax bracket of a slave was also 100%, less whatever food and shelter equivalent was received.  Are we there yet?

Another huge area ripe for confiscation is energy.  In the United States, every time you fill up your tank, you are giving up roughly $.30-$.70 per gallon in direct taxes that do not go to the station owner or the providers of the fuel to the station.  If you are a producer of energy, you likely pay a very hefty amount of corporate and other taxes at every level of the production chain.  In 2011, the U.S. consumed 134 billion gallons of just gasoline alone.

The printing of fiat money is the mother ship of confiscation.  Each dollar printed represents a call on real assets and labor.  It is not target specific.  It steals from everything.  Retirement assets are now in the rumor mill to be confiscated.  This form of accumulated labor represents trillions.  Various schemes are being bandied about that will affect all forms of retirement assets, public and private.

Let’s return to gold and silver.  There is massive confiscation occurring in those markets already.  One effect of suppressing the prices of the metals is that the miners are being forced to sell their product well below intrinsic value.  They can withhold the metals from the market, but they need working capital unless they are willing to shut down the mines.

At the same time, the costs of mining have risen dramatically due to rising energy prices and shortages of skilled labor.  Profitability is well below where it should be, and this will ultimately lead to worse shortages of physical gold and silver.

It is also a different time than the 1970’s for the miners.  The countries in which these mines exist are much more sophisticated about extracting a percentage of the output instead of being content with relatively small bribes and local employment.  This is also confiscation of private property and labor.  Why bother taking away metals from the 1% that own gold and silver?  It is a rounding error compared to the wealth to be grabbed as outlined above.

So why suppress prices?  Accumulation takes time and countries want to accumulate at low prices.  India and China are two new powerful sources of demand.  China is particularly important given the amount of fiat currency they held in cash, Treasuries, etc.  The current holdings of gold relative to the total reserves of China are a state secret, but they started from a tiny base.
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