One of the most contentious laws no matter who you ask across the political spectrum is the practice of civil asset forfeiture. This occurs when, even if a citizen hasn't committed a crime but is merely suspected of one, the authorities can seize any assets from the (potential) defendant and hold it indefinitely.
While the intent of the law is to place financial pressure on white-collar criminals and well-funded criminal organizations such as the mafia, it is increasingly used against poor and middle-class Americans—who, keep in mind, often have not even been charged with a crime yet!
Now, new legislation that has been proposed in the U.S. Senate seeks to bolster such asset forfeiture rules by extending the scope of this state-sanctioned theft to include a much wider range of assets and circumstances.
Typically, civil forfeiture involves a car being seized or a bank account being frozen. In too many cases, the assets are withheld from the owner even long after they have been acquitted of any wrongdoing or the charges were dismissed. The Senate wants this controversial legal procedure to also apply to hard wealth like gold coins and bullion, among a wide range of other assets.
The title of the recently introduced bill is “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.” On the surface, it's pitched as a measure to combat the mechanisms for money laundering and tax evasion. This is a problem not just within the financial sector, but is also how terrorist groups secure a big portion of their funding (aside from seeking ransom for hostages). The idea behind the bill was no doubt influenced by the "Panama Papers" scandal that leaked last year revealing the millions upon millions of dollars in wealth held in offshore tax havens by various world leaders and financial institutions.
There is, of course, merit to the notion that black-market financing channels and money-laundering loopholes must be shut off. The law seems to be targeted at cryptocurrencies like Bitcoin, which have become increasingly popular in a growing range of criminal activity due to their untraceable and decentralized qualities.
Nonetheless, this proposal will have adverse consequences for an untold number of honest investors and savers. It essentially seeks to criminalize holding any significant amount of wealth ($10,000 or more) in cash or something tangible without wading through the bureaucratic channels of disclosing such assets to the government. The bill also specifically mentions anything stored in safety deposit boxes, where modest amounts of precious metals are commonly stored. Given the high price of Bitcoin or an ounce of gold, it wouldn't take much of an allocation in either asset to trigger such a seizure if you fail to file the right paperwork.
Like so many anti-cash and anti-gold laws, this bill would have the effect of defeating the purpose of holding a portion of one's wealth outside of the banking system in physical gold or silver.
The practice of civil asset forfeiture in general is constitutionally dubious, yet it has long been defended by high-ranking members of the Justice Department, most notably current Attorney General Jeff Sessions.
While it may in part serve a noble purpose of depriving terrorists and drug-dealing networks of "dark money," giving such a statute blanket application is problematic in regard to civil rights. If passed, S.B. 1241 (as currently written) could empower the IRS or another government agency to seize your assets simply because you did not disclose you had them! Luckily, it remains only proposed legislation at this point in the process, and must pass both the Senate and the House of Representatives before it reaches President Trump's desk.
If nothing else, this is another reminder that your precious metals are much safer in an approved depository (i.e. a vault) than in a safety deposit box!
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.
Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.