Hedge Fund Manager Says Governments May Make Private Gold Ownership Illegal

[Hydrogen]

Crispin Odey, one of Europe’s highest-profile hedge fund managers, said that governments may ban private gold ownership if they lose control of inflation in the wake of the coronavirus crisis.

“It is no surprise that people are buying gold. But the authorities may attempt at some point to de-monetise gold, making it illegal to own as a private individual,” Odey wrote in a letter to investors seen by Bloomberg. “They will only do this if they feel the need to create a stable unit of account for world trade.”

Odey, a long-standing critic of central bank policies who is known for his apocalyptic predictions, increased the gold position in his flagship Odey European Inc. fund during the course of April. Holdings of June gold futures represented 39.9% of the fund’s net asset value at the end of the month, up from 15.9% at the end of March. A stake in Barrick Gold Corp., the world’s No. 2 gold miner, was his largest single long equity position.

The fund, which gained 21% in March, was down 9.5% in April, according to the letter. A spokesman for Odey declined to comment.

Fear of government confiscation is a common theme among some of gold’s most ardent supporters, who point for precedent to the U.S. government’s forced purchases of private bullion holdings in 1933 as part of a devaluation of the dollar. The price of gold was raised from $20.67 an ounce to $35, where it remained until the U.S. ended the gold standard in 1971.

Today, with major currencies no longer linked to gold, there’s no indication that governments or central banks are considering any similar move.

Gold futures for June delivery rose 0.4% to $1753.20 an ounce at 7:38 a.m. on the Comex in New York, close to a seven-year high.

Odey, who has previously compared the current pandemic to the Great Depression of the 1930s, argued that central banks would fail to contain inflation as the economy eventually recovers from the impact of global lockdowns.

“History is filled with examples where rulers have, in moments of crisis, resorted to debasing the coinage,” he wrote. Odey is not alone in betting that gold will benefit as high inflation follows the coronavirus crisis, although market measures of inflation expectations show that it’s far from a consensus view.

High inflation would hurt long-dated bonds and growth stocks, Odey predicted, citing forecasts for inflation rates of 5% to 15% within 15 months. “I very much expect that the authorities will fight these prevailing trends for every inch of the way, but I also expect them to lose the fight,” he wrote

Odey is known for his eye-catching comments and bearish market outlook. In 2016, he predicted that a potential recession and higher inflation following the Brexit vote could lead to U.K. stocks slumping 80%. The following year, he told investors to watch out for the “Minsky moment,” referring to the term inspired by economist Hyman Minsky to describe a sudden market collapse that follows the exhaustion of credit.

https://www.bloomberg.com/news/articles/2020-05-20/odey-says-governments-may-make-private-gold-ownership-illegal

....



This was published may 20th, 2020. It may partly be responsible for bitcoin's latest decline. I have also seen a number of bloggers claiming bitcoin HODL is "dead" over the long term. An opinion I disagree with.

A ban on private ownership of gold and precious metals could be described as counter intuitive. Gold carries a potential to allow consumers to retain the dollar value of their wealth should debasement of fiat and hyperinflation occur. Its a safeguard not only for banks and governments but for the personal savings of average, everyday, people as well.

[The Sceptical Chymist]

“It is no surprise that people are buying gold. But the authorities may attempt at some point to de-monetise gold, making it illegal to own as a private individual,” Odey wrote in a letter to investors seen by Bloomberg. “They will only do this if they feel the need to create a stable unit of account for world trade.”

Odey, a long-standing critic of central bank policies who is known for his apocalyptic predictions, increased the gold position in his flagship Odey European Inc. fund during the course of April.

Call me a peabrain, but how do you demonetize something that isn't money anymore?  Nobody can just declare that gold doesn't have any value anymore, so I'm not sure what he means by that statement.

