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A lawsuit
over billions of dollars of unclaimed savings bonds is brewing over whether
the Treasury Department or the States should be able to confiscate the
minimal remaining value of these certificates of confiscation. This
article will be written from the first person perspective of the victim who
has been robbed after investing in these ‘risk-free’
assets
issued by the United States Treasury.
DILIGENT SAVER
In 1965, being a diligent
young man my parents rewarded me for graduating from High School by buying me
a $75 United States Savings Bond. Following this pattern of savings while I
was in the United States Army in 1969 I saved $6.25 per month so that I could
buy a $25 dollar savings bond each quarter. Upon hearing the news of
unclaimed bonds being confiscated by either the States or the Treasury
Department therefore today, October 19, 2009, I cashed in these United States
savings bonds. The original face value of these 3 bonds was $125 Dollars. I
paid $93.75 for these in the 1960’s.
If I had used gold and
silver to buy these same bonds then it would have cost me 2 ounces of gold
and 24 ounces of silver. When I cashed these in today I received $825.11
which consisted of $93.75 in principal and $731.36 of interest. The
value of gold today is a $1,063.90 per ounce and silver is $17.81 per ounce.
Thus the $825.11 dollars represents 47 ounces of silver and no gold.
But that is not all.
TAXES
From the $825.11 dollars
there is $731.36 of interest. At approximately 30% tax rate that
amounts to about $219.41 of tax liability. Therefore, the net amount
received is $605.70 and will purchase a mere 34 onces
of silver.
OPPORTUNITY COST
If I had kept the gold
and silver that I could have bought these United States savings bonds with
back in 1965 and 1969 then I would have two ounces of gold and about 24
ounces of silver. I could sell that bullion for about $2,850. What
is wrong with this picture?
LYING GOVERNMENT
Newsmax reports, “The
Treasury Department counters that it indeed tries to find owners of the
unclaimed bonds, and says it has a Web site where people can simply type in
their Social Security number to see if they have one.”
Diligent Saver responded,
‘Despite paying significant amounts of taxes for decades and using both
a Social Security number and valid address while filing I never received a
single communication from the Treasury Department about these outstanding
savings bonds. Nevertheless, they were extremely diligent notifying me
when they thought I owed more taxes.’
CONCLUSION
There are significant
assets available that may be confiscated by the government as unclaimed
property. The Treasury Department does have a tool to locate these
certificates of confiscation. While many argue that these types of
assets are ‘risk-free’ this example plainly illustrates that
these assets are subject to payment, counter-party and political risks.
On the other hand, gold
and silver are immune to all of those risks except political. For
example, during some of the time period at issue the Ancient Metal of Kings
was considered so dangerous by the United States government that it was
illegal for residents in the Land of the Free to own.
But this is typical of
fiat currency and the governments which issue it. Neither the paper
tickets nor costumed officials should be trusted. In every case
throughout history their paper coupons have over time proven to be merely
certificates of confiscation. And to think
the Chinese own $2T of
these silly little coupons!
DISCLOSURES: Long
physical gold, silver and platinum with no position in the problematic GLD or SLV ETFs.
Trace Mayer
RuntoGold.com
Trace Mayer, J.D., holds a degree in Accounting from Brigham Young University,
a law degree from California Western School of Law and studies the Austrian
school of economics. He works as an entrepreneur, investor, journalist and
monetary scientist. He is a strong advocate of the freedom of speech, a
member of the Society of Professional Journalists and the San Diego County
Bar Association. He has appeared on ABC, NBC, BNN, many radio shows and
presented at many investment conferences throughout the world.
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