Off Shore?

December 20, 2002

This one will be controversial, and I am sorry, but this is MY OPINION ONLY, and I won't change it. If you disagree, that's your prerogative. My opinions on anything, are formed by experience, knowledge, and hunches. Also a bit of prejudice, if you please. Let me begin by telling you a story that is sad, but true.

I started dealing in precious metals, after I had retired, at age 41. I was bored, and met a fellow who was a coordinator for the John Birch Society. I had sold a big hotel in Silverton, Colorado, had taken a 30 year note on the proceeds, and had bought a home in Scottsdale, AZ. S…… heard I had come from Silverton, where gold was mined. He got in touch with me, and told me he was starting a precious metals firm in Phoenix, (which is adjacent to Scottsdale) and wanted to know if I was interested. "I guess so," was my reply. I had never had a job, but always worked for myself, and this worried me a bit, but I was assured that this wasn't a job, and I would be paid a pure commission, with no guarantees. I was almost the first broker in a firm that would become one of the largest: North American Coin and Currency. I began in November, 1977.

I did very well. When I left, March 1st, 1980, my check for February, was over $16,000…in 1980 dollars. Everyone in the office thought I was nuts, walking away from a place like that, where I was making a fortune. When I left, I wrote S…… a 3 page, single spaced typewritten letter, telling him he was going down the tubes, unless he did certain things, which I elucidated in the letter. I knew he wouldn't, as I had already told him orally, a dozen times; so I left. Being absolutely honest, I took no client list with me. People since, have told me I was also nuts for not doing that, as I had a list of close to 1500 clients. I am so honest, I have been told that I squeak. Knowing I was leaving, I wrote to all my clients, and told them never to allow anyone to "store" their gold for them. I told them I was leaving, and left no forwarding address…once again to be honest. I distributed my client cards to various brokers in the office, and left with a clear conscience. It took a bit longer than I had predicted, but North American went down, and its officers went to jail. Guess what happened to the gold and silver that was "stored" in their vaults? They lost it all. Every Krugerrand was gone. Millions and millions of dollars was lost by clients of North American Coin and Currency, who had their precious metals "stored" with them. They paid for them, and trusted someone else to hold them.

So now, we have the latest gimmick. Store your gold off shore and write checks for it, in an account that is storing gold you buy from them. Sounds convenient, correct? Surely does. It may be 100% legitimate, I don't know, but when I lay down my dollars for gold and silver, I want to hold them myself, and not trust anyone to "hold it," that is not even in the United States. How do you know it is there? You have never visited them, nor seen their vaults with all this gold in them, have you? We know that the fractional reserve banking system is one of the great frauds going today, because banks and government create "money" out of nothing. How does anyone know what's going on in the Caribbean? I have heard from a client, that the COMEX won't deliver gold on demand, when a contract is due. If that is true, what's the point of having a gold contract, if the physical won't be delivered?

The banks and fed are creating "money" out of nothing. It is rumored that the Comex won't deliver gold as is called for on a contract, and reputable people say that the COMEX deals in millions of ounces of silver and gold that simply doesn't exist, but is "paper" gold and silver. If the banking system and federal reserve is crooked, and maybe the COMEX as well, what assurances do you have that an outfit off shore, in some island in the Caribbean is so honest? My God people…have you just jumped off a turnip truck? If you lay down your hard earned dollars for gold; why in the world would you allow someone else to hold it?

They may be as honest as me, but things do happen. North American Coin and Currency went very well for over 3 years, and became a huge operation. I still talk to some of my buddies that were there when I was, but it went sour. I knew it was going, and no one believed me, so I left by myself, and the rest stayed in a huge money making position. It's indeed a difficult thing to do to live by your principles, when the cash is flowing in. My clients trust me briefly, when they send me checks for purchases, and I trust my supplier when I send him checks for the gold and silver. This is a brief trust, and a trust that is backed by knowledge, a history of honesty and solvency, and reputation.

You trust businesses when you buy groceries, gas, or tires. You trust your mechanic, because he has treated you well in the past, and comes recommended. You can see the groceries, burn the fuel, and see the results of a repair job. You get the gold and silver from me by registered, insured mail, and you have to sign for it, so I know you got it. You have a trade number I issue, to lock in the price. You hold the physical gold and silver in your hot little hands, so there can be no mistakes. No one to trust, who tells you, "Sure Mabel, I have your gold in my safe, and you can have it any time you want, and it is safe on my little island." Like North American Coin and Currency, how do you know?

Suppose the guy who owns the outfit decides to take the gold and run off to South America or Europe? Suppose one of his employees is less than honest, and absconds with some of the gold? Suppose it becomes impossible to transport anything off shore, because of regulations? Suppose a hurricane wipes them off the map? Suppose a fire levels the place? Suppose, suppose, suppose. Too many suppositions for me. No, I refuse to hold anyone's gold. Suppose someone robbed me? I'd lose mine, but no one else's.

A very good friend of mine, who also contributes to these columns, disagrees with my stance on off shore gold storage, and I am certain the off shore companies will also. A client of mine had a ton of money there, and decided to get out. They took five full days to wire the dollars. They said their contract allowed them to take five days, and I am sure it does, but it made my client really angry, and was an additional warning to me.

Where do these outfits buy and sell the gold? What security do they have? Can a well armed bunch of natives blow the place open or steal? When tourists visit islands in the Caribbean, the resorts are fenced off with heavy barbed wire, to keep the natives out, with their seeming inbred desire to rob and steal. Would you go to a Sandals Resort? Sure, because it is fun, but it is also heavily guarded and fenced to keep out the rif raf. You really want your gold there? Not me. Now please, no e-mails of protest, because this is merely my opinion, based, as I have previously said, on various things, which I consider adequate…for me anyway. Just do what you will, and have a merry Christmas! But whatever the season, protect yourself.

The first use of gold as money occurred around 700 B.C., when Lydian merchants (western Turkey) produced the first coins

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