Also, if this guy Odey really thinks gold ownership is going to be made illegal (which I don't think is demonetization, btw), why would he be increasing his position in gold?  Seems to me like if he really believed his own words, he'd be selling gold and filling his portfolio with other investments that seem to have a less uncertain future. 

I'm surprised this article was from Bloomberg and not Zerohedge.  I've been hearing about pending gold confiscation for years by goldbugs and the like.  I can't see a logical reason for it to happen, but who knows.  These are crazy-ass times we're living in.

[suchmoon]

This is not a new conspiracy theory, I've heard variations of it since the 90s.

Also, if this guy Odey really thinks gold ownership is going to be made illegal (which I don't think is demonetization, btw), why would he be increasing his position in gold?  Seems to me like if he really believed his own words, he'd be selling gold and filling his portfolio with other investments that seem to have a less uncertain future.  

I think it's supposed to mean that he believes the government will buy it out at a higher price.

[exstasie]

The classic gold bug doomsday scenario.

I thought this was an interesting take from Nick Szabo:

Yes, thugs will go after digitally centralized assets long before they go after individually controlled gold or crypto.  Predators target the easiest victims not the hardest ones.

https://twitter.com/NickSzabo4/status/1263156439616335877

What do you think of that? Like confiscating Coinbase's holdings (or Bakkt or anyone else) and paying account holders in USD "equivalent" like they did under Roosevelt with gold.

I've been speculating for a while about a potential place for BTC as a reserve asset, so that doesn't seem impossible to me. I just wonder on what kind of timeline. A lot probably depends on the stability of USD as a reserve currency.

Any scenario like this still feels many years away. Then again, just a few years ago these ideas would have seemed absolutely crazy, but everything is accelerating so fast now. Always faster than I anticipate.....

[Hydrogen]

The classic gold bug doomsday scenario.

I thought this was an interesting take from Nick Szabo:

Yes, thugs will go after digitally centralized assets long before they go after individually controlled gold or crypto.  Predators target the easiest victims not the hardest ones.

https://twitter.com/NickSzabo4/status/1263156439616335877

What do you think of that? Like confiscating Coinbase's holdings (or Bakkt or anyone else) and paying account holders in USD "equivalent" like they did under Roosevelt with gold.

I've been speculating for a while about a potential place for BTC as a reserve asset, so that doesn't seem impossible to me. I just wonder on what kind of timeline. A lot probably depends on the stability of USD as a reserve currency.

Any scenario like this still feels many years away. Then again, just a few years ago these ideas would have seemed absolutely crazy, but everything is accelerating so fast now. Always faster than I anticipate.....

I think Nick Szabo is correct about the path of least resistance being the #1 default option.

Perhaps not in the way he expected:



In a conspiracy theorist's worldview, there could be critical timing present in the junction of a global hyperinflation event. It could be a simultaneous all doors closed. Rather than a more gradual paradigm shift.

Honestly do not know. I'm over here trying to grow my own food and supply of air condensed water. Which could effectively disqualify me from the discussion.

[davis196]

This is the most ridiculous thing I've ever heard.
Governments banning private ownership of gold?OK,let's assume that this s*it happens.
The question is,who is going to find my gold,if I hide it somewhere? The government?CIA?The police?
Most people are hoarding small amounts of gold,so hiding that gold would be really easy.
I don't even wanna write about the fact that governments confiscating private property is just communism.

[arayde]

I dont think that they will ban gold. They just dont have reasons for it, i dont think that private gold amount is really significant in the scale of gov

[stompix]

Governments banning private ownership of gold?OK,let's assume that this s*it happens.
The question is,who is going to find my gold,if I hide it somewhere? The government?CIA?The police?
Most people are hoarding small amounts of gold,so hiding that gold would be really easy.

Let's forget that this is another nonsense and that they will never do it and go for the scenario of this actually happening.

So, you bury your gold and you hide it and...what next? Are you going to hoard it forever?
Or when you need money you're going to dig it up and try to sell it at which point you might be dealing with a police officer and land in prison?
It's already a pain in the ass to sell real gold now, when it's legal, imagine how it's going to be once it's not.

Odey is known for his eye-catching comments and bearish market outlook. In 2016, he predicted that a potential recession and higher inflation following the Brexit vote could lead to U.K. stocks slumping 80%. The following year, he told investors to watch out for the “Minsky moment,” referring to the term inspired by economist Hyman Minsky to describe a sudden market collapse that follows the exhaustion of credit.

So, this guy seems to be another candidate for the best contrarian indicator. Time to dump gold?

[Ucy]

Governments banning private ownership of gold?OK,let's assume that this s*it happens.
The question is,who is going to find my gold,if I hide it somewhere? The government?CIA?The police?
Most people are hoarding small amounts of gold,so hiding that gold would be really easy.

Let's forget that this is another nonsense and that they will never do it and go for the scenario of this actually happening.

So, you bury your gold and you hide it and...what next? Are you going to hoard it forever?
Or when you need money you're going to dig it up and try to sell it at which point you might be dealing with a police officer and land in prison?
It's already a pain in the ass to sell real gold now, when it's legal, imagine how it's going to be once it's not.

Odey is known for his eye-catching comments and bearish market outlook. In 2016, he predicted that a potential recession and higher inflation following the Brexit vote could lead to U.K. stocks slumping 80%. The following year, he told investors to watch out for the “Minsky moment,” referring to the term inspired by economist Hyman Minsky to describe a sudden market collapse that follows the exhaustion of credit.

So, this guy seems to be another candidate for the best contrarian indicator. Time to dump gold?

I'd rather bury attractive, safe, highly nutritious/high-quality foods or herbs with long-shelf life than burying gold.
Gold might not serve it purpose in times of serious crisis but foods or herbs will.
I think I would store or bury lots of rare super foods/herbs with quick and very noticeable positive effects in body when taken even in little amounts. That would be more valuable than gold

[Febo]

Hedge Fund Manager Says Governments May Make Private Gold Ownership Illegal

That is super dumb. It reflect on ban that happened 100 years ago. But at that time USD was still on gold standard so Gold mattered fro FEDs. Now it dont matter for them, since it have nothing to do with their bills. Gold is just a commodity as silver, aluminium or copper. Dumb idea to ban commodities.

[el kaka22]

Oh that would be incredibly bad. It would make gold worth basically nothing and in the end they could tie the gold back to fiat if they want (or not) because gold would be worthless as well. Hopefully nothing like that happens, gold is number one in store of value for decades now, fiat loses value where gold gains it so it would be horrible for people who want to keep their savings in safe place.

However, if this ends up happening there is still bitcoin for us, and that could potentially mean there would be increase in bitcoin ownership. Which means the general economy will be affected, millions of people would be affected, everything will be bad, one thing good will be the increase in value of bitcoin and that is something we could enjoy as investors.

[salamat700]

Also, if this guy Odey really thinks gold ownership is going to be made illegal (which I don't think is demonetization, btw), why would he be increasing his position in gold?  Seems to me like if he really believed his own words, he'd be selling gold and filling his portfolio with other investments that seem to have a less uncertain future.  

Well, maybe he is selling this idea thinking that doing so the value of gold will increase more and by then he can sell some of his holding for profits. Or maybe the man is just imagining things or seeing visions of the future...either way it is quite hard to believe a man with his standing. Granted that, yes the government -- any government for that matter -- can be deciding on things based on its own interest and not the people, when under heavy crisis or stress. Let's hope that this prediction will never come true.

[stompix]

I'd rather bury attractive, safe, highly nutritious/high-quality foods or herbs with long-shelf life than burying gold.
<>
I think I would store or bury lots of rare super foods/herbs with quick and very noticeable positive effects in body when taken even in little amounts.

I'll tell you a secret! Well, it won't be anymore since this is a public forum...
There was a secretive, till I spilled the beans (pun!) art of burying herbs, it was called agriculture!!! 
Sorry, I couldn't resist, but you really made me do it, how did you think of burying herbs?

Oh that would be incredibly bad. It would make gold worth basically nothing and in the end they could tie the gold back to fiat if they want (or not) because gold would be worthless as well.

Nope, it will not make it worthless, gold actually has usage besides fancy lingots and jewelry and for a lot of machinery and stuff we use alternatives inferior to gold when it comes to its properties simply because it's far too expensive to use it.

[Kakmakr]

The only reason why the government would want to do this, is if they finally realized that the US Dollar has become worthless. So they will buy something with real value after they created panic in the market with their worthless dollars. The US government has done something similar in the past and the Goldbugs are very aware of that.  

How will this affect bitcoin... well I presume that investors in Gold will sell their Gold and then buy something like Bitcoin that has similar investment opportunities, like being a good "store of value" and rarity.

Alternatively Goldbugs might opt to invest in other rare investment options like gems and/or Silver or Platinum.  

[eaLiTy]

I've been hearing about pending gold confiscation for years by goldbugs and the like.  I can't see a logical reason for it to happen, but who knows.  These are crazy-ass times we're living in.

I have heard stories from my grandmother who saw two world wars about the government confiscating gold ornament to aide the war, they would raid their homes and take away the gold promising that they would return at a later time and how some would hide the gold in clay pots and bury them underground so that they will not take everything. The funny part is my grandmother got the token of appreciation as gold coins per Ounce taken 15 years later. What i am saying is that it happened in the past but it is highly unlikely it will happen 100 years later.

During desperate times you never know what the government will plan to get out of the shit hole they are in and these are desperate situation . At best we might see some limitations on the amount of gold every individual could hold, other than that making it illegal makes no sense.

[shield132]

Why? Why to make such silly statement? In overall this guy and similar ones come here, some of them call themselves "economic experts" and we have still bad economics even when 'experts" take care of it. What kind of "experts" they are? Or am I the only one who can't perceive this word correctly?
Seems we will see Executive Order 6102 but V2.

How democratic is it when government tries to de-monetise something that I and millions of people own? They try to de-monetise things but not increase value of currencies. Good job!

This is the most ridiculous thing I've ever heard.
Governments banning private ownership of gold?OK,let's assume that this s*it happens.
The question is,who is going to find my gold,if I hide it somewhere? The government?CIA?The police?
Most people are hoarding small amounts of gold,so hiding that gold would be really easy.
I don't even wanna write about the fact that governments confiscating private property is just communism.

Maybe if someone goes out with necklace, or bracelet, will be a victim and there will be a need of further tests to detect whether that thing contains gold or not.

[exstasie]

Let's forget that this is another nonsense and that they will never do it and go for the scenario of this actually happening.

It's unlikely I'm sure but we probably shouldn't discount the possibility entirely since it's actually happened before.

So, you bury your gold and you hide it and...what next? Are you going to hoard it forever?

I think there would be a robust gold market regardless of whatever governments do officially. People are too skeptical of their governments and of fiat currencies to give up their gold.

So, this guy seems to be another candidate for the best contrarian indicator. Time to dump gold?

Probably. Peter Schiff and the gold bugs are exuberant, predicting hyperinflation, etc. I'd like to see this guy's past "apocalyptic" predictions and see how they worked out.

[fiulpro]

See if people are actually doing something because the government cannot provide them with financial security , they should not take that away from them..
It is very very important to understand that everyone struggles but at the same time it is important to recognize that if they can take care of themselves by holding gold then it is not an offence.
In many cultures holding gold is actually in the culture itself, last time I checked the country is not defined by only one culture .
If they do that they will being emotional upset at the same time it will be a ridiculous law considering how most people who are actually making the law would also be holding some amount of gold.
It is considered a safe investment and at the same time it is a safe investment , hopefully the law won't be passed.
It's like taking people's freedom away